Most business owners dread doing big financial reviews. And I totally get it — when you’ve got such big numbers stacked in front of you, it can all feel a little…overwhelming, to say the least.
(Real talk — you may be lying awake at night DREADING it. No shame in that!)
That’s exactly why it’s so important to keep consistent tabs on your finances. It’s kind of like cleaning your house. When you do your weekly chores, that spring cleaning sesh is so much easier to tackle. You’ve got a MUCH smaller mess to clean up.
When you’re always in the know about your finances, you avoid having a mountain of paperwork when it comes time to file your taxes.
I know that sounds like a lot when you’ve already got a lot on your plate, but never fear! You know I have your back!
In this post, I’m going to show you my “Finance Friday checklist.” You’ll get a peek into how I speed up my weekly bookkeeping routine, so that it only takes me about 30 minutes to an hour to complete.
If you’ve got accounting software, like Xero, you can easily link your bank account. The system will automatically pull in what you’re spending money on and categorize it, so all you have to do is review.
But maybe you’re a spreadsheet girlie — nothing wrong with that! You can manually do this too.
Either way, clearing these bank feeds means making sure what is in your bank account is reflected in what you’re using to track your expenses. And then, breaking them down into categories.
I always have rules in my accounting software that tells the system that certain transactions always go to XYZ. For example:
Again, you can totally do this manually on a spreadsheet, but if you’re interested in seeing how accounting software can help, you can learn more about Xero here!
The next thing you want to do is run the current fiscal year by month, profit and loss. And look at the past AND current month together. That means you’re looking at ALL revenue, and all expenses, and seeing what you’re left with.
A profit and loss report usually shows revenue on the top, expenses in the middle, and profit on the bottom. It gives you one big picture to see how everything is shaking out. And when you do it monthly? Even better.
This is beneficial for several reasons.
For one, you can see if your profit was higher or lower than anticipated. If it’s lower, that’s a good indicator that you need to revisit your expenses and see what’s a miss.
You can also get a better idea of what your finances actually look like because sometimes, clients will pay late and the invoice rolls over into the following month. Or there may be a time when your subscription takes out an annual charge and it’s the month to pay it.
There are a lot of variables that can happen, but you can get ahead of them if you keep your books tidy!
This is where it gets goooood!
Now, you’re going to compare everything in a rolling 12-month report. But remember that there IS a difference between a profit and loss report and a cash summary report.
The P&L is to show you what you’re gaining, and what you’re losing. A cash summary report shows you what you have AFTER things like taxes, credit card payments, and owner draws. What’s left after it’s all said and done is the cash report.
It’s also good to run a report like this when doing your bookkeeping because it helps you ensure that surpluses or deficits match the P&L reports.
The most important part of the ENTIRE report is the “plus net cash flows” line. This tells you how much you are really either relying on your cash reserves or depleting it every month. Or adding to your cash pile.
Even if you mean well with your expenses (like maybe dipping into reserves to pay for an extra helping hand during a big project).
This gives you some really good insight into the overall cash flow of your biz!
Basically, you’re divvying up your income into different accounts — operations, owner expenses, profit, etc. This is one of the more simple steps in speeding up your weekly bookkeeping routine, because you’re just transferring money.
This is the part that either makes or breaks my weekly bookkeeping sessions when it comes to time! I have so much fun here because you can play with the numbers and see what’s possible.
And when you’re a daydreamer like me…c’mon, it’s hard not to get swept up in it!
In this last step, you’re going to go back to your recurring revenue and expenses spreadsheet to look at what you’re getting paid from clients and to see if there’s any cushion should there be uncertainty in your biz. Or sometimes to even see if an offer is bringing in any income or not.
Here, I like to review expenses and add anything that’s RECURRING. But it’s NOT for one-off expenses. This spreadsheet is really to get a good understanding of what it really takes to keep my business afloat.
Then, I play with the numbers to see how many clients I need on my essentials package to start hitting my owner’s draw goals. Talk about an action plan! This really puts the fire under my feet (and it’s why I love this step so much).
I know it sounds like a whole heck of a lot but just like a 10-step skincare routine, it always goes faster than you think! This entire process usually takes me anywhere from 30 minutes to an hour, depending on how much analysis I want to put into it, but getting it done on the latter end of that spectrum is totally doable.
But if you want someone to do it all for you so you practically don’t even have to think about it, I’ve got you covered!
My team and I will help you keep all those important numbers in line, and organize them for you, so you don’t ever have to lose sleep over bookkeeping again! Plus, we’ll create all the reports you need to give to your CPA when it’s tax time.
This means…more time to hunt for Easter eggs in Speak Now Taylor’s Version, right?!