Be That Business Newsletter #13: Three hacks on automating in your business

During the course of my work, I have found that over-automation can cause havoc. That is because over-automation assumes that life is neat and tidy and always fits into a pre-prescribed box.
I have seen CRA audits and reviews deny legitimate claims because the paperwork does not match what was entered on the bookkeeping, and these audits take increased work, effort, and time to fight and support.
I have seen business decisions made based on data that assumed expenses were business that were actually personal.
I have seen analysis done on monthly reports in which the dates of the expenses are incorrectly allocated.
I have seen legitimate business expenses and GST/HST Credits missed and not claimed.
Life is not neat and tidy, and doesn't fit into boxes! Does that mean that automations are useless and to stay away? Not at all! Automations are a huge time saver when used with intent! But the key is, they need to be used with intent!
In fact, you can exponentially increase the time saved and reduce work required when you couple automations with Real Life Processes! This month's hacks center in on exactly this! A hack on how to get more done by doing less work?! Yes please!
These hacks are based on the use of the "Bank Feed". The bank feed is the information from your bank account and credit card flowing into your bookkeeping software each month, sitting on a holding platform, waiting to be 'classified' (entered as a transaction into the bookkeeping, or matched to a transaction already entered). Did you know you can automate some of this classifying to be hands free?!
Even if you don't have a bank feed, these hacks are still extremely useful, as many people work off of the bank statements to make sure all the expenses are entered/recorded.
Also, even if you do not do your own bookkeeping, you are paying someone else to do your bookkeeping. These hacks will help keep your bookkeeping costs low and more accurate!
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3 Business Hacks for July:​
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1. Automate Bill Payments and Entries - You can and SHOULD enter and claim 100% of your business expenses, even if they are not yet paid. For example, if you had a cell phone bill in October, November, and December, but did not pay them until January... don't miss claiming the expenses in their proper month! In this scenario, if all the expense is recorded in the following January when the three bills are paid, then the monthly taxable profit for October, November and December will show higher than actual. Also, the January report will show a profit much too low, and your business will look like it is not performing as well. The way to correct this is to put in the bills monthly. But this is only part of the hack; you still will need to reconcile the bank. To reconcile the bank when there are partial payments on these bills ($200 here, $300 there), is time consuming! Look at all this work! You cannot use your bank feed to put those in correctly; you have to manually enter a partial payment. The automation only comes in by classifying the amount being fed in from the bank activity. If you were to automate the entry of these partial payments of $200 and $300 here and there, for example using your bank feed to automate every online bill payment to Koodo as "Cell Phone Expense" and back out GST/HST, not only could the expense and the GST/HST not match the bills and be more work to support to CRA in an audit, you will also not have accurate reports as described above! So no automation? OR... Work WITH the automation! Set your Cell Phone bills to be paid automatically, in full, a few days after the bill is sent out (you can usually set this up via your provider). NOW you can set your bank feed to automate every payment to that company as "Cell Phone Expense, back out GST/HST", and the full expense will be recorded in the correct month!
   The beauty of this hack is that you no longer have to waste time even PAYING the bill! You no longer have to waste time ENTERING the bill! You no longer have to waste time ENTERING the bill payments! The reports will have the expense and GST/HST Credits at the correct amount, in the correct month! And a CRA Audit and Review will pass easier and with less work. By doing LESS WORK you have MORE DONE! (I think this hack actually eliminates ALL the work involved!!!) I have heard warnings; "Don't automate bill payments, as then you don't look at the bills". But, you should still look at your bills. Automating payment doesn't prevent a quick look! But you take a quick look, then file it away! Done and Done! Work Smarter! Not Harder!
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2. Loadable cards don't actually save time - I have seen business owners buy pre-paid loadable cards/gift cards to purchase Starbucks or Tim Horton's and the like. But, if you take a look at that receipt, there is no GST/HST! Plus, it does not list what was purchased, because nothing was actually purchased! So, if reviewed in an audit, CRA would disallow this as an expense and no GST/HST credits would be allowed. Only the actual purchase receipts are considered support, no matter how they were paid. And can you link up a bank feed to your gift card balance? No. Now there's even more entry of the individual purchases paid by the gift card, or missed/risked expense claims as people assume the gift card purchase would pass a CRA review. Loadable Gift Cards are the opposite of time savers.
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3. Don't Use Cash + Be Predictable - If you are aware that every bank purchase and credit card purchase is going to be fed into your bookkeeping software ready to be classified, be predictable! Only buy gas at the gas station, for example. Don't purchase personal items with your business credit card. If you follow rules in real life, you can create rules on your bank feed to mirror them. Every time you introduce something different or unpredictable, you have to find and correct that item on your bank feed, and this takes time. And every time you purchase something with cash, you have hope you don't lose the receipt, and then you have to manually enter that transaction! This takes time AND introduces the risk of missing the expense claim! Life happens, and the bookkeeping can reflect what happens in life. But the more you set up processes to reduce the unpredictability of life, the less time and money you are going to spend on your bookkeeping :)

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What are your personal tips and tricks for creating efficient processes? I'd love to share them in an upcoming newsletter, and give a shout out to your business!
Be Intentional Today!
Get out there, and Be That Business That Thrives!

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