Welcome to today’s episode of I Hate Numbers where Bookkeeping is the topic. Travel back to Ancient Mesopotamia, Babylon, Assyria & Sumeria and you will see they have got their bookkeeping & accounting sorted. Documents from ancient Mesopotamia show lists of expenditures, & goods received & traded. Nearly 7,000 years later how records are kept has changed, however the reasons for doing so remain the same.

Why Keep records

We take videos and pictures to capture moments that we will treasure for life. We do that so we never forget.  Your business may process 100s of transactions daily.  With all that going you cannot keep reliable mental notes. You need to make a record of your business financial events.

Bookkeeping is one business task that you cannot fully escape. Your financial transactions show what you spend, what you earn, the ins & outs of your bank accounts – note them, somehow. Information for all over needs to be recorded. Our paper receipts, e-mail receipts (damned you Amazon), and the ones keeping the office draw company

Benefits of bookkeeping

“In business, people with expertise, experience and evidence will make more profitable decisions than people with instinct, intuition and imagination.” Amit Kalantri .  An effective bookkeeping systems brings immense satisfaction, power, knowledge.

Business decisions should be based on more than instinct.  Instinct is useful, evidence is stronger.  In addition, you need to be aware of your profits or losses.  Bookkeeping gives life to your financial and business activities.

Conclusion

When you have your business engine ready, a decent bookkeeping system then your life can feel liberated. The power of this insight and knowledge is numbers gold

If you do not capture the moments from your transactions, then you have no number business story to tell. Financial records are words to our story. Those words show us how much money we are making, where the money is going, helps us figure out what our financial future holds.

What Next

Grab a coffee, make yourself comfortable, sit back and listen.  Start thinking about the many financial transactions that carry out in your business. We want to make calm out of chaos.

I love doing this podcast and sharing my love of Numbers with you.  Check out the link to subscribe and do not miss an episode.  Help me spread that Number Love by sharing it this podcast and others with your network.

In This Episode

• Why keep financial records
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• Capturing the words to your business story
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• Developing your own Numbers confidence and decisions
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• Take more control of your numbers to help make money

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. Welcome to another weekly episode of I Hate Numbers. The show that wants you and your business to get a bit closer, bit more friendly with your numbers, so your business can survive, thrive, and prosper. Remember your numbers are your best friend. Your best friend, you maybe think to yourself, no, surely that's somebody else,

but no. They're your best business friend because they won't lie to you. They'll hold your hand. They'll help you through those calmer times and those choppier times. They're always going to be there and they're going to help you make money, survive, and prosper. So, what are we going to talk about in this week's show?

Well, in previous shows, we've talked about some cool stuff here. We've talked about costs. We've talked about profits. We've talked about break-even. And for me, numbers are a way to tell the story of your business as we are now and where we want to be in the future. What we are really going to focus on today is where do we get the words to tell a story?

Every story needs words. Every story needs to have a narrative, and those words are from your transactions. Transactions is just another way of saying when do you spend money, when you get money from customers, when money leaves your bank account, when money comes into your bank account. All those activities, all those transactions result in some form of record being created.

Critically, what we're going to be talking about, what we're going to be focusing on is about bookkeeping. It's been said that making good judgements when one has complete data, and facts, and knowledge isn't leadership. It's actually bookkeeping. I didn't come up with that wonderful phrase. It's from a person called Dee Hock, and I think that sums it up.

Bookkeeping is not about a library of having books, but it has that analogy here that when you've got all those records, all those documents flying around, whether they're on email, whether they're stuffed in your kitchen drawer, whether they're put into some filing cabinet you've got, you need some way to organise and get those transactions recorded.

All the cool stuff that we've looked at before and all the sexy stuff that we can look at in future episodes like planning, budgeting, making those key decisions, knowing how we can actually generate more value in our business, how we can make more money, and prosper, and thrive, it's not going to happen until you've got an engine.

You've got a bookkeeping system that actually recalls that. Now, when you hear the word bookkeeping, some people’s eyes glaze over. They think tedium, they think tedious, and there is an element of that. In next week's episode, I'm going to be talking to you guys about how we can organise it, the actual systems, you know, what options do you have available.

I'll dip my toes slightly into the water of that, but what I want to talk to you about really today is why you should bother with bookkeeping, what the benefits are, and before we start, let's have a little bit of a history. Now, bookkeeping has a long established history. It goes back at least 7,000 years.

Some people say it goes back even further than that. It can be traced back to Mesopotamia about 7,000 years ago, and we've got records here showing what was being spent, goods received and traded by the Mesopotamians. I'm sure I pronounce that incorrectly. And it was all relating to the taxation of trading of temples.

Some people say it goes back even further than that to ancient Babylon, Assyria and Sumeria where they were recording the growth of crops and herbs. The rationale fast forward several thousand years where we are in real time, those records may have changed in shape and form, but the underlying necessity to have them is still there.

Now, you might be asking, why do we need to bother? For most businesses it might be a once-a-year exercise. You gather up all your bits of paper. You may have some form of records and you take them off your trusted financial person who's going to blend those into something. Now, fundamentally, there are lots of reasons why bookkeeping should be taken more seriously, and it's something we should be doing as a more constant thing here,

and here's some of the reasons I get an overview. First of all, it's a sign of good business thinking. It recognises, and it's a discipline in yourself that recognises the importance that it has. Number two, we've talked about cash. We've talked about liquidity. We've talked about keeping that business going, but it's really key and essential that we know what's going on with cash flow.

Well, that's not going to be easy to note until you've got some form of bookkeeping and record-keeping system occurring. Number three, and there's more, believe it or not, is the backbone of any information system you've got going on. Now, if you like marketing, social media, we know it's important. We know it's important to get a message out there.

Well, in terms of what's going on, are your efforts being well expended? You won't actually know that until you've got some way of actually monitoring and keeping an eye on things going on. Bookkeeping is the same, and when you run your business, whether you are a solepreneur, an acorn-size business, or a big oak-tree-size business, it's very mature being established,

it is critical that you've got some way of having an idea what's going on in your business. Those records are the building blocks. It's the financial engine, if you want, of your business. It generates critical financial information and it helps us give the story to our business. It tells us what profit we're making.

We're telling what customers are making us money. What customers are losing us money. Fourthly, you know, we need those records to actually give us some degree of accountability as we progress in our business and we've set ourselves a plan. And the idea of a plan I'm going to address in future podcasts is we need some degree of accountability.

We need some form of metric. We need some way of actually knowing what's going on. If, unless we have those records organised, unless we have those records we can tap into, we are going to be floundering around like the salmon that's beached on the waterside, and we won't actually know what's occurring.

There are other reasons as well. Typically, there may be what's called a compliance issue. So, if you are registered for taxes, you know the authorities may wish to see what's going on in your business here. It may be once a year if you do what's called your annual accounts. If you are registered for sales taxes, then you may need to do those on a quarterly basis.

So, whatever the time frame is, we need to keep that for the authorities. In most jurisdictions, believe it or not, keeping records is actually a legal requirement. Now, I don't work for the legal authorities. I'm aware how they operate, so again, a legal compunction is going to be quite key as well. Other reasons I could throw in there.

If we think about all those treasured moments in our life, we use videos, we use pictures. Bookkeeping, for me, is that mechanism that we can adopt to capture those precious moments in our business. Those precious moments are the records and the transactions that occur. Depending how active and large your business is,

that could be tens of transactions every day. It could be hundreds of transactions every day. It could be thousands. Imagine that chaos that's created if we've got those records all over the place, and so bookkeeping gives us a way to structure it, to organise that. And from a financial point of view, by the way, if you are somebody who has an external advisor, typically when you go to that advisor and say, I need you to prepare something for me, like my accounts, my tax returns, they will typically look at the state of your bookkeeping records and decide what they're going to charge you accordingly.

So, keeping those bills down is got to be a good reason if nothing else. Now, folks, you’ve got different mechanisms that we can adopt here. We can do this manually. You know, we can get the old fashioned sheet of paper. We'll record it that way. That's great. We can use that world of spreadsheets. We can go digital.

Lots of options present themselves to us. In next week's podcast, I'm going to drill down deeper and give you options and ways that you can actually record your financial transactions. For me though, have that in the back of your mind. Have that reinforced. Have that as the engine in your business. If you do not have good records, you will not be able to answer that question -

How much money am I making today? Am I making the money that I thought I would do? Which customers are losing me money? Where can I actually best apply my energies, and my resources, and my time to actually survive, prosper, and sail these choppy waters in front of me. Those records are your video camera.

Those are the pictures that you capture to give you the words to your business story. In next week's podcast, as I've said, we're going to explore the different ways you can keep those records here, but for now, it's about the importance of those records itself. Guys, I hope you've enjoyed this podcast. I've enjoyed doing it.

I hope there's been some value that you've taken away from that. Obviously, I'm not going to be embarrassed if you want to share this podcast, give me your reviews, give me your feedback. I always love feedback. See what listeners are saying. So, if you've got some topics you want me to explore, check out our website.

Uh, there's a section there that you can add questions. Go onto iTunes, Spotify. There are other podcast platforms there and I'd appreciate your endorsement, your thumbs up, your rotten tomatoes. Have a great week. I'll talk to you next week. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.

We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.