Business Finance

7 Basic Bookkeeping Habits to Help You Secure Financing

Oct 17, 2019 • 9 min read
Female small business owner doing the books
Table of Contents

      Does the thought of bookkeeping fill you with uncontainable excitement? Probably not. What about money in the bank to make your business ambitions a reality? Now we’re talking. 

      It turns out that boring ol’ bookkeeping and business capital have more in common than you might think. You need cash to grow your business, but as you well know, money doesn’t grow on trees. You’re going to need to secure top-notch financing to get ample capital to invest in your business. 

      But before lenders start doling out the big bucks, they’re going to want to make sure you’re a safe, reliable applicant. They’ll look at your credit score, cash flow history, financial projections, business plans, and more. And how do you keep these critical financing factors in tip-top condition? With fundamental bookkeeping habits, of course.

      You can’t qualify for business financing without the proper financial documentation. And even if you do have your finances neatly organized in a silver 3-ring binder, the numbers need to prove to lenders that you and your business are a worthwhile risk. Fortunately, bookkeeping not only helps document and organize your finances, but it arms you with the information necessary to improve your business’s health and qualify for financing


      There’s no need to make bookkeeping more complicated than it needs to be. With just a few basic, routine habits, you can stay on top of your books each month with little-to-no hassle. Follow these bookkeeping best practices, and you’ll be well on your way to bigger, better financing for your business.

      1. Adopt Cloud Bookkeeping Software

      First, it’s 2019—ditch the spreadsheets and ledgers and get cloud bookkeeping software. Tech can do practically all of the tedious bookkeeping for you. Okay, not everything, but a bookkeeping platform like Sunrise can automate your invoicing, expense tracking, income categorization, and financial reports. That adds up to a lot of saved time.

      Software doesn’t replace the need for professional accounting guidance, but it does simplify the minutia of running a business. It’ll help you get your finances in order and keep them in order. Plus, by using a cloud-based solution, you’ll always have real-time financial data on your business’s performance—no need to wait until end-of-week or end-of-month reconciliations.

      Make sure your bookkeeping tool also has high-quality document management features. The right tool will streamline the process of managing financial documents like invoices, daily expenses, payables, receivables, and receipts. The software should also allow you to easily share your files with your accountant—no copy/paste or screenshots necessary. Less time bookkeeping means more time focusing on growing your business.

      2. Track All of Your Expenses

      Before you start paying, tracking, and reporting, you need to separate your personal and business expenses. While it might be convenient to just swipe one piece of plastic in your life, this practice will ultimately make tracking your expenses a nightmare.

      Open a separate bank account and get a business credit card. By separating your accounts, you won’t have to waste hours sifting through your expenses at the end of the month. You’ll always know how much your business has spent and what the money has been used to purchase.

      Now that you’ve separated your accounts, it’s time to track all of your expenses. Business lunches, printer ink, travel expenses—everything. There are a ton of small business tax deductions you can capitalize on, and every penny counts.

      3. Create Cash Flow Forecasts

      This process is where bookkeeping turns from entries to insights. Yes, bookkeeping is a necessary evil for legal purposes, taxes, and audits, but it also informs and drives your business strategy.

      With detailed financial records, you’ll be better able to forecast your cash flow. With accurate cash flow forecasts, you’ll always be prepared to make the best financial decisions for your business. These insights will help you avoid dangerous amounts of debt and leverage your existing capital to its utmost potential. Coming full circle—these informed business decisions will improve your financial health and help you qualify for financing.

      4. Pay Your Taxes

      Remember when we talked about separating your personal and business expenses? Yeah, tax time is when you really reap the rewards of that upfront decision.

      Income tax, payroll tax, unemployment tax, excise tax, sales tax, property tax…that’s a lot of taxes. Don’t let the fees creep up on you come tax season.

      If you’ve been consistent and organized with your bookkeeping, tax time will be a breeze. If you’re using a solution like Sunrise, you can simply invite your accountant to access your transactions and financial reports —they’ll take care of the rest. Easy peasy.

      5. Regularly Review Your Financial Records

      Financial reports won’t do you much good if you never use them. Make it a habit to frequently analyze your statements. Keyword: analyze. Don’t just glance at them or give them a quick read—dive into the details. These are the same reports lenders will be looking at to decide if you qualify for financing. You should be looking for the same red and green flags they’re trying to discover.

      To some degree, you should check your financial records every day. At the end of each day, make sure the money in the bank matches the receipts. By monitoring your transactions daily, you’ll be able to catch errors, fraud, and unexpected fees before it’s too late.

      While it’s important to track day-to-day transactions, you also need to review the big picture with month-to-month statements. The profit and loss statement, balance sheet, and cash flow statement are your most important financial reports. These telling financial documents will give you quick and deep insights into your business’s health. They’re also the first thing lenders and investors will look at when examining your business’s potential.

      Make sure to block off time in advance to take care of your bookkeeping tasks. You’re likely extremely busy, and many things might seem immediately more important than tracking your day-to-day finances. Don’t slip into the procrastination trap—set aside time at the end of each day and month to reconcile your books.

      6. Remember the Rule of GIGO

      Remember: “garbage in, garbage out.” GIGO. The reward of your consistent bookkeeping is equal to the quality time and thought you put in every day and month. It’s not enough to just go through the motions and check bookkeeping off your to-do list each day. You need to ensure the quality and legitimacy of your entries if you ever want your reports to benefit you.

      Come tax time or a surprise audit, your financials won’t do you much good if you got sloppy for a month or two here or there. Saving minutes now will cost you hours later (and likely a more substantial fee from your CPA, too).

      7. Consider Hiring a Professional

      Numbers and entries might not be your thing, and that’s okay. As an entrepreneur, you have to wear a lot of hats—fortunately, you can hand off your bookkeeping hat with little hassle.

      If you know you don’t have the bandwidth or the slightest desire to deal with day-to-day bookkeeping, consider hiring a professional bookkeeper. Bookkeepers can help track your transactions, reconcile your books, explain your financial reports, and answer all your number-related questions.

      You can hand the entire bookkeeping process over to a professional and get back to doing what you do best—growing your business.

      Excellence Is Not an Act—It’s a Habit

      At first, you might approach each of these bookkeeping habits as tasks. You may need to add reminders on your phone and calendar to nudge you to get the job done. Some days you may have other pressing obligations, and other days you might simply forget. That’s fine and dandy—it’s all part of the process.

      Over time, however, diligence to these tasks will evolve from act to habit. You’ll find the value in bookkeeping and make it a priority—not a burden. That’s when you’ll achieve true bookkeeping excellence. And that’s when your bookkeeping labors will really start to pay off.

      Better Books Lead to Better Financing

      With your books in order, you’re ready to pursue your financing ambitions with confidence. Armed with financial insights, you’ll know exactly how much cash you need and how much you can afford.

      At a moment’s notice, you’ll be ready to apply for whatever financing you need. Your awareness of your business finances will help you determine if you even need financing—and if you do, which loan makes the most sense. 

      For example, you may discover your cash flow is taking a hit because your clients are dilly-dallying on their payments. If that’s the case, you may want to consider accounts receivable financing instead of a short term loan. Or maybe you find that you consistently receive more sales during November, leading you to acquire a business line of credit to hire seasonal help.

      Better bookkeeping practices lead to better financing—it’s that simple. Once you receive that lofty sum of cash with oh-so reasonable terms, you’ll realize all the tracking, reconciliations, and reports were all worth it. Get after it, entrepreneur. Your next loan is just a handful of bookkeeping habits away.

      About the author
      Jesse Sumrak

      Jesse Sumrak is a Social Media Manager for SendGrid, a leading digital communication platform. He's created and managed content for startups, growth-stage companies, and publicly-traded businesses. Jesse has spent almost a decade writing about small business and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped startup. When he's not dabbling in digital marketing, you'll find him ultrarunning in the Rocky Mountains of Colorado. Jesse studied Public Relations at Brigham Young University.

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