Spring-Clean Your Financial Clutter

If your company is still doing manual bookkeeping, the biggest problem with never de-cluttering your files is space. As file folders and drawers start to overflow, you may also waste time flipping past old documents like invoices and bills as you try to locate the single piece of paper you need.

Are you using an accounting application instead of paper? That system probably seems more organized and compact, and it doesn’t encroach on your office space. But it’s just as bad—maybe worse—to have unnecessary content in your electronic bookkeeping files. Searches can run more slowly. Reports may have extraneous data. Considering how spacious data storage is these days, you’re unlikely to run out of room, but big files with a lot of superfluous detritus can trigger performance problems – or worse.

So block out some time to clear the decks. You’ll save time and space, and minimize the chances of a system meltdown. You may also find that you’re less likely to overlook work that needs to be processed, because everything you see will be something that needs attention.

If you’re using a manual, paper-based system:

  • Go through your customer and vendor records, whether they’re in a card file or some other paper format. Pull out individuals and companies that have been inactive for 12 months. But don’t destroy these records yet. Store them somewhere away from your active work.
  • Do the same with transactions that have already been processed. Establish a cutoff date—an accounting professional can help you establish this—and store the ones that are older than that. When it’s safe to destroy them, shred.
  • If you don’t have a good system for tracking your inventory of products, now’s a good time to develop one. You could create an index card for each product, but an Excel spreadsheet would serve you better. Consider doing a physical count and entering a current total for each item. Keep this count updated, and you shouldn’t run out or over-stock.

If you’re using an accounting application:

  • This should be easier than with a paper system, but you’ll still have to look through your contact lists and see when each last either bought or supplied something. Most PC-based solutions offer a way to mark customers as inactive. They won’t show up in lists, but their information will still be there.
  • Your financial advisor can tell you how long transactions should be easily available. Many software products and websites offer ways to archive old data, but this operation requires great care.
  • One of the things that accounting applications do very well is store information about your inventory of products. If you’ve created thorough records for each item, you already know that the software tracks your stock levels. Run reports and give some thought to your current mix. Is it time to retire some products? Change pricing on others? Run a promotion?

The idea is to get inactive paper and electronic records into some kind of archive so that every piece of paper you touch and every digital record or transaction or report has relevance to your company’s current workflow.

And once you have everything in order, you might develop some policies that will minimize the need for such a major information overhaul. A financial advisor can help you formulate these so you can start fresh and keep your workspaces current.


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