blind accountingAre you practicing blind accounting? How much do you really know about your own company’s financials?

Are you able to pull a report at any given moment on the following:

1) How much does your company owe others, and how long have you owed them? [These are your Accounts Payable and aging, loans etc.]

2) How much is owed TO your company, and how long have you been owed? [These are your Accounts Receivable and aging]


3) How much cash is actually in your account, and how much of it is spoken for (i.e. checks written that have not cleared the bank, etc.)?  [This is your account balance and reconciliation]

Generating Instant, Accurate Reports Is Essential

If you are unable to pull an accurate report as needed, I suggest that you are courting disaster. Truth is, Blind accounting is NOT a good system!

Business owners often tell me one of their key concerns is, how little they know about accounting. They seem to think they need a college degree to even begin to understand it. Consequently, they hire a bookkeeper or other accounting personnel and blindly trust them to handle their books—the future of their business.

Many owners say they are able to run reports from their company’s accounting software to get an accurate picture of their finances, but this can be DANGEROUS, for many reasons!

Operating your company blindly—with poor vision into your accounting systems—is a recipe for ongoing credit problems. Handling large sums of money, especially these days, can be a huge temptation for some. And without proper accountability, you open your business up to possible loss or lawsuits; not to mention, financial ruin.

The Myth of Complicated Accounting

Let me challenge the myth that accounting/bookkeeping is complicated and should only be “left to professionals.”

Good bookkeeping is NOT complicated! It can actually be simple.  I suggest that you, the owner, take just a few hours to familiarize yourself with a bookkeeping program such as QuickBooks. Or, maybe your company is currently using another accounting program.  Truth is, using an iPhone is more complicated than using QuickBooks!

No, you won’t learn all there is to know about accounting in a few hours. And I’m not saying you should NEVER hire a bookkeeper or seek professional help. But, you can get a good start on understanding the shape of your business on a daily basis. If you wait on bookkeeping personnel to generate a report on LAST month’s accounting, you might find you’re too late in learning about a serious problem.

We’ve all seen news reports about companies going under or losing thousands of dollars, due to their accounting department’s “creative” bookkeeping. This would not happen if an owner had “eyes” for his or her company’s financials. Blind accounting can be disastrous!

I talk with owners all across America, and am still surprised at how many do not have a clear picture of their company’s accounting. Some people feel intimidated by bookkeepers/accountants, and feel ill-equipped to question their figures. When asking their accounting personnel for reports, they’re often told, “I can’t give you one right now, I haven’t paid the bills.” Or, they may say, “I haven’t sent out invoices yet” or “I haven’t done the deposits.”

Caution! The next thing an owner should ask is, “WHY?” Then insist on an answer.

System of Accounting

Many companies don’t send out customer invoices or enter vendor bills and other pertinent information on a daily basis. That is something they should do! The reason they don’t is because there is NO SYSTEM for doing that!

Of all the departments in a business, accounting is the last one that should operate using the “loosy-goosy” method. However, many bookkeepers and accounting personnel work just that way.  They do what should be priority tasks whenever they feel like it; or, when an accounting-challenged owner gets upset when the bank account is running low on cash. Then everyone goes into crisis mode.

Certain bookkeeping practices need daily attention, in a systemized way. This gives you CLEAR VISION—having an accurate and up-to-date snapshot of your company’s financial health, for making good business decisions. No blind accounting!

Many bookkeeping offices look as if an F-3 tornado passed through them. This leaves clutter and piles of un-entered vendor bills, jobs not invoiced or sent out, and packing slips not married to bills. Moreover, old, not-yet-filed invoices, etc. are often stacked high, right next to new business. Sound familiar?

Enter ALL customer invoices and vendor bills into your accounting program daily, as it will ensure your company’s financial reports are always current. Also needed is a balance of cash in the bank, and a list of written checks that have not cleared the bank.

I strongly suggest that you, as the owner, have a way to go online and get your bank balance anytime you need that information.

Turning Information Into A Workable System

How do you turn the above items, that an owner needs to do or know, into a system that will ensure it happens?

You need a written Daily Routine Checklist for each of your bookkeeper/accounting personnel. This checklist needs to be signed and turned into you or a manager each day—no exceptions. A Daily Routine Checklist is a system that works!  For more than 15 years, our business, and many client businesses have used Checklists!

Below are some PROMPTS that need to be included on bookkeeper or accounting personnel DAILY ROUTINE CHECKLISTS! Because, this will ensure certain tasks are being completed daily, weekly, monthly and even yearly:

__  Customer Invoices (ALL) mailed and entered into accounting software.
__  Customer Payments (ALL) entered into accounting software.
__  Vendor Bills (ALL) entered into accounting software.

The tasks below could be weekly or even monthly, once you are assured your finances are current and in good order:

Weekly or Monthly
__  Profit & Loss (P&L) report printed and given to owner.
__  Accounts Payable report printed and given to owner.
__  Accounts Receivable report printed and given to owner.
__  P&L report printed for general manager.
__  Bank statement reconciled (This could be done weekly).

We have many more prompts on our accounting personnel’s Daily Routine Checklists to ensure the best practices; that tasks are completed; and that paperwork is not piling or backing up. These checklists can help take the danger out of your accounting, and ensure your bookkeeping office remains clutter-free. Remember, blind accounting can be dangerous!

Did I mention? — Great systems work!