How Often Should You Update Your Books? Monthly vs Weekly Bookkeeping
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How Clean Books Can Help You Get Business Loans or Investors
November 4, 2025
QuickBooks Tips
If you have a business that you want to grow, you need to understand that there will come a time when you need to take out a loan. The licensed moneylender or bank that you will go to will need to see your books, to assess if you are worth trusting. The one thing that you can do to ensure that you will get those business loans is to keep clean books. A lender will never give a loan to a business that seems not to be able to keep their books organized. They won’t care that you love your business or that you want to buy new equipment; they want to see numbers. This article will present to you why it’s so important to ensure that your books are in order.
Contents:
Why Would You Need a Loan?
Many business owners think that they will never need a business loan. But a loan is not necessarily for when you get in trouble, but for when you want to grow or you want to stabilize cash flow. It is not uncommon for businesses to face timing gaps between paying suppliers and receiving payment from customers. A loan can be a solution to this problem, to ensure that payroll, rent and utilities are covered. Moreover, if you have a store that is more popular during a certain season, you will need some help to survive during the unpopular period of the year. Think of ice cream stores or stores selling skiing equipment.
Expansion is the other reasons why a business might need a loan. Sometimes it’s the perfect time and you have a great opportunity, but you don’t have the money. You might want to open a new location, need to hire new staff or you want to invest in new equipment. There are so many things that you might want to do that would eventually bring more money into the company. As you already know, in the world of business, you need to put money in before taking money out. And when you get an opportunity, you need to take advantage of it.
Why You Need to Keep Clean Books?
If you want to apply for a business loan, your books need to be flawless. Why? Because lenders are taking a risk when lending money, especially large amounts like those usually borrowed by businesses. This is why a bank or lender will only lend to a business that they think will pay back. To put it simply, they are trying to minimize the risk as much as possible. Let’s take a look at some of the reasons why a business that doesn’t keep clean books appears suspicious:
- You might have cash flow problems you are hiding or are not aware of
- The expenses might be understated or overstated
- Disorganization points to poor and unprofessional leadership
- It suggests that tax obligations are not met
- It shows that you don’t value accuracy
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You can contact us anytime if you have questions or encounter a problem with your bookkeeping program.
Other Benefits of Organized Books
Besides the fact that organized books directly impact how a lender will perceive you, there are other benefits too. One of the main ones is that you won’t be stressed when tax season comes around. Which is amazing, because a stressed business owner makes bad decisions, which is exactly what lenders don’t want to see. Moreover, disorganized books prevent you from identifying deductible expenses. Saving money, especially for a small business, is very important. It could actually change the fate of your business. All of these elements play into your being able to take a loan or not.
Think of it this way: You don’t keep your books in order, which leads to not identifying deductible expenses. That further leads to you losing money, and having cash flow problems. You want to solve the cash flow problem by taking a business loan, but you can’t, because your books at not in order. It’s a vicious cycle that you need to avoid from the beginning. Once your books are mixed up, it’s hard to get back on track.
How Books Influence Loan Approvals?
The state of your books directly influences the way your loan application process will flow. The bank or lender will use your financial records to assess whether you qualify or not to borrow a loan from them. You will need to provide your cash flow management reports, income statement, balance sheets and potentially some other documents. If you have your books organized, no matter what document you are asked to provide, you can do it immediately. This automatically shortens the application process altogether. No back-and-forth that information is missing. Everything will just flow!
Furthermore, lenders need to follow strict regulations when approving loans. If checking your books feels like finding the needle in the haystack, they will most likely not approve your application. A lender will also calculate DSCR, which stands for Debt Service Coverage Ratio, which is your ability to pay back the loan. And, as you can guess, the stronger the DSCR, the higher the chances of approval.
You Can Negotiate the Terms
Having clear books gives you the upper hand, which allows you to negotiate the terms of the loan. If you can demonstrate consistent cash flow and healthy profitability, you might get a lower interest rate or a higher credit limit. This allows you to get terms that will actually suit you and make the loan easier to pay back. Everyone would love a lower interest rate, but not everyone can have it. Check out this article by Equifax to learn how to negotiate with your lender.
Why Do Investors Care?
You want to keep clean books not only for lenders but also for investors. They don’t need money back plus interest, but they do want returns on equity. If your books are not organized, the investors cannot assess the worth of your company, which can lead to them deciding not to invest. Having books that reflect the real situation of your business can only help you. Investors will look at your books waiting to see the potential to grow, and messy books won’t show that. Also, you need to understand that an investor is betting both on you and your business. If they don’t see you as someone organized they can trust, they will walk away.
When an investor looks at the books of your business, you want them to see that you are building a dedicated business owner. They don’t want to see incorrect records and cash flow problems. They need to see that you can handle the money that they want to invest in your business. If your books show that you are not good with money, they might invest a small amount, or not invest at all. And, if you want a big and successful business, you cannot afford scarring investors away. You want to present yourself as a trusted and capable partner, and that is impossible if your financial records are inaccurate.
How to Keep Clean Books?
The quickest and simplest answer to this question is to hire a professional bookkeeper. Many business owners try to handle the books of their business themselves, but most of them fail. There are so many things that need to be done to have accurate books. A business owner, who is busy with a million other things, will most likely forgot about the tiny things. A bookkeeper’s job is to correctly record transactions. No other tasks and no distractions. As an example, our team of experts always ensures that all of your data is accurate. A professional bookkeeper’s eye is trained to spot any mistakes from a mile away.
Any mistakes, no matter how small it is, can mess up your records. One transaction that is recorded twice, or not recorded at all, could cause terrible cash flow problems. At Proledge, we offer bookkeeping services that might be a great help for your business. We offer both online and offline services, depending on what you need. Let’s take a look at the advantages of outsourcing bookkeeping:
- You don’t have all of the expenses that come with hiring an in-house bookkeeper; like office, equipment and salary.
- You have access to a team of experts, with knowledge and tools that couldn’t be equaled by just one employee.
- Scalability, as the provider can scale the services up and down depending on the changes happening in your business
Finding the right bookkeeping services provider is an important step that you need to take when building a business. The first thing you want to look for is a company that has experience in the bookkeeping industry. Also, you want to collaborate with a provider that is open to communicating effectively with their clients. At Proledge, we prioritize the relationship with our clients, which is why we are available 24/7. You can check our reviews and contact us for further information!
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