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Time to Clean Out Your Business Finance Closet

by Adeline Teoh

3 min read

Doing paperwork is nobody’s favourite task, but with a little extra effort in the record-keeping department you can reduce the time you spend on tasks, cut unnecessary expenses and get a better view of your business.

The business owner who fronts up to their accountant with a shoebox of receipts is not a myth, though they are perhaps an exaggeration. Unfortunately, there are plenty of small business owners who do not take good care of their accounts and records. Being organised not only helps you become more efficient – saving you time and sometimes money – it also can unlock benefits by having a better understanding of how your business is faring.

If you’re drowning in a sea of paperwork, however, it can be hard to know where to start, so here’s a guide to cleaning out and decluttering your business finances.

Clean Your Records

No, we’re not talking about polishing your vinyl collection. We’re talking about knowing which records to destroy and which to keep. The ATO has a handy record-keeping evaluation tool so you can see what you need to hold on to for tax purposes, such as:

  •          Invoices and receipts you issue for goods sold or services rendered
  •          Invoices and bills for goods or services you purchase
  •          Employee payments including wages, superannuation and taxes
  •          Financial statements including bank account and credit card statements, profit and loss statements and your balance sheets
  •          Tax return information
  •          Stocktake records and assets register

Additionally, you’ll need to hold on to business documents including, but not limited to, registration, insurance agreements, contracts, employee records, licences and permits. The rest you should archive safely or destroy securely by using a shredding service or similar.

Digitise Your Documents

If you need to keep an archive, consider digitising your documents by scanning and saving them rather than holding on to the paper records. Not only does this free up some office space, it is more efficient as you can find the files you need more easily.

Store them securely on a device you can access but others can’t – under physical lock and key, plus password protection is recommended. And don’t forget to make backups. Keep the backups off-site or in the cloud with the same level of security so if anything happens to your office, such as a fire, you still have them on hand.

Set Up a System

Now you have your records in order, devise a filing system you can stick to. Most business owners keep records by date because that is what the tax office seems to prefer for returns. But you can choose other classifications such as type of transaction, for example purchases made or invoices issued.

Document the process so that if someone else needs to do it for you, they can go through the correct procedure to keep things consistent.

Streamline Your Finances

Having straightened out your record keeping, evaluate your financial transactions. Can you make things more efficient? Look for mistakes, unnecessary expenses and opportunities to consolidate multiple bank accounts, for example. This is a good chance to find savings and prevent potential waste in future.

Automate As Much As Possible

Where possible, automate tasks such as paying staff and issuing regular invoices, and allow predictable bills, such as utilities, to be automatically deducted when they are due.

Review Your Finances

Once everything is running as you see fit, review both the system and your finances periodically: the former to make sure it’s working and the latter to gain an insight into how your business is doing. Online accounting systems like QuickBooks Online can help you manage payments as well as provide an at-a-glance overview of your financial position.

Organising your finances provides you with instant efficiency gains, but having a clearer picture of your transactions gives you the ability to spot anomalies and opportunities, which will help keep your business on the path to success.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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