Small business accounting is easier than ever with online services. However, there are still many costly mistakes made. Even the smallest data entry errors could deeply affect every aspect of a healthy business. Here are some types of costs that could be affecting your business due to poor data entry.
Financial Costs
There can be direct financial losses being made because of poor data entry. According to a 2016 IBM estimate, bad data added up to $3.1 trillion per year in costs to businesses.
Reputation
Poor bookkeeping can deeply affect the reputation of a small business. If there are repeated mistakes, the employees, clients, and the general community will see the business as unprofessional.
Potential Client Loss
If the books are unorganized, it can lead to losing clients. There is a possibility that they may be billed incorrectly, which can cause clients to get frustrated and lead to them finding another provider.
Productivity Decreased
There is a large decrease in productivity if the books are unkept. By not properly logging everything, this can lead to a small business needing to backtrack and reorganize everything. The employees would have to chase down the bad data entry to redo calculations, which takes away from their time and efficiency.
Decision Making
When deciding on something for your small business, many analyze its financials. If the data entries are incorrect, this could lead to poor decisions based on false information.
Opportunity Costs
There is a possibility of a missed opportunity if data does not reflect the possibility of change. In addition, if the data is inflated, it could lead to you thinking you had an opportunity and taking a misinformed risk that may be costly in the end.
Legal Costs
Besides a bad reputation, there is a possibility of legal disputes because of:
- Continually overcharging a client
- Underpaying employees or vendors
- Making inaccuracies in tax accounting
Overcoming Poor Data Entry
An easy way to avoid poor data entry is by getting financial advice from a small business accounting professional. They may also outsource a bookkeeper to ensure that all of the numbers are correctly entered and compiled.
