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Bad Bookkeeping Comes at a Cost

Oct 13, 2020 10:00:00 AM Kathy Dise Bookkeeping

bad bookkeeping comes at a costMany small businesses choose to do their own bookkeeping for a variety of reasons, including perceived cost savings. Others hire a cheap bookkeeper or inexperienced staff to cut costs. The truth is, bad bookkeeping can be costly, and here is why:

Poor Information

Improper bookkeeping such as miscategorizing expenses and income or not recording payroll properly leads to inaccurate financial statements. To make the best decisions about hiring employees, business development or asset purchases, you need an accurate picture of your finances. Additionally, banks and investors will insist on accurate financial statements.

Incorrect Cash Balances

Do your financial statements reflect the accurate amount of cash you have? All accounts should be reconciled regularly so that you know what funds are available. Proper monthly bank reconciliations will help to ensure you know your cash position is correct. Be sure to reconcile the bank balance to the balance sheet when closing out your books at the end of each month.

Misinterpreting Data

Not everyone knows what to look for on a balance sheet or profit and loss (P&L) statement. A trusted and experienced bookkeeper can help you analyze the data to aid in your decision-making.

Cash Flow Problems

Poor bookkeeping can lead to cash flow surprises. Unbilled (or late-billed) invoices or vendor bills that got lost and surface just when you are in the middle of a cash flow crunch, can wreak havoc when you are trying to make payroll.


If you have an internal employee filling the bookkeeping roll, be sure not to give them unlimited access to your bank accounts. You should be authorizing outgoing funds and purchases to ensure legitimacy. Simple steps, such as providing read-only bank account access and reviewing all bank and credit card statements, can minimize the risk of fraud. Alternately, an outside bookkeeping company can provide peace of mind that work is being done correctly.  

We Can Help

We specialize in bookkeeping for small businesses. Contact us at to find out how we can provide accurate financials and bookkeeping advice so you are making informed decisions.

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Kathy Dise

Written by Kathy Dise

Kathy has over 30 years experience helping small businesses succeed. As a commercial lender, commercialization expert and now as a QuickBooks diamond level advisor, Kathy understands the challenges small business owners face. Her experience helps business owners quickly accomplish their financial goals. As the owner of BudgetEase, Kathy works with clients to develop a plan to efficiently process 1,000s of small transactions so owners can make informed decisions. She lives in Shaker Heights, OH with her husband Ralph and enjoys golf, curling and walking in Cleveland’s fabulous Metro Parks.