Small business accounting has made a tremendous journey since the days of paper ledgers and handwritten entries. Now, small business bookkeeping software makes entries easier and more reliable. However, even now, data entry presents challenges. Whether you do your accounting by hand or enter it into an accounting program, poor data entry can create a broad array of costs.
Would you like help with avoiding data entry errors? Contact us for assistance with small business accounting.
Costs Run Deep for Data Entry Errors
It’s no surprise that a major error in small business bookkeeping can cause a large problem for your company. However, even small mistakes can make a difference. When your accounting is incorrect, you may see ripple effects in every aspect of your business health. Here are some types of costs you may be paying for poor data entry, even if you aren’t aware of them.
Direct Financial Costs
You may experience direct financial losses that result from wrongly entered data. In fact, according to a 2016 estimate by IBM, bad data added up to $3.1 trillion per year in costs to businesses. What’s more, small businesses are not exempt.
Companies of all sizes have to be incredibly alert and proactive to avoid or correct the poor data entries that bring such costs. As a small business owner, you might not have a large accounting department to give your data extra attention. So, in some ways, you may be even more vulnerable.
When you have a small business, you need to protect your reputation above all. But if your company is plagued by too many data entry errors in your small business bookkeeping, people may lose faith in your company. Your employees, clients, and the general community will see your business as unprofessional.
Worse yet, if the errors happen to favor your company, you may end up looking like a scammer. The costs could eventually run so deep that you lose your company altogether. To reveal your honesty and integrity, you need clean, accurate data that tells the true story of your character.
Loss of Clients
Poor data entry in small business accounting can cause a loss of clients in some cases. For example, data entry for billing must be precise and perfect. If it isn’t, clients get annoyed with you. Then, if it happens again and again, they become so frustrated that they may seek another service provider.
Certainly, if you’re in business to serve clients, you want to keep them happy. Remember that one way to do that is to present them with accurate bills and accounting of the services you’ve rendered them. It may not occur to them to say thank you for an accurate bill, but they will thank you with their continuing loyalty.
Nothing eats time like trying to find a data entry error somewhere in all your small business accounting. While your employees could be doing the work your clients need them to do, they’re wrapped up in chasing down bad data entries. Beyond that, poor data entry can result in bad information about jobs in progress. Because your team doesn’t have the correct background numbers, instructions, or details, they can’t do the project timely and efficiently.
Small business owners tend to take great satisfaction when their company runs like a well-oiled machine. What you have to remember is that that machine will never run smoothly without correct, complete, and accurate data. With outsourced accounting services, you can boost your productivity through accurate bookkeeping.
Preparing to make a decision about your small business almost always includes taking a look at your small business accounting financials. Even if not, you will likely look at other types of data, such as productivity figures or inventory lists. Today’s savvy business owners just don’t make changes without checking the data.
Yet, what would happen if the data you looked at was incorrectly entered? What if the information you were analyzing was nothing more than a page of misinformation? Unless you knew there was a problem, you would likely make the decision based on what you see. Your bad information would probably lead to a bad decision, and your company could stand to lose substantial money and time.
Data can bring exciting opportunities. For instance, say the data in your small business accounting showed that a certain group of clients needed a new type of service. As soon as you see that data, you might begin plans to add that service. However, if the data was incorrect and so failed to reveal the need, you might not get the smallest glimpse of this insight. The opportunity would be wasted.
On the other hand, thinking you have an opportunity when you don’t can be just as costly. The wrong information in your small business bookkeeping system might seem to indicate that you have a chance to gain more clients by adding a service. If those numbers are wrong, you might do all the work to set up for the service only to find out nobody wants it. However, with help from outsourced bookkeepers, you will know exactly where the opportunities lie. Then, you can seize them and grow your business.
Bad data entry can be serious business in small business bookkeeping. It can not only damage your ability to serve your clients well and rob you of your hard-earned profits. It can even have legal ramifications. Here are a few of the errors that could lead to legal disputes.
- Continually overcharging a client
- Underpaying employees or vendors
- Inaccuracies in tax accounting
Of course, if you knew someone at your company made an error, you would probably rush to resolve the issue. The problem is that the errors often go unrecognized in small business bookkeeping. You wouldn’t want to pay someone what they don’t deserve. So, unless you find the mistake, the dispute may continue for the long term.
How to Overcome Poor Data Entry
You can do better and avoid many of the costs of poor data entry. Start by getting financial advice for small business owners from a trusted small business accounting professional. They can point you to the best small business bookkeeping software. They may even suggest you consider a virtual FO to help manage your company’s financial activities.
Besides this advice, a small business accounting firm can provide you with QuickBooks help when you need it. They can set you up with outsourced bookkeepers whose only job is to make sure the numbers are correctly entered and compiled.
Financial Optics is an accounting company offering small business accounting and small business bookkeeping as well as virtual CFO and business advising. Based in Overland Park, Kansas, Financial Optics serves the entire U.S. with outsourced accounting services.
Founder Tim Sernett, a CPA with over 30 years of experience, heads the company with a commitment to providing top-quality services for tech companies, B2B service businesses, and others who need accounting assistance to build a better future.
Are you ready to build a better business through more accurate accounting? Reach out to us today to see how our outsourced bookkeepers can help!