Quick answer
Tidy books mean your bookkeeping software matches your bank, every transaction is coded, and your reports show a true picture. Before borrowing, spend a weekend reconciling each bank account, clearing uncoded transactions, separating personal items, reviewing who owes you and whom you owe, and producing a profit and loss statement and aged receivables list. Clean books make your numbers credible and your application faster.
Key points
- Reconciled means your software balance equals your bank balance.
- Uncoded transactions and personal items are the usual mess.
- Aged receivables and payables tell a lender how cash really moves.
- A weekend of tidying saves weeks of back-and-forth later.
There’s a particular kind of dread that comes from opening your bookkeeping software after a few busy months. Hundreds of unreconciled transactions, a “suspense” account full of mysteries, and a nagging feeling that the profit figure on the dashboard can’t possibly be right.
If you’re thinking about borrowing, or just want to know where you stand, one focused weekend can fix most of it. You don’t need an accounting qualification, just a coffee, your bank statements and a plan.
Why tidy books matter when you borrow
Business.gov.au notes that lenders look at your financial health and capacity to repay, and may ask for financial reports and cash flow information. Every figure you give a lender, from turnover to profit to what customers owe you, comes from your books. If the books don’t match the bank, the figures aren’t believable, and the lender will lean on other evidence or ask more questions.
Tidy books also help you. They show whether you need to borrow at all, how much, and whether repayments would fit.
Before you start: gather these
- Internet banking access for every business account, and business credit cards.
- Your bookkeeping software login (or your spreadsheet).
- Receipts and bills from the period, digital or paper.
- A list of customers who owe you money, and suppliers you owe.
- Two uninterrupted blocks of three hours.
Saturday morning: reconcile every account
Reconciling means matching each bank transaction to a record in your books, so the balances agree. The ATO recommends reconciling cash and EFTPOS sales regularly so internal records match external ones.
- Start with the main business account. Work from the oldest unreconciled month forward.
- Match what’s obvious first: regular income, rent, wages, subscriptions.
- Create transactions for anything missing from your books but on the bank statement.
- Flag anything you can’t identify rather than guessing. You’ll come back to it.
- Repeat for every other account: second business accounts, the GST holding account, business credit cards, payment platform accounts.
You’re done when the software balance equals the bank balance for each account on the same date.
Saturday afternoon: clear the mystery pile
Now go back to the flagged items:
- Search your email for the amount or the payee name; invoices and receipts often turn up.
- Check your phone for payment app history.
- Ask your bookkeeper or accountant about anything left.
Code every transaction to the right category. The ATO asks businesses to work out and record the business portion of mixed expenses accurately, so split anything that’s partly personal. If you find purely personal spending in the business account, code it as drawings or a loan to the owner, depending on your structure (ask your accountant which).
This is also where a lot of owners realise how much mixing is going on. If that’s you, our guide on setting up a separate business bank account is a good next step.
Sunday morning: who owes you, and whom do you owe?
Your aged receivables report lists unpaid customer invoices by how long they’ve been outstanding. Your aged payables report does the same for bills you owe. Lenders find both revealing, because they show how cash really moves through the business.
- Mark off anything already paid that’s still showing as owing.
- Chase overdue invoices. A polite reminder on Sunday afternoon is fine; a call on Monday is better.
- Write off genuinely uncollectable debts, with your accountant’s guidance.
- Check your bills are all entered, so your payables are complete.
Business.gov.au’s guide to managing cash flow is a useful companion if the receivables report shows customers routinely paying late.
If this step shows a cash gap, such as a big customer paying slowly while suppliers want paying now, that’s useful to know. It’s exactly the kind of thing to talk through with us; there’s no credit check just to enquire.
Sunday afternoon: produce the reports
With the books reconciled, run these reports and save them as PDFs:
| Report | What it shows | Period |
|---|---|---|
| Profit and loss | Income, expenses and profit | Financial year to date, and last full year |
| Balance sheet | Assets, liabilities, equity | As at today |
| Aged receivables | Who owes you, and for how long | As at today |
| Aged payables | Whom you owe, and for how long | As at today |
| GST or BAS summary | Figures for recent periods | Last four quarters |
Glance at the profit and loss. Does it look right, given what you know about the business? If profit seems wildly off, something is probably miscoded; revisit the biggest categories.
These reports are what your accountant might use for an accountant’s letter if a lender asks for one, and they support your BAS figures.
What are the most common bookkeeping messes?
| Mess | Quick fix |
|---|---|
| Duplicate transactions from bank feeds | Delete duplicates after checking the bank statement |
| Owner’s personal spending coded as expenses | Recode to drawings or owner loan |
| Loan repayments coded entirely as expenses | Split interest and principal (ask your accountant) |
| Card settlements recorded net of fees | Record gross sales and fees separately |
| Cash sales missing | Enter cash takings from your till records |
| GST coded wrongly on some items | Review GST codes on large or unusual transactions |
How do I keep them tidy after this weekend?
- Reconcile weekly, fifteen minutes on the same day each week.
- Snap receipts as you go, straight into your software or a folder.
- Keep business and personal separate.
- Store records for the required period. The ATO says most business records, including banking records, should be kept for five years.
Tidy books are one of the five pillars in our 14-day loan-ready plan, alongside your credit report, ATO access, bank statements and a clear purpose.
Should I get my bookkeeper or accountant involved?
If you have a bookkeeper, this weekend is a great time to work together rather than alone. Share the flagged list from Saturday and ask them to confirm the trickier codings, especially loan repayments, owner drawings, asset purchases and anything involving GST. If you don’t have one, consider paying for a few hours of help to review your work once you’ve done the heavy lifting. It costs far less than having a professional start from a mess.
Your accountant is also the right person to confirm whether your reports are ready to share with a lender, and whether anything should be adjusted before they are.
Illustrative example: the landscaper’s weekend
Illustrative only; not a real business.
A landscaper’s software shows 340 unreconciled transactions across four months. On Saturday morning he reconciles the main account and flags 22 mysteries; by Saturday afternoon, email searches solve 18 and his bookkeeper answers the rest by text. On Sunday he finds three invoices marked unpaid that customers had paid, and two that are genuinely 60 days overdue, which he chases on Monday. His profit and loss now makes sense, and when he enquires about finance for a second tipper truck, the figures he gives match his statements to the dollar.
Numbers you trust, then one simple enquiry
With your books reconciled, you’ll have the most accurate figures you’ve ever had, and that’s exactly what a good application needs. Our enquiry takes about 60 seconds, there’s no credit check when you first enquire, and your details stay with our lending team rather than going out to a pile of lenders. A real person calls and walks through your options in plain English.
Use your freshly tidied numbers when you fill in the form. Accurate answers mean we can match you to the right option straight away, without any back-and-forth.
Frequently asked questions
What does reconciling actually mean?
Matching each transaction in your bookkeeping software to the corresponding line on your bank statement, so the balances agree. The ATO recommends reconciling regularly so internal records match external ones.
Do lenders look at my bookkeeping software?
Not directly, but they may ask for reports from it, such as a profit and loss statement or aged receivables. Those reports are only useful if the books are reconciled.
What if I use spreadsheets instead of software?
The same principles apply. Match every line to your bank statement, categorise each one, and make sure the totals agree.
Should my bookkeeper do this instead?
If you have one, absolutely involve them. This plan helps you know what to ask for and understand what they've done.
How far back should I tidy?
At minimum, the period a lender is likely to look at, often six to twelve months. Ideally, the whole current financial year.
Will tidy books guarantee a loan?
No, but they make your figures believable and speed up assessment. Every application is still assessed on its merits.