Why Use a Spreadsheet?
When it comes to writing up transactions after-the-fact, using a spreadsheet is often your best bet. Your bank account is almost certainly available online and the transactions can generally be downloaded into a common spreadsheet format (eg.”CSV” – or comma separated values). In fact if you use credit cards, PayPal™, Stripe, FreshBooks™ (i.e. for Billing) or other online systems, you can quickly obtain all of your transaction data without having to re-enter dates, amounts or even elements of the description of your transactions.
Should you Prepare Monthly Financials?
While it sounds like a ‘no-brainer’ to use online accounting software (eg. Wave – Xero – Quickbooks Online) for doing your books monthly and directly importing bank transactions into the software, that often simply isn’t true. ‘Doing a month-end’ is time-consuming and takes a fair bit of skill and experience. In fact a skilled person will likely require about a day to prepare meaningful and accurate financial statements.
In order to answer that question you need to consider these issues:
- do you have the resources on staff to prepare a month-end accurately?
- does management understand how to read the financials?
- do month-end financials provide the best & simplest metrics to inform management?
Very few startups can truthfully answer YES to any of these questions. In my view you need to answer YES to each question if you want to invest in producing monthly financial statements.
Often the online accounts themselves can actually provide some of the best and simplest business metrics…