Four Ways to Help Clients Better Understand Balancing Books

Gina Deveney
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Many clients do not take the time to balance the books properly. Other clients are happy to let an accountant balance their books but do not make time to study or understand the information the accountant presents. It is your job to help clients understand why balancing the books is important and what it teaches about their finances. After all, balanced books are a central part of basic accounting.

The first way to help clients understand balancing the books is to explain that the debit and credit columns must balance out. If these two columns do not balance, it means that there is an error somewhere in the books. These types of errors include anything from a forgotten expense receipt to a typographical mistake during the data entry process.

Many clients who run small businesses rarely think about why the books need to balance out. In their minds, as long as their online banking software shows they have money in their account, everything is fine. It is your job to explain that, despite online banking and other technical changes, understanding basic accounting is still an important part of managing a small business.

That means the second way to help clients understand balancing the books is to explain that the only accurate way to determine how much money they have available to them is by balancing their debits and credits. Online bank balances show money in the account, but they do not show upcoming debits that have not yet hit the account. Nor do online bank balances show overall profit or loss for the quarter or year.

Talking about overall profit and loss is the third way to help clients understand the importance of balancing the books. Explain that it isn't about how much money they have in their bank account right now; it's about their overall profit or loss over a period of time. It is possible to have money in the bank but still be running a loss. Only by balancing the books is it clear whether a small business is making a profit or slowly losing money over time. This is why bookkeeping is one of the most important parts of running a small business.

The fourth way to help clients understand why a grasp of simple accounting is important is to explain that balancing the books helps clients understand what to do next. If balancing the books consistently shows a profit, for example, the odds are that the client's small business is on the right track. If balancing the books over time shows a stretch of profits followed by loss, it is possible for clients to use this information to change their business strategy before an additional series of losses.

Use these tips to help clients understand why balancing the books is important and how to use the information provided during the book balancing process to make smart choices about their small business and its finances. Once they understand what it means to balance the books, they are more likely to learn from the process.


(Photo courtesy of (PANPOTE)/


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