The Dangers of Blind Accounting
How much do you really know about your own company’s financials?
Are you able to pull a report at any given moment on the following:
- How much your company owes others. — How long you have owed them?
[Your Accounts Payable and aging, loans etc.]
- How much is owed to your company. — How long you have been owed?
[Your Accounts Receivable and aging]
- How much cash is actually in your account. — How much of it is spoken for (i.e. checks written that have not cleared the bank, etc.)?
[Your account balance and reconciliation]
If you are unable to pull an accurate report as needed, I suggest that you are courting disaster. NOT a good system!
Business owners often tell me one of their key concerns is how little they know about accounting. They seem to think a college degree is needed to even begin to understand it; so, they hire a bookkeeper or other accounting personnel and blindly trust them to handle their books (in other words, the future of their business). When I ask these owners if they are able to run reports from their company’s accounting software to get an accurate picture of their finances, many say they cannot. This can be DANGEROUS, for many reasons!
Operating your company blindly—with poor vision into your accounting systems—is a recipe for ongoing credit problems. Handling large sums of money, especially these days, can be a huge temptation for some. And without proper accountability, you open your business up to possible loss or lawsuits—even financial ruin.
Let me challenge the myth that accounting/bookkeeping is complicated and should only be “left to the professionals.” Good bookkeeping is NOT complicated! It can actually be simple, if you (the owner) would take just a few hours to familiarize yourself with a bookkeeping program such as QuickBooks, or maybe the program your company is currently using. I dare say using an iPhone is more complicated than using QuickBooks.