Tip 7: Go Electronic

Welcome to the seventh installment of the Top 10 Tips for Financial Success blog series, where we hit the books to better manage your books!

Whether you’re a small business or a solopreneur, these 10 tips are vital to your bottom line!

Tip Number 7: Keep Electronic Records.

True confession: Not only am I a QuickBooks nerd; I love my scanner.

Now I know that many people love their paper and love their shoeboxes full of paper receipts and records. I know this because many of you are my clients.

But me? I believe shoeboxes are for shoes, and records belong online.

Why? Because a paperless office is a peaceful office, and here are my tips for making yours so.

Scan, scan, and scan some more

While I believe that shoeboxes are for shoes, I won’t stop you from keeping your receipts in a shoebox. But at the very least scan what’s in your shoebox and place your loads of paper back in the shoebox, if that makes you feel good.

Because you know what won’t make you feel good? Needing a receipt for an IRS audit, only to discover that the ink has completely faded, meaning you have no proof that you purchased $400 of office supplies.

Yep. That happened.

So get those receipts and records scanned and make sure that you organize files so you can find them, which leads me to my second tip:

Create (and use!) naming conventions for your files

It’s all fine and dandy to scan items, but how you organize them is even more critical. After all, if you can’t find the info you need, what’s the point of keeping records?

My preferred naming convention is [Date YYMMDD], [Vendor], and [Amount]. This convention makes my records easily searchable. For instance, if I’m reviewing books and wonder, “What was that $38.13 that I saw on the bank statement?” I can type in $38.13 and voila!: There’s my receipt.

Backup Your Files On Multiple Platforms

Finally, make sure that you save your files. I strongly suggest that you scan your receipts in electronic folders on your computer, or even better, on the cloud. Remember, if you have files on the cloud, that means they are backed up. However, if you save data on your computer’s hard drive, you’ll either want to perform a regular backup on your computer or transfer your files to a Dropbox or similar cloud service.

But Beth, this sounds like a lot of work! How will electronic records help save my business money?

Remember when we talked about the dangers of commingling, and we learned that time is money? The same principle applies to electronic records: a little work up front will save you a lot of money later.

Keeping paper records instead of electronic ones means you’re spending time searching for receipts and documents when you could be bringing in new business.

Or worse, if you have a bookkeeper doing your books, then they’re spending (and charging you for) more time trying to search through your shoeboxes, random envelopes, and Ziploc bags, which is in effect costing you more money.

Case in point: I had a client who was in the midst of an IRS audit and handed me two Bankers Boxes(R) of receipts and records. The client assured me that these boxes were all I needed.

By now, you know how this story goes. It didn’t take long to realize that there were more receipts and records that we needed to complete the financial picture. Several employees had their records and receipts in their own Bankers Boxes. To boot, the company had started to save files online but then fell out of the habit. And those online files? Incomplete and unorganized. I spent weeks emailing a group of people every time I needed something.

The client spent loads of money for me to create their system, and in the end, they missed crucial aspects of their audit and paid a hefty fine.

The Bottom Line

Electronic records simplify and streamline operations and allow you to answer small and big questions quickly. A little organization now will save you a lot of money later.

Not sure where to start? Connect with us at beth@bethblaney.com to schedule a “Recordkeeping Revamp” today!

About Us

At Beth Blaney & Associates, our top concern is providing small businesses and solopreneurs freedom from the number-crunching and office work that pulls them from their fields of e