How Bookkeeping Helps In Managing Your Company Finance
For any business, the financial side is the most critical area that should never be taken casually. The accountant and bookkeeper are two persons whom you can employ in your company to keep things in order. From maintaining account books to filing company tax returns, these two professionals look after various responsibilities along with the bookkeeping and other aspects that are required to run a business smoothly.
There is a little difference between the two roles, and both persons have to work together to keep the business running. In this blog, we discuss those differences and the importance of a bookkeeper for managing your company’s finance.
How Is A Bookkeeper Different From An Accountant?
If you own a small business, you have to handle a wide range of tasks. To generate revenue, you have to keep things running, meet customer satisfaction, and regularly check the finances. Keeping track of the financials can be challenging because it involves lots of information and thus needs more attention than any other aspect. That is why we always recommend hiring both an accountant and a bookkeeper.
The jobs of bookkeepers and accountants are different. Accountants have to take care of the following responsibilities.
- They have to prepare and lodge statutory returns.
- They need to offer advice on legal entity structures.
- In addition, they should also provide general financial advice to the owners.
In Australia, accountants become members of a statutory association. Here, qualified and registered accountants are called CAs (Chartered Accountants) or CCAs (Chartered Certified Accountants).
On the other hand, bookkeepers of a small business have to handle many different responsibilities. However, they have to primarily focus on arranging, taking records of and making reports on the financial transactions as part of the business operations. Currently, bookkeepers need to do other extended duties also, which include:
- Training clients to operate accounting software.
- Implementing inventory control processes and document management to create business efficiencies.
- Implementing point of scale (POS) systems to capture daily transaction records in a retail environment.
- Developing, implementing, and reviewing internal business operations.
Sometimes, you may find that a bookkeeper has expertise in an area of specialisation. Therefore, if you know about that area, the bookkeeper will be the best person for that.
What Are The Specific Duties Of A Bookkeeper?
Here we discuss some of the responsibilities a bookkeeper manages to keep the business running smoothly.
Monitoring The Daily Transactions
A bookkeeper can look after the recording of daily bank transactions. If you use Xero accounting software for your company, you can hire a Xero bookkeeper Perth who will use the automatic bank feeds for this purpose. It is much easier for them to track the business cash flow from the bank statement lines fed into the accounting software. In addition, it also saves a lot of time on data entry.
Sending Invoices To The Clients And Managing The Accounts Receivable Ledger
It is usually the job of a bookkeeper to prepare invoices and send them to the clients. They also take care of the accounts receivable ledger.
Handling The Accounts Payable Ledger
Until a specific point in time, bookkeepers usually make all the payments on the company’s behalf. It includes expenses, cost of supplier invoices, and managing cash.
Monitoring The Cash Flow
A bookkeeper also needs to keep an eye on the cash flow to make sure the business does not face any shortage of money. Bookkeepers usually do it by checking the balance of revenues to expenses. If they think that the company needs more cash, they either take action or provide valuable advice to the owner.
Preparing Account Books
It is the bookkeeper’s job to make sure that the accounts are kept updated so that the job of the accountant can be easy. It allows an accountant to use their knowledge and skills to report to the board, make business recommendations, and file company tax returns.
To summarise, the bookkeeper looks after the daily works so that accountants can focus on other strategic financial operations. Therefore, without bookkeepers, it will be difficult for accountants to do their job with ease.
Read More: Beginners Guide To Lodge The BAS Statement In Australia
How Can A Bookkeeper Help Your Business?
In the starting phase of your business, you may choose to manage your own accounts. But after a certain point of time, you may be required to hire some professional to do the job for you. Here we discuss five different ways a bookkeeper can offer you help.
You Can Focus On Business Strategy
A bookkeeper tracks all the details and puts the records in the accounting software. As your business grows, you will find it highly challenging to make time from your daily business schedules. But when you have a bookkeeper, they can do the accounting for you while concentrating on other duties.
Reduce The Accounting Costs
Instead of keeping an accountant for managing daily bank transactions and payroll services, you can consider hiring a bookkeeper. It will save a lot of your money.
A Bookkeeper Will Keep An Eye On The Cash Flow
If you do not want your business to run out of money, the cash flow should be regularly monitored. A professional bookkeeper successfully does this duty, so you will never have to worry about this matter.
A Bookkeeper Can Access Vital Figures
Keeping an accountant to manage the monthly business reconciliation and reporting will be necessary. But, if you need to get financial information in the middle of the month, you have to approach your bookkeeper.
A Bookkeeper Keeps Control Over The Financial Data
As a small business owner, it may be difficult to afford to hire a professional accountant. This is the reason why most accountants in Australia work part-time for their clients. Using top-quality online accounting software makes their job much more manageable. It also allows a bookkeeper to work on the same data as the accountant.
Whether you do the job yourself or employ someone or go for outsourcing, bookkeeping should be a vital part of your business. Without a proper bookkeeping system, your accountant will not get a clear picture of what is going on and cannot make strategic decisions.