Messy Books And The Cleanup – How To Get From Under That Pile of Paper And Back On Track

So I was talking to a client the other day. A client that was overworked and overwhelmed. One who found himself taking over the books from his former bookkeeper.

And I could hear a TON of frustration in his voice.

He had no idea what was going on – he didn’t know if his books were “right”, if his vendors had been paid, if he was owed any money from his clients or why the bank was calling him.

The Messy Dilemma

Okay I may have embellished just a bit…but barely.

He was definitely frustrated and it really wasn’t his fault.

Here’s a little background.

My client has been asking his bookkeeper to bring him up to speed for months. Asking for reports. Asking the bookkeeper if they needed anything. Asking if there was anything he could do to help things along but still…

Nothing. Nada. Zilch. Zip.

Between the two of us, we still aren’t sure if the bookkeeper simply couldn’t do the work requested, didn’t have time to do the work or wouldn’t do the work.

But this is a cautionary tale – when outsourcing ANYTHING – don’t abdicate your role!

Stay involved. Stay in the loop. Ask questions. Often. And get updates at least monthly.

If they balk, remind them that this is YOUR business because it IS your business!  Right? So take charge and act like it!

Messy Books

Messy Books Are Inevitable…Unless

So maybe that’s not what happened in your case.

Maybe it’s much more simplistic.

Perhaps, there isn’t an outside saboteur.

Or the mess you have on your hands is one of your own creation.

No matter how it happened… you have a virtual avalanche just waiting to bury you.

An avalanche of paper or virtual notes that don’t mean much of anything to you…that’s not compiled into any sort of organized manner so you can’t exactly use it to make any sort of business decisions.

You have no idea if your business ideas are profitable or not. Which items/products are selling.

You just don’t know much of anything when it comes to the finances of your business but you do know that you need to make a change.


How to Clean Up Those Messy Books

Anyway, enough of mini-horror stories and the blame games.

Let’s get back to the issue at hand… messy books and how to fix them.

And promise me that you’ll do all of these steps. Especially the first one! 😉

Step 1 – Vent

Vent. Seriously. Get all your frustrations out.

I’m not going to bash a fellow professional or give you the blues about letting things get out of hand but I won’t stop you from getting it off your chest and having a mini pity party.

The only thing that I DO ask of you is this. DO NOT dwell and DO NOT rage on and on about this for more than 10 minutes.

Prolonged venting won’t help but I don’t want you to keep it bottled up either… so get it out, once and for all.

Step 2 – Assess

Take stock of what’s really happening.  Assess the damage.

Pull out the good ol’ paper and pen.  Jot down some notes. Make a few lists. Figure out what is done, what’s not done, what needs to be redone, etc.

Once you’ve done a full assessment you might just discover that maybe, just maybeeeee, it’s not as bad as you thought it was going to be!

Who knows, you may find yourself pleasantly surprised. (Fingers crossed)

Step 3 – Gather

Now that you have your handy-dandy lists created, time to get the things.

Gather all the documents you can find to creature/recreate your books.

Stuff like bank statements, credit card statements, loan documents, outgoing invoices, incoming bills, cancelled checks, receipts. Anything and everything that will help to create a full picture of your business finances.

Step 4 – Get To Work

Go to work – get the mess cleaned up and tidy as soon as possible.

Create your invoices, bills, deposits, checks paid, etc. Create/recreate all the transactions.

Reconcile to your bank statement or credit card statement. This is where you confirm that what you have created matches what the bank says happened.

Create a masterpiece out of the messy source documents you found in step 3.

TIP – organize these items into months. Input all the things (invoices, bills, checks, deposits) and then make sure the balance at the end of the month matches (ties out to) your bank statements. When done this way, if you make a mistake along the way, you can isolate it to the month you’re working on.

Step 5 – Systems

Create systems to move forward.

Systems like what to do when your client(s) hasn’t paid you (outstanding invoices/AR system), should you use bill pay or recurring billing to pay bills (AP systems), financial reports and deadlines (what reports do you want/need to review, when and how often), etc.

This is just the tip of the iceberg. Just a few of the things you may want to have as part of your money system.

Every business is as unique as their business owners so what you may want may be different that what the next business owner wants. Come up with your mix with your bookkeeping/accounting professional.

Check out my Money Matters Checklist for what to do and when as well as what to review and when.

Step 6 – Celebrate And Take A Vow

Yes! You did it. So Celebrate.

After the celebration is done, VOW to take control of your business finances!

Now that you have everything tidy, don’t get into this messy muck again… ever.

At the end of the day it’s all about balance. As business owners, we have to somehow strike a balance between work and play.

Your bookkeeping is an area that needs your attention. I know it’s not all that sexy or exciting but it’s necessary to the ongoing health and growth of your business.

When you’re ready to outsource, I get it. No one wants to be the dreaded micro-manager. However, it’s not too much to ask that you get the reports and the insight on your finances that you need.

Last but not least, check in with your money. Think of it as giving your business a periodic physical.

Review your finances at least once a quarter to determine how healthy your business is and make your decisions accordingly about what your next step(s) should be…

Until next time…

PS – If you want a more detailed, step by step how to for getting your books into tip-top tidy shape, check out my 7 Steps To Better Books checklist. 

Notes & Resources:

Editor’s note: This post was originally published in September 2015 and has been completely revamped and updated.

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