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4 Serious Consequences of Neglecting Your Bookkeeping

Bookkeeping is the first and possibly most crucial phase in the accounting process. In this role, a bookkeeper will collect all financial data (from transactions to wages) and organise it into reports that are simple to understand and that you can use to analyse your business later on.

It's all too easy to let the mundane tasks, such as accountancy and recordkeeping, build up into an overwhelming mess. What if it keeps piling on? We have listed four serious consequences of not updating your records regularly.

1. Your Billing Cycle May Get Out of Hand

Even if you make a mental note of who owes you what, remember that we're all human and will make errors from time to time. Are you confident that you didn't forget about the invoice for the customer who has a bad habit of paying bills late?

The longer your company goes without payments due to a lack of timely invoice organisation, the more money your company will lose.

2. Your Company’s Cash Flow Is Left Untracked

If you don’t maintain records, your books will not reflect your company's current financial health. Without proper records, tracking cash flow estimates and statements are difficult or impossible.

It is possible to overlook difficulties such as past-due bills, unsold inventory, or regular variable expenditures like shipping charges or hourly pay if you do not precisely measure cash flow. You can determine your breakeven point if you have a comprehensive grasp of your fixed and variable expenses.

Your cash flow statement outlines when money is received and which invoices need to be paid. A paper trail might show a cash flow issue in your firm. But without accounting, there is no trail—just a pile of papers.

3. Your Options for Financing Become More Restricted

Do you need quick access to funds? If you don't have up-to-date records, your options are restricted. If you approach a bank for a loan without precise financial documents, you will likely be turned down, and a cash advance may be your only alternative.

Would you want to invest in a firm that hasn't updated its Cost of Goods Sold in six months and is unaware of its inventory and profit margins during that time? Most likely not.

Without proof of your financial history, obtaining loans, attracting investors or partners, or selling your firm would be complex.

4. Your Payroll Issues Become More Prevalent

Payroll problems might occur if a system of checks and balances is not in place. You must keep payroll records up to date and pay employees on time—tracking benefits, leave time, costs and other details may get complicated if not kept structured.

Without adequate accounting, you may be underpaying (or overpaying) staff without realising it. Any discrepancies in year-to-date wages will be reflected on the employee's W-2 form from your records, potentially causing tax difficulties for both of you.


Bookkeeping is essential for preserving correct financial records. Aside from the fact that you are obligated by law to keep proper books and records, doing so will save you time and stress in the future. However, tracking down a year's worth of records on your own pulls you away from the day-to-day operations of your firm, and catch-up accounting may exacerbate an already stressful time of year. If you don't have a system in place to manage your records, your accountant will require a lot of time to sift through the mess, costing you an hourly charge that might cost you a fortune.

The Ecommerce Accountant is a well-established organisation renowned for providing eCommerce accounting. We offer accounting software implementation, cashflow formatting as well as decision-making support. Get in touch with us now to learn more about how we can assist you!

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