What Financial Red Flags Should You Be Watching?

Not all bookkeeping problems are obvious. Sometimes, the warning signs are subtle, and if you catch them early, you can avoid costly mistakes later. 

Here are three financial red flags to keep an eye out for as you move into the final stretch of the year. 

1. Frequent “Uncategorized” Transactions 

If you see a growing number of transactions sitting in “Uncategorized Income” or “Uncategorized Expense,” it’s a sign something’s slipping through the cracks. 

Pro Tip: Review these weekly so you don’t lose track of what they really are. 

2. Accounts That Don’t Reconcile 

If your bank balance in QuickBooks doesn’t match your actual bank statement, that’s a red flag for errors, or missing transactions. 

Pro Tip: Reconcile monthly and investigate differences right away. 

3. Expense Spikes 

Sometimes costs go up for good reason (program expansion, new supplies), but sometimes they increase slowly overtime and it takes a keen eye to catch what's really happening. Then there are times when added expenses are due to oversights or inefficiencies.  Most of the time, it takes intention to find, research, and evaluate increases in costs. Looking at your expenses deeply, at least quarterly, will allow you to keep your costs down. 

Pro Tip: Compare this year’s monthly expenses to last year’s to spot trends.  

Next Steps: Want help spotting (and solving) red flags? 

We help early education businesses identify issues early and correct them before they become major problems. 

Schedule a Financial Health Check with us today.