Your business’s profitability is largely dependent on having a competent, experienced bookkeeper whose accounting processes are rock solid and consistent – not to mention trustworthy. They do, after all, ensure that the business’ financial transactions are recorded properly and in a timely fashion.
Without detailed financial transparency, you risk playing a never-ending game of catch-up with balances, reports, and financial information that help you make valuable business decisions.
How do you address these gaps and issues in the processes and productivity of your bookkeeper? That’s the million dollar question.
Let’s go into some red flags below, as well as how you can mitigate these risks affecting your profitability and growth:
Bookkeeper Pitfalls 101
Unless you’ve done the books yourself, you may not know what to look for as the business owner when examining tasks and processes.
There’s so much to keep track of – from payroll, customer billing, and other business purchases and records – that it’s difficult to know where to start.
Consider the following questions when evaluating your bookkeeper’s performance:
- How proficient are they with Xero and how it’s setup?
- Are they current on best practices for efficiency and expertise? This includes whether other applications should be used, and how to use them to automate manual processes
- Can they provide ongoing and reliable month-end close statements and reports?
- Are they able to provide quick answers to business questions so you can make data-driven decisions?
- Have their numbers been reliable in the past? Do you trust them? If not, why?
- Are they staying compliant with the latest regulations? (This depends on your state and industry, of course)
- How many mistakes have they made? Were any suspicious?
While having a trusted bookkeeper can be ideal, having a dependency on one for an extended period opens the door for potential errors, mistakes, and the possibility of fraud.
The True Cost of Bookkeeping Inefficiency
Once you’ve answered as many of these questions as you can, it’s time to take inventory on those which lack strong processes and best practices, and the effect/cost it has on your business.
Incompetency or Lack of Expertise
This can quickly spell trouble, but it isn’t immediately noticeable if you’re not aware. As a business owner, you wear multiple hats and may not even realize there’s an issue. Unless they’re vetted, trained and properly supervised on an ongoing basis, you have no way of knowing whether they are following best practices and adhering to established policies and procedures. No small business ever succeeds on a hope that something’s getting done right. This is especially true when dealing with transaction processing and coding, timely reconciliations and month-end closing errors.
Accounting and Bookkeeping System Inefficiencies
If the accounting and bookkeeping system is not setup to automate as much as possible and to integrate with all of your financial systems, you’re wasting time and increasing the possibility of errors. Both of those can be expensive. Individual bookkeepers are usually not accounting system design experts, and can’t keep up with the ever-changing world of accounting technology. In addition to optimizing your chart of accounts you should be automating billing, collections, bill payment, expense management, time tracking and more. If your bookkeeper hasn’t set up an integrated accounting ecosystem for your business – you’re wasting money!
Inaccurate, Late or In-actionable Reports
You should be getting actionable financial reports that help you make better, more strategic decisions and grow your business. If you’re not getting timely accurate financial statements, you’re missing a baseline “report card” on your business’s health, and thus, the valuable potential for making decisions to increase profitability gone down the drain.
Fraud or Embezzlement
What happens to your business when your eyes and ears, the employee you trust most is the one stealing? If the person paying the bills also reconciles the bank account, you have a high risk of fraud. Unfortunately, this has become all too common.
BENEFITS OF OUTSOURCED BOOKKEEPERS
It’s often a challenge to find a dependable bookkeeper who knows the latest best practices in small business accounting. With credible bookkeeping services, like the right outsourced accounting solution, however, you can have a fully trained team consisting of a bookkeeper, staff accountant and business coach.
This provides you with all with knowledge of the latest best practices in small business accounting. Making the switch is akin to moving from a flip phone to a smartphone – now is the time.
Using a Xero Centric Smart Back Office that integrates with your financial systems to automate procedures and deliver actionable financial intelligence is the next step. Learn more about The Smart Back Office by visiting our website http://www.alltradesbookkeeping.com.au/
Many businesses are transitioning to outsourced bookkeeping or accounting services as a more cost-effective, efficient and viable alternative to an in-house bookkeeper or accountant. The cost of outsourcing your bookkeeping and accounting makes it easier to budget and helps remove the burden of hiring, managing, retaining and training staff.
We can help alleviate some of the stress from having to hire a bookkeeper by serving as your outsourced advanced bookkeeping and accounting department. Our outstanding client service is provided by our dedicated team of a bookkeeper, staff accountant and business coach that do all the heavy lifting for you whilst providing you with the expertise your business needs to run smoothly, improve cash flow, increase profits and provide you opportunities to build your wealth and lifestyle.
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I am helping a select group of business owners explore what they need to do to instantly improve their revenue, create capacity, generate more profits and put more money in their bank account every day. There is a selection process to get into each group. If you’d like to work with me to design your very own blueprint send me an email at firstname.lastname@example.org with “Profit in the subject line.