All Posts
No items found.

7 Common Bookkeeping Mistakes That Hurt Profitability From A Fractional CFO

Are you making these seven common bookkeeping mistakes that are hurting your profitability? Follow the tips in this blog post to protect your bottom line. 

July 1, 2024

Is bad bookkeeping slowly killing your business’s bottom line? Minor bookkeeping mistakes can snowball into major profitability problems, quietly eating away at your margins and clouding your financial visibility. 

As a fractional CFO, I’ve seen firsthand how bookkeeping errors and mistakes can derail an entire business. When you hit the $2 million to $10 million revenue range, you’re more susceptible to bookkeeping issues because you’re beyond the startup stage. Yet, many of the robust financial systems and oversight of larger companies aren’t in place yet. 

If you struggle with: 

  • Accurate forecasting
  • Payroll problems 
  • A lack of financial strategy 
  • Missed tax deadlines

It’s time to get your books in order! Let’s look at the most common (and costly) bookkeeping mistakes preventing founders and CEOs from reaching their business goals. 

Bookkeeping Mistake #1: Disorganized Financial Records

Poor bookkeeping can lead to serious cash flow problems. If you aren’t tracking your expenses and accounts payable, you may run into late payments, overdraft fees, and other unnecessary expenses. For instance, you might miss a credit card payment due to poor record-keeping, or inaccurate financial records can lead to hefty tax penalties if you aren’t complying with tax regulations. 

As a CEO, it’s mission-critical to maintain a clear picture of your company’s cash flow. If you don’t, this reflects poorly on your business management skills and your company's health while also draining financial resources. 

If you can’t achieve that visibility, you may have a hard time: 

  • Paying employees on time
  • Investing in growth opportunities
  • Staying on top of tax payments and other deadline-oriented financial obligations

How do you remedy disorganized financial records? With a cash flow management system, regular financial reviews, and help from a financial professional. You must be able to anticipate and address potential shortfalls, and you can’t do that without accuracy and consistency. 

Bookkeeping Mistake #2: Failing to Reconcile Accounts

Everyone should reconcile their accounts to catch errors or fraud in their bank and credit card statements, whether personal or professional. Failing to do so means you can’t: 

  • Trust your financial reports
  • Properly file taxes
  • Make smart business decisions

Catching issues early through regular account reconciliation means you can course-correct quickly before problems snowball into a massive headache or devastation for your business. 

A little diligence goes a long way. If you’re struggling with this step, you can create automated systems that send alerts when something seems amiss. You can also hire a fractional CFO to get your accounts in order and keep them in order. 

Reconciled bank accounts mean smarter business decisions based on accurate financial reporting and profitability metrics. 

Bookkeeping Mistake #3: Improper Payroll Management

Not being able to pay your employees on time is a huge red flag for the health and quality of any business. You don’t want to be that person. Inefficient bookkeeping can lead to those problems, which can negatively impact employee morale. 

Common payroll mistakes include: 

  • Misclassifying workers
  • Miscalculating withholdings
  • Missing filing deadlines

If timesheets aren’t accurately recorded or payroll taxes are miscalculated, employees might get paid late or less than they are owed. You don’t want that. It erodes trust in the company and leads to frustration, decreased productivity, and higher turnover rates. 

Payroll is usually the biggest expense for a company, so small errors can have an outsized effect on profits. 

How do you fix this mistake? By keeping pristine payroll records. Automate payroll and work with an accountant to ensure accuracy and compliance. 

You can implement payroll systems and Cloud-based payroll solutions that automate tasks and reduce errors. Streamlining this critical bookkeeping task also frees up time for your team to focus on other things, enhancing productivity and fostering a positive workplace culture. 

Proper payroll management leads to better financial health for your company and happier employees—a win-win! 

Bookkeeping Mistake #4: Inaccurate or Incomplete Financial Records

Alongside disorganized financial records is an even worse bookkeeping mistake: inaccurate or incomplete financial records, leading to a lack of financial strategy. You can’t plan for the long-term success of a business without accurate or complete financial records because you’ll be flying blind. 

Without a clear financial strategy, businesses might: 

  • Miss growth opportunities
  • Fail to manage risks
  • Struggle to allocate resources effectively

Thankfully, the solution is a simple one. How do you ensure accurate financial records that inform a robust financial strategy? By doing regular financial reconciliations and ensuring accurate and timely financial reporting. 

Don’t have time for that? Hire someone who does. You don’t have to hire a full-time CFO to manage your financial records and strategy. A fractional CFO can fully immerse into the inner workings of your business, set up processes to track and review your financials, and help inform decision-making. 

If your financial records are inaccurate or incomplete, generating reliable financial reports is impossible. You can ensure better budgeting, forecasting, and investment planning with a clear financial strategy and accurate information. 

Bookkeeping Mistake #5: Missing Tax Deadlines

Missing tax deadlines is a common and costly consequence of poor bookkeeping practices. Penalties, interest charges, and looming threats of audits are no way to run a business. You can avoid this by: 

  1. Maintaining up-to-date financial records throughout the year
  2. Utilizing tax software and financial professionals to streamline the process
  3. Setting reminders for key tax deadlines

To compile accurate tax filings, you need organized financial records. You can see the theme here: consistent organization. 

If this is a weak spot for your organization, consider outsourcing all tax and financial tracking and planning to a professional who can navigate the complexities of tax compliance. You don’t have to be a financial expert to run a successful business. You just have to hire one. 

Bookkeeping Mistake #6: Increasing Internal Fraud Risks

How does a company increase their risk for internal fraud? By failing to implement the proper controls within the business. No one wants to hire someone who would commit fraud, but without proper oversight and controls, it opens up certain levels of risk for it to happen. 

Internal fraud can lead to huge financial losses, legal consequences, and damage to your company’s reputation. You can avoid that! 

How do you reduce the risk of fraud? 

  1. Segregate financial duties among different employees
  2. Set up processes for regular internal audits
  3. Ensure no single person has unchecked control over financial transactions

You can protect your business by regularly reviewing financial statements and using accounting software to limit who can view or modify data. As a fractional CFO, I’m here to guide you through these challenges and help you build a solid financial foundation for your company. 

Bookkeeping Mistake #7: Lacking Consistent Internal Financial Processes 

Manual, error-prone, painstaking processes are putting a damper on your company’s growth. They not only open you up to human error but also make it difficult to get real-time visibility into your finances. 

With the rise of AI and Generative AI, so many powerful tools already exist that help automate financial processes in a way that easily integrates with your current systems. Cloud accounting software can automate: 

  • Invoicing
  • Expense management
  • Bank reconciliation
  • Payroll management

That could be a game-changer for any business not using these solutions. By keeping your books up-to-date always, you can: 

  • Make faster, smarter, data-driven decisions
  • Reduce costs
  • Improve cash flow
  • Drive profitability

The time and money you can save by avoiding these seven common bookkeeping mistakes and implementing processes and professionals to manage them, you can reinvest in growing your business and protect your bottom line. 

7 Ways to Customize NetSuite To Your Business Needs

Unlock the full potential of your company and NetSuite investment with these seven ways to customize NetSuite to your business needs. 

How NetSuite Elevates the Customer Experience Across Every Function

Every business needs to focus on the customer experience. Discover how NetSuite can elevate CX across functions. 

The Top 5 NetSuite Cloud Features to Future-Proof Your Business 

Tackle the biggest pain points for scaling your business with these top 5 scalable NetSuite Cloud features. 

7 NetSuite Issues and How to Fix Them Quickly

NetSuite is a powerful tool, but like any software, it has its own challenges. Learn how to solve the seven most common NetSuite issues. 

What is Netsuite and Why Do So Many Startups Choose It

What is NetSuite, and why do so many startups love it? There are many reasons, so keep reading to learn how NetSuite can solve your biggest pain points. 

A Must-Do Checklist for Year-Round Bookkeeping Compliance 

If you want your business to remain financially healthy, follow this monthly, quarterly, and yearly checklist for year-round bookkeeping compliance. 

5 Benefits of Using Netsuite for Financial Reporting and Analysis

You can transform your business trajectory using NetSuite for financial reporting and analysis. Keep reading to learn about the 5 benefits of using this ERP system. 

Is Netsuite Right For Your Growing Company

Every company is unique and requires different processes and workflows to reach the next stage of growth. Keep reading to learn if NetSuite is right for your growing business. 

Basic Bookkeeping vs. Advanced Financial Management: Which One Do You Need?

Does your business need basic bookkeeping or advanced financial management? Keep reading to find out. 

7 Ways a Fractional CFO Minimizes Tax Risk

Constantly changing tax laws and regulations can overwhelm a growing company. Learn these seven ways a fractional CFO minimizes tax risk.

6 Ways a Fractional CFO Can Secure Funding For Your Business

Securing funding for your business isn’t a walk in the park. It requires strategy, financial expertise, and accurate financial data to tell a compelling financial narrative. Here’s how a fractional CFO can help. 

5 Tips for a Successful NetSuite Implementation

Successful NetSuite implementation is about people, processes, and technology. Follow these five tips to drive your business forward. 

How Much Does A Fractional CFO Cost? 

How much does a fractional CFO cost? Let’s answer many founders’ most pressing questions about making this critical hire. 

How to Cut Costs, Not Corners with an Outsourced CFO

How can you cut costs for your startup without hiring a full-time CFO? A fractional CFO is the answer and here’s why. 

4 NetSuite Hacks To Optimize Your Supply Chain

To gain a competitive advantage in today’s fast-paced world, you have to stay on top of supply chain challenges. Utilize these 4 NetSuite hacks to optimize your supply chain and boost your bottom line. 

6 Budgeting Tips for Business Success from a Fractional CFO

Read these 6 budget tips to help you define a clear financial roadmap for every decision you make as a company, and to drive a culture of financial accountability. 

Top 7 Reasons Mid-Market Leaders Choose NetSuite’s Cloud ERP

If you’re managing complex financial situations on outdated systems, it’s time to upgrade to this customized-to-fit-all solution of NetSuite’s Cloud ERP. 

When Is The Right Time To Hire A Fractional CFO

When is the right time to hire a fractional CFO? When you meet at least one of these five criteria.

The 7 Best Tax Strategies for Scaling Businesses from a Fractional CFO

As a business, you want your money working for you as efficiently as possible. Follow these 7 best tax strategies to reduce tax liability and grow your business. 

5 Financial Metrics Every CEO Should Track

If you do a Google search on important financial metrics for your business, you’ll come up with dozens of “must-have” metrics. But you only need 3-5 to succeed!

10 Ways NetSuite Helps Optimize Cash Flow and Minimize Burn Rate

Are you a founder or CEO struggling with cash flow problems and an out-of-control burn rate? Read the top 10 ways NetSuite can help solve all your biggest financial problems within a single solution.

EBITDA vs. Free Cash Flow: Which Metric Matters More?

EBITDA vs. free cash flow are two financial metrics that often find themselves head-to-head for companies between $2 million and $10 million in revenue. Which is better?

3 Signs Your Business Is In Desperate Need of a Fractional CFO

Do you have leaky cash flow problems, inaccurate forecasting, and a general lack of time or money to manage your organization’s financials? It may be time to hire a fractional CFO to save your business.

Solid financial reporting can help attract debt and equity financing

Financial reporting plays a key role when a business needs funds for continued operations and strategic investment opportunities.

Did your business buy the wrong software?

No one likes to make a mistake. This is especially true in business, where a wrong decision can cost money, time and resources. According to the results of a recent survey, one of the primary ways that many companies are committing costly foibles is buying the wrong software.

Best practices for M&A due diligence

Participating in mergers and acquisitions (M&A) offers growth opportunities for businesses, but also comes with its share of risks. It's crucial for buyers to have a thorough understanding of the strengths and weaknesses of potential partners or acquisition targets before proceeding with any deals.

Perform an operational review to see how well your business is running

In the wide, wide world of mergers and acquisitions (M&A), most business buyers conduct thorough due diligence before closing their deals. This usually involves carefully investigating the target company’s financial, legal and operational positions.

Tax-favored Qualified Small Business Corporation status could help you thrive

Opting to run your small enterprise as a Qualified Small Business Corporation (QSBC) might be a smart tax strategy.

Navigating Year-End Finances: A Real Estate Broker’s Guide to Cost-Effective CPA Solutions

As a real estate broker, you're accustomed to navigating complex deals and managing a multitude of tasks. However, when it comes to managing year-end finances, even the most seasoned brokers can find themselves in murky waters

Unleashing the Power of NetSuite: Why Your Business Needs an Expert CPA Firm

In the realm of business management, NetSuite stands out as a powerful tool designed to streamline operations and enhance financial visibility.

Financial Mastery Without Full-Time Costs: The Strategic Edge of Fractional CFOs for Tech Leaders

In the ever-evolving landscape of the tech industry, where innovation is the currency of success, financial management plays a pivotal role in shaping the trajectory of your tech firm.

New Year, New Numbers: Top 10 Accounting Priorities for a Smoother Tax Season

As the calendar flips to a new year, business owners find themselves at the threshold of a crucial period—tax season

Countdown to Tax Time: Affordable CPA Strategies for E-Commerce Success

As an e-commerce business owner using the powerful NetSuite platform, the countdown to tax time can bring both anticipation and anxiety.

Key 2024 inflation-adjusted tax parameters for small businesses and their owners

The IRS recently announced various inflation-adjusted federal income tax amounts. Here’s a rundown of the amounts that are most likely to affect small businesses and their owners.

Best practices for effective board meeting minutes

If you think the recorded minutes of your nonprofit’s board meetings are just a formality, think again

Businesses: Know who your privileged users are … and aren’t

Given the pervasiveness of technology in the business world today, most companies are sitting on treasure troves of sensitive data that could be abducted, exploited, corrupted or destroyed

Accounting for M&As

Business merger and acquisition (M&A) transactions have significant financial reporting implications. Notably, the company’s balance sheet will look markedly different than it did before the business combination.

Using QuickBooks to prepare 2024 budgets and forecasts

As year end nears, many businesses and nonprofits are planning for 2024. QuickBooks® provides budget and forecast features to help management make financial predictions, as well as assess “what if” scenarios to help make more-informed business decisions.

Tips for QuickBooks users: 5 mistakes to avoid during bank reconciliation

Reconciling bank accounts is critical to ensuring the accuracy of your company’s accounting records. The primary purpose of a bank reconciliation is to confirm that the transactions recorded in your bank statement match those shown in your accounting records.

Shareholder advances: Debt or equity?

From time to time, owners of closely held businesses might need to advance their companies money to bridge a temporary downturn or provide funds for an expansion or another major purchase

Revitalize Sales Strategies for the Digital Marketplace

E-commerce business owners, as the year draws to a close, you and your leadership team are likely fine-tuning your vision for 2024.

Maximizing Cash Flow in Real Estate: The Power of Cost Segregation Studies

Is your real estate business fully capitalizing on the depreciation of your property investments?

Some businesses may have an easier path to financial statements

There’s no getting around the fact that accurate financial statements are imperative for every business. Publicly held companies are required to not only issue them, but also have them audited by an independent CPA

Key Performance Indicators (KPIs) for SaaS Businesses: A Comprehensive Guide

Software as a Service (SaaS) has revolutionized the software industry. The transition from traditional software licensing models to subscription-based, cloud-hosted services offers businesses scalability, flexibility, and significant cost benefits

3 types of internal benchmarking (KPI) reports for businesses

As each year winds to a close, owners of established businesses can count on having plenty of at least one thing: information.

Are you ready for year-end inventory counts?

As year end approaches, it’s time for some calendar-year businesses to perform physical inventory counts. This activity is more than a time-consuming chore; it’s an opportunity to improve your company’s operational efficiency.