Bookkeeping Red Flags You Shouldn’t Ignore
Are You Overlooking These Bookkeeping Red Flags and Warning Signs?
You’re running a small business, juggling a million things, and your books? They’re somewhere between “I’ll get to it” and “Where did that report go again?” Sound familiar?
Here’s the truth: even one small issue in your bookkeeping can snowball into a serious financial mess. At Perlinger Consulting, we help small business owners across Colorado (and beyond) spot and fix those red flags early—before they turn into full-blown problems.
Let’s dive into a few key warning signs we see all the time (and how you can fix them).
1. Bank and Credit Card Reconciliations Are Inconsistent
If you haven’t reconciled your accounts in months—or only do it when something looks off—it’s time for a reset. Reconciliations help you:
- Catch duplicate or fraudulent charges
- Avoid bounced payments
- Keep your cash flow accurate
- Identify bookkeeping errors before tax time
2025 Tip: Many accounting platforms, including QuickBooks Online, now use AI to flag suspicious transactions. Be sure your software is up to date and take advantage of smart alerts.
Solution: Reconcile monthly (at minimum) and automate wherever possible. Most software tools now include bank feeds that can reconcile daily with minimal input from you or your team.
2. Your Profit & Loss Report Doesn’t Match What’s in the Bank
Just because your P&L says you’re making money doesn’t mean you have cash in the bank. If your bank balance doesn’t reflect what your reports show, there may be issues with:
- Unrecorded expenses
- Customer payments not applied to invoices
- Outdated or manual processes
- Misclassified income or expenses
2025 Tip: Leverage visual dashboards and real-time reporting tools to compare your P&L against your actual bank balances. Platforms like QuickBooks Online, Xero, and Zoho Books offer robust reporting modules that can help bridge the gap between reported income and available cash.
Solution: Build monthly routines for comparing key reports: P&L, balance sheet, and statement of cash flows. Look for discrepancies and adjust immediately rather than waiting for year-end.
3. You Can’t Tell Who Owes You Money (or How Much)
When your accounts receivable is a mystery, that’s a major problem. If you’re not tracking who owes what—or not following up on unpaid invoices—you’re basically leaving money on the table.
Educational Insight: According to a 2024 Intuit survey, small businesses that don’t automate invoicing wait an average of 39 days longer to get paid than those who do.
Solution: Run A/R Aging reports every week. Create standardized processes for follow-up reminders, past due notices, and finance charges. Automate where you can, but review regularly to ensure accuracy and professionalism.
4. You’re Still Entering Everything Manually
Typing in every transaction by hand? That’s a recipe for errors and wasted hours. Manual data entry slows you down and increases the risk of mistakes.
Educational Insight: The IRS estimates that over 40% of small business accounting errors result from manual entry, miscategorization, or data duplication.
2025 Tip: Many banks now offer direct feeds with enhanced detail, including merchant names and categories. Connect your bank and credit card feeds directly to your accounting platform to eliminate double entry and reduce human error.
Solution: Let software do the work. Set up automated rules for vendor names, payment categories, and recurring transactions. Use batch entry for one-off situations, and review transactions weekly to maintain accuracy.
5. You Rely on Your Gut More Than Reports
We hear this a lot: “I just kind of know how things are going.” While intuition matters, accurate accounting is what helps you:
- Know when to invest
- Decide when to cut back
- Understand your real financial position
- Make strategic hiring and inventory decisions
Educational Insight: A 2023 SCORE report found that small businesses using financial reports to guide decisions are 2.5x more likely to grow revenue year-over-year.
2025 Tip: Use mobile apps that connect to your accounting software to check financial health in real-time. Look for KPI dashboards, visual cash flow graphs, and forecast tools that help simplify complex decisions.
Solution: Review your reports monthly with a trusted advisor. Compare actual vs. projected performance. Identify what’s working, and make informed decisions based on data instead of stress or guesswork.
Bonus Red Flag: Your Bookkeeper Isn’t Communicating
If you’re unsure what’s happening behind the scenes, or you’re always following up for answers, that’s a red flag too. Transparency and proactive communication are just as important as the numbers themselves.
Solution: Ask your bookkeeper for regular updates and walk-throughs of your reports. Make sure they explain what they’re doing and why, in terms you understand. Bookkeeping should feel like a partnership, not a guessing game.
Let’s Clean Up Your Books (and Keep Them That Way)
Red flags aren’t always obvious until it’s too late. That’s why our team at Perlinger Consulting takes a proactive approach to small business bookkeeping. We specialize in accurate accounting services, accounts receivable automation, and QuickBooks consulting designed just for small business owners.
Need help spotting issues in your books? We’re just a phone call away.
Call Glenn at 720-290-4389
Visit: perlingerconsulting.com
Check us out on Google: Perlinger Consulting, Centennial CO
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Disclaimer: This blog post is for informational purposes only and does not constitute financial, legal, or tax advice. For guidance specific to your situation, please consult with a certified professional. This post may include links to third-party tools or services; Perlinger Consulting makes no guarantees regarding their effectiveness or accuracy.