Good bookkeeping always begins with high quality data entry. Have you heard the saying “Rubbish in Rubbish out”? This really applies in this situation. It does not matter what system or tools that you use the quality of the data you input will really contribute to the usefulness of the information you have to work with at the end. Data entry is truly the foundation of everything bookkeeping and accounting related.
What is data entry for bookkeeping
This is the process or recording of each business financial transaction. This will cover all deposits, transfers and withdrawal of business funds.
Why is data entry for bookkeeping important?
Keeping up to date information is important so business owners have a clear picture of how their business is performing. You can then generate reports which will show how much money is coming in, who owes you money, how much you owe people, what your profit is etc. It will also provide you with information to meet all your compliance and reporting requirements more simply.
Options for doing data entry
- Do It Yourself – Many business owners undertake their own data entry. This can lead to a good understanding of what is going on with the financial side of a business. It can also be incredibly timeconsuming and shift the focus away from delivering core services.
- Done for you – This option would see a business outsource it’s data entry and bookkeeping completely, for example, to Trade Guardian.
- Shared (Done with you) – This option is a balance of the business splitting key data entry and bookkeeping functions both internally and with an outsourced partner. A likely scenario could be that key record keeping, data entry and other regular tasks, like invoicing, are completed internally. Other tasks such as training, review, bank reconciliations and compliance reporting is done by Trade Guardian.
Tools for doing data entry
There are many ways for a business to keep information and collate this. The system used really needs to match the size and scale of the business. Some very small and simple operators may still keep a shoe box of receipts and invoices and summarise all information using a spreadsheet. This option may suit those working on their own with limited expenses and who are not needing to track or report under the GST system. The advantage is it is simple and cheap. The potential disadvantage is that information could be missed or calculation errors could occur within the spreadsheet resulting in errors.
New software solutions are now available to undertake this work online. The products available are suitable for smaller operators, but also then have capacity for larger businesses by adding extra features or functionality. These new systems also allow for information to flow more directly from sales systems, bank accounts and scanners. The information can also be more readily shared between multiple users.
Examples of some of the online tools include Receipt Bank or HubDoc. Using these tools you can snap a photo or scan all information from your expense receipts on the go from mobile phones, laptops or emails. The software will then extract all the important data (for example suppliers names, ABN, invoice amounts, GST components etc) and then import the information into your accounting software.
Accounting Software today has also gotten very clever and has inbuilt features to either link in with the above tools or assist with automating data entry. The advantages of using these tools are that you can save time and reduce human errors as well as keeping all your source documentation in one place.
Two of the major leading companies offering online accounting solutions are MYOB and Xero. Both have product offerings that can assist with automating the capture of financial information.
Case Study of Shared (Done with you) services
At Trade Guardian we work with many business owners to implement simple and effective processes to keep their accounts up to date. This often involves managing a large volume of paperwork. Working together we develop clear roles about how each function is undertaken, which tools we will use and who is responsible for each step.
To illustrate this as an example, imagine we are working with a Cafe Owner. Let’s call him Fred! Fred is super busy running the Cafe, dealing with customers, staff, suppliers etc. We have decided together that we will use Receipt Bank and Xero to deal with record keeping and bookkeeping tasks.
Fred installed the Receipt Bank app on his smart phone. Whenever he has receipts from expenses for the business (for example he had to go to Woolworths or Coles for urgent supplies) he opens the app and takes a photo of it. Fred has also contacted all his regular suppliers and asked them to send invoices and statements directly to his unique Receipt Bank email address. When he does receive invoices from suppliers directly to his personal email address he just forwards these directly to Receipt Bank as well.
Each week Trade Guardian’s role is to review all the information that has been sent to Receipt Bank. We have connected Receipt Bank to the Cafe’s Xero file and set up relevant rules to map expenses to relevant account codes. Once we quickly review the information in Receipt Bank we are able to publish this across to Xero. As you can imagine we have just saved considerable time with not having to manually enter all this data. We also have all the source documentation linked to each transaction saved for future reference.
Once all the purchase information is in Xero we are able to produce an Accounts Payable report which we review with Fred. We can then proceed with the next steps of creating and recording payments.
Other task we undertake to assist Fred include processing his weekly payroll. Again the data entry side of this function is streamlined using another tool called Deputy. Deputy allows Fred to roster staff and approve timesheet data for us to run payroll. Again this is synced to Xero for streamlined payroll processing.
Once all these regular tasks are undertaken Trade Guardian is able to use Xero bank feeds to reconcile bank accounts. More detailed reports can then be prepared for Fred so he can monitor how his business is performing. We are then also able to ensure compliance reporting around payroll and GST is completed in a timely and accurate manner.
The above case study has illustrated how record keeping and data entry can be done jointly in a really effective way. This scenario can be customised to work with any business regardless of their size and industry. Trade Guardian is currently working collaboratively in this way with a range of businesses including builders and tradespeople, hairdressers, consultants, hotel owners and a range of other professional services.