Keeping the books in order is no small task, especially when you’re learning as you go. Many self-taught bookkeepers are smart, capable, and hardworking, but there are still some common bookkeeping mistakes that even the best can overlook.
With businesses losing over $7.8 billion a year due to incorrect and manual financial reporting processes, correcting these mistakes can make a big difference in cash flow, reporting accuracy, and overall business health.
Here are the top 10 mistakes to watch for and some small business accounting best practices to help you avoid them.
1. Recording Transactions When Money Moves—Not When It’s Earned or Owed
One of the most common bookkeeping mistakes is recording income or expenses only when cash changes hands. In reality, accrual accounting tracks money when it’s earned or owed, not just when it hits your bank account.
How to avoid it: Understand whether your business should use cash or accrual accounting. If you’re using the accrual method, be sure to record invoices and bills at the time of the transaction, not at the time of payment. Tools like Chargezoom’s online payment terminal can help you stay on top of invoices and payments in real time.
2. Thinking Cash Flow Equals Profit
It’s easy to assume that a healthy bank balance means a healthy business. But cash flow measures the movement of money, while profit measures true financial performance after all expenses have been accounted for.
How to avoid it: Regularly review financial reports, such as profit and loss statements. For faster insights, Chargezoom’s integrations with accounting software (including QuickBooks, NetSuite, and more) make it easy to sync your data and see the whole picture instantly.
3. Waiting Until Tax Season to Clean Up the Books
If you’re scrambling every April to sort receipts, fix mistakes, and chase missing invoices, you’re not alone. But you’re also putting your business at risk. Last-minute corrections can lead to missed deductions or even audits.
How to avoid it: Block time each week to review and reconcile your accounts. Need help staying organized? An invoicing platform can help you automate billing so you’re not stuck playing catch-up.
4. Letting Invoices Sit Too Long Before Sending Them
Delayed invoices mean delayed payments. The longer you wait, the longer your cash is tied up—and the more difficult it becomes to predict and manage your cash flow.
How to avoid it: Send invoices immediately upon completion of work. Want to make it even easier? Check out these invoicing tips for QuickBooks users to speed up the process.
5. Not Following Up on Overdue Invoices Promptly
Just because you sent an invoice doesn’t mean it will get paid on time. Waiting too long to follow up on overdue notices leads to cash flow gaps and sends the wrong message to clients.
How to avoid it: Set up a clear follow-up system: one reminder the day after the due date, another a week later, and so on. Better yet, automate collections and reminders so no invoice falls through the cracks.
6. Failing to Build a Repeatable Workflow for Invoicing and Collections
Without a consistent process for invoicing and collecting, important tasks get lost in the shuffle, especially when you’re juggling multiple roles.
How to avoid it: Map out a standard workflow: issue an invoice, confirm receipt, follow up, and escalate if it remains unpaid. Chargezoom’s innovative tools allow you to accelerate cash flow by establishing repeatable and reliable billing systems.
7. Forgetting to Track Vendor Terms and Payment Deadlines
Missing supplier payments can damage valuable relationships and rack up late fees.
How to avoid it: Maintain a simple calendar of vendor terms and due dates. For a smarter solution, automate reminders through your accounting software to avoid last-minute scrambles.
8. Not Backing Up or Securing Financial Data
A single technical glitch could erase months (or years) of financial history, leading to hours of rework.
How to avoid it: Use cloud-based bookkeeping tools that automatically back up your data. Chargezoom’s platform is built with security at its core, giving you peace of mind that your financial information is safe.
9. Skipping Regular Financial Record Reviews
Financial trouble rarely shows up overnight. It builds quietly over time, and without regular review, small issues can become big problems.
How to avoid it: Review reports monthly, if not weekly. Focus on key indicators like profit margins, overdue invoices, and cash revenues.
10. Missing Out on Automation That Could Save Hours Each Week
Manual processes aren’t just slower—they open the doors to costly human errors. The direct and indirect costs of these manual efforts can also hurt your bottom line.
How to avoid it: Automate what you can. From sending invoices to reconciling payments, Chargezoom enables you to eliminate manual work and focus on growing your business.
Small Changes. Big Results.
Even the best self-taught bookkeepers make errors. With the right systems and tools in place, you can avoid the most common bookkeeping mistakes. By addressing these issues and applying small business accounting best practices now, you can save time, avoid stress, and keep your business running smoothly.
Take control of your billing, invoicing, and payments—all in one platform. Get started with Chargezoom today.
