A Bookkeepers Responsibility To Their Clients

Every Company requires a bookkeeper to properly function but the duties and responsibilities vested in a bookkeeper can vary from company to company depending on the size of the enterprise and the manner as to the distribution of duties among its employees. However, notwithstanding the type of company, bookkeepers deal with at least the mandatory facets of the financial record-keeping of a firm. Bookkeepers are part of a company’s accounting department or in smaller companies are wholly and solely the accounting department, who engage in the day to day execution of financial transactions and record keeping. Bookkeepers are even sometimes regarded by business and financial institutions as the backbone of an organization.

Among the typical tasks a bookkeeper would execute on a day to day basis are the management of payable and receivable accounts, update of profit-and-loss statements, balance sheet and trial balance, establishment of BAS and PAYG liabilities, reconciliation of bank statements, and recording of financial transactions. Bookkeepers are also often responsible for the recording and calculation of the payroll function and often are responsible for the process of transferring the funds to the employees.

Bookkeepers are generally the individuals responsible for coordinating and constructing a Company’s profit and loss statement over any given time frame. They therefore have to ensure that every account in the Chart of Accounts stays in balance on at least a monthly basis and properly investigate any financial transactions within the company that are not routine or appear out of the ordinary. By doing this a bookkeeper is able to be a balance and check for staff members and privileged stakeholders who may be out to defraud or embezzle funds or liquid assets of a company.

In executing the tasks above it is a bookkeepers responsibility and professional obligation to represent their company or employer by conducting themselves with a high standard of honesty and integrity when dealing on behalf of a company. A high level of confidentiality and discretion are required when dealing with the financial matters of a company as many issues that a bookkeeper may deal with are of a sensitive nature. But beyond this it is highly likely a bookkeeper will also be exposed to sensitive details of individuals within the company including staff and even the shareholders of a company and for this reason it is important that the individual entrusted with these privileges must be trusted to manage this information appropriately.

Bookkeepers are often called upon to provide expert opinions in regards to internal operations from a financial perspective primarily because they have the best understanding of the financial day to day operations of a company. A bookkeeper will often deal directly with the directors or shareholders of the company whilst the company is going through a contracted or expansive business phase as directors and shareholders need to keep their finger on the pulse at a greater level than usual as this is generally a more volatile time for the company.

Finally, it is important that a high level of communication between the bookkeeper and management exists as this fosters an environment for business success. At all times the bookkeeper is responsible to look out for the best interests of the business and not their direct manager as a managers view can sometimes become clouded by the opportunity of personal gain which presents itself when a high level of autonomy and resource is left at a managers disposal. For this reason it is important that a Bookkeeper has access to the directors or shareholders of a company.

Outsource Bookkeeping to a Bookkeeper

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In today’s world, continual cost cutting and innovation businesses are trying to determine how they can successfully reduce overheads, increase profits and deliver a better product or service than last year to stay ahead of the competition.  One way businesses are achieving this successfully is through the principle of outsourcing.

Outsourcing has penetrated nearly every major identifiable business department in the western world whether it be sales, customer service, advertising, production and even bookkeeping, accounting and financial management. This trend in itself proves that the expertise is there so why not seek it out and take advantage of it? Well, the reason that businesses often do not consider this as an option is management do not want to risk compromising the products or services that they deliver to customers.

If outsourcing can be achieved successfully at a basic level without compromising the quality of a business’s products or services can this be done across all business units? Time has proven that outsourcing can be achieved with a level of success as everyone will have experienced the product of outsourced sales or customer service when engaging multi national and international companies. But What if a business considered outsourcing the bookkeeping and accounting functions in its operations? Could a business unit that is so critical to everyday operations and carries a high level of information sensitivity be successfully outsourced?

When somebody thinks of the term “outsource” they generally think overseas but this is not always necessary to achieve the results that are sought after. This is true especially if someone were looking to outsource a business function which requires a greater level of knowledge and expertise of national law and customs they would feel more comfortable outsourcing domestically to a business which specializes in that particular need. In today’s marketplace in Australia the domestic market is very competitive in the industry for the outsource bookkeeping and accounting services.

Today, if a business requires personnel to execute bookkeeping or accounting functions that business would typically first look to employ somebody internally to fulfill this need. However there are a number of factors that should be considered if a business is seriously evaluating whether to hire internally or engage an external accounting or bookkeeping firm to fulfill the immediate and foreseeable financial needs of the business.

Overheads are one of the greatest considerations of taking on extra staff. Beyond what the basic wage and entitlements are of employing somebody you also need to consider other employment costs. Other employment costs which a business takes on generally with a new employee are the recruitment and training costs, staff amenities (tea and coffee etc.), additional office space, cleaning costs for the additional office space. The list could continue on but these are some of the main costs incurred when taking on new staff. But what if a business could engage someone to take care of the businesses bookkeeping and accounting requirements without having to introduce any of the overheads?

Engaging an external domestic bookkeeping or accounting firm could be a game changer for many small and medium sized businesses. Having a professional bookkeeper or accountant that can pick up the workload of a business without introducing the overheads listed above is probably something that many businesses have not even considered and have just come to expect holistic employee costs a bi-product of doing business. This does not need to be the case though as we will now explore the advantages of outsourcing the bookkeeping and accounting functions of a business.

The advantages of engaging an external or public bookkeeper or accountant for the financial requirements of a business are as follows. A public accountant or bookkeeper must keep up professional development requirements in order to maintain their registration with the tax Practitioners Board. Both accountants and bookkeepers are required to have specific qualifications in order to practice in the industry this ensures that the service which is delivered is generally of a high standard. In comparison to this internal bookkeepers or accountants require neither in order to execute their job function.

Further advantages of engaging a public bookkeeper or accountant are the reduction of overheads which include all costs which would be incurred in employing a staff member (see paragraph 6). In some cases it may also negate the requirement of having a physical office where over the counter service is not required. Also the requirement of having to manage bookkeeping or accounting staff can also be bypassed, where a strict criteria of deliverables exist and are communicated to the bookkeeper or accountant effectively.

Baring in mind the advantages of engaging an external/public accountant or bookkeeper a business manager should strongly consider their options when confronted with the opportunity to make this decision.

If you are considering outsourcing your bookkeeping follow the link to find out more information.

Bookkeepers Rates and Charges

One of the first considerations when a business manager decides to engage a bookkeeper is the cost burden the business will have to bare. Cost in most cases is the primary determining factor which determines the caliber of bookkeeper that a business will engage. Cost will always be connected to the workload variable which is influenced by the size of the business, the number of transactions the business engages in and the information that a business manager desires.

Where a large workload exists a bookkeeper may be required to manage the workload and provide input on a daily basis to ensure the business operates at the level dictated by management. Where the workload is at a smaller level a bookkeepers input may only be required on a weekly, fortnightly, or monthly basis and in some cases even quarterly. Generally bookkeeping services are charged out on an hourly basis however, bookkeepers are starting to move towards a fixed fee scenario because this is more appealing for a business manager as it provides certainty and can easily be budgeted for.  There are a number of elements which need to be considered which could affect the cost of a bookkeeping service for a business, these may or may not be relevant to each business but will have a bearing on cost, these are as follows:

Find the Base Rate

Business managers now within the current economic climate are often looking for a quality and cost-effective accounting service. The downward pressure this has on bookkeeping service providers ensures that a business will easily be able to locate a bookkeeper at a cost which reflects the bookkeepers rates that had been budgeted for by management. But the cheapest is not always the best so a business must be careful which bookkeeping firm they engage to fulfill their service requirements as this can have dire financial implications for a business if the bookkeeping is not done properly.

Get to Know the Business

In order for a business manager to understand the amount of time which would is likely be involved in  managing and executing the bookkeeping tasks they must look at a few general aspects of the business and consider the following:

Does the business currently use accounting software to manage the bookkeeping functions?

–          If so, how effective is the current software at executing tasks in a time efficient manner and which also produces the features that a business requires?

–          How many invoices does the business send out per day/week/month?

–          How do customers pay for their goods/services? Is this a very manual process and can it be streamlined?

–          How are the suppliers managed and paid? Is there a better way to manage this?

–          What other time consuming tasks exist which require a high level of manual input in order to execute?

The Three Month Review Policy

A business manager should take the time to review with the bookkeeper the time it takes to execute the tasks required to fulfill the expectations of the manager. This approach will enable the bookkeeper and the business manager to discuss a new price equilibrium which is fair for both parties after the bookkeeper has experienced role and what is required of the role. There may be a large + or – time variance compared to what was initially thought which may provoke a discussion regarding internal process improvement. A process improvement discussion may result in the form of new software being implemented which may be able to automate processes currently done manually or the removal/addition of processes which could add value to the business.

Further Notes To Consider

Bookkeeping is no longer what it used to be due to the introduction of new legislation which governs the provision of bookkeeping or Business Activity Statement services (BAS) and is enforced by the Tax Practitioners Board. This in turn has led to the standard of bookkeepers greatly increasing over the past 3 years as a number of rogue operators have been removed from the industry. This has been a catalyst for a number of positive and negative aspects for a business manager wanting to outsource the business’s bookkeeping requirements. A positive aspect is there is now a minimum standard of learning and qualification which is required for a bookkeeper to be eligible for registration with the Tax Practitioners Board so to provide BAS services. This ensures a business manager that if they engage the services of a BAS agent then they are generally assured of a quality service. However with this has come an increased cost to bookkeepers attaining this level of qualification and certification which will manifest in slightly higher fees for businesses than prior to the new legislation being introduced. Ensure when you engage a bookkeeper that they are a registered BAS agent to protect the financial health of your business as a bookkeepers work will generally have powerful tax implications for a business.

The Accountant and Bookkeeper Relationship

An Accountant and Bookkeeper are often confused to be similar in meaning and even intertwined. Whilst both roles contain elements of the other Accounting and bookkeeping do differ, but they work hand in hand in providing the best financial services to businesses. The truth is, they offer different kinds of services and are usually combined to come up with better outcome. And it is the best relationship between the bookkeeper, accountant, and client that makes business environment and the life of everyone in it simpler and easier.

In a general sense, the daily functions of a business can be executed by bookkeepers at lower rates when compared to the rate paid to accountants including BAS returns, Accounts Receivable, Accounts Payable and Bank Reconciliations. Bookkeepers have an option to notify and defer recording complicated transactions beyond their knowledge and skill level for a tax agent or accountant. Note that accountants better understand taxation law and generally get the best possible outcome for their clients when it comes to large capital purchases, lowering taxable income, and business structure.

Bookkeepers are able to raise any issues with the business accountant year round rather than having to wait until the end of the year. In fact, a business’s financial records for the fiscal year will be as accurate and organised as possible provided that the accounts were prepared by a knowledgeable and experienced bookkeeper rather than by someone who has no know-how and/or experience. Managing a business’s accounts in this manner makes sense financially as the fees differ significantly between bookkeepers and accountants. Consequently the accountant’s time will be freed up so they can perform their other role of being financial advisors as they work with their client in strategic planning, cash flow budgeting, and business expansion. The accountant’s ability to fulfill their role strongly relies upon the bookkeeper taking good care of the daily base compliance and accounts.

When it comes to the question of whether an accountant or bookkeeper should be hired for a business, the answer is both. But there are a number of factors you need to consider when considering what your business will require. The kind of industry as well as the level of expertise that a company requires needs to be carefully considered. The structuring of a business’s services as well as where in the industry the business fits: is it at the luxury or budget end of the market.

The most important factor which will be considered is the financial position of the business at the point in time a decision needs to be made about the bookkeeping and accounting services. After considering these factors you will be best equipped to make a decision as to what your business bookkeeping and accounting requirements are to ensure the best outcome for a business.

Take into consideration the fact that accounting itself serves as a language on its own sense. This means that the staff or consultants you hire need to have a thorough knowledge of bookkeeping and/or accounting so they are able to easily explain concepts to the business manager. Whilst bookkeepers and accountants are typically labeled mundane or boring it is very important that they are transparent and honest in all business dealings and ensure information is shared where appropriate with other internal and external stakeholders. Most bookkeepers and accountants are very accommodating and willing to answer any questions you would like to raise or any confusion that requires clarification. Often bookkeepers and accountants take satisfaction out of seeing the expansion of a business and for their clients to fulfill their business goals.

It is advisable from the moment you start your business to consult a bookkeeping or accounting professional as early as early as possible. This will help you to sort out information and data from the beginning so you do not encounter huge compliance and/or operational problem that may hamper your business’s ability to function. Such an approach will provide your business with the personnel and the business fundamentals that will help to ensure your business is not just successful today, but for years to come.

Outsourcing Bookkeeping and Accounting For Your Business

Knowledge can transform lives. Wise use of accounting procedures can transform lackluster performance into outstanding leadership in its industry. If you haven’t given your accounting department much though, and have been content to keep your books clean as a financial record and not a living system, then it might be time to rethink your ways. With financial engineering and new technology these days, you can bring about order from numerical chaos; deliver keen business insights that can be translated into plans, actions and powerful new systems. Then, you can focus on what owners and managers do best: growing your business.

Not everyone is a whiz at math, however. And many a wise entrepreneur or businessman has wept at managing the numbers. Take heart! Why not try out how effective an outsourced accounting department can be? Once you find knowledgeable people with the best practices, people who utilize the power of information technology, you can streamline your financials faster, and growing your business can be a breeze.

Bookkeeping is often viewed as a necessary task that creates no value for businesses, but it is still the core function of every financial department in any business. Without proper bookkeeping, meaningful business analysis cannot be delivered for management to make informed decisions.

Accounting delivers useful business insights to business owners, presenting all the information that is most relevant, in different forms. Empowering you with reports that access your key performance indicators allows you to evaluate your choices and decisions in your operations. When done for the right reasons, outsourcing the back office functions of your business offers many advantages.

Consider these Advantages. During periods of rapid growth, the back-office operations of a company, especially bookkeeping and accounting, often experiences a greater volume of transactions. Seasonal changes and surges in demand may be good for the bottom line but it can also use up the human and financial resources at the core of your business. You won’t want to sacrifice the success of your own business. Outsourcing bookkeeping and accounting activities will allow your managers and key personnel to refocus their business talents on activities that contribute most to its growth.

Expensive operational costs are a clear signal urging managers to consider outsourcing services. If the overhead costs of doing your bookkeeping and accounting in-house are extremely high, outsource these functions if it is no longer viable to do it at a reasonable cost. This reduces overhead and simplifies processes, which translates to reduced cost and increased efficiency.

Companies plagued with a high turnover see outsourcing as a way to provide continuity to the company while reducing risks of mistakes in its operation. It is another way to bring in better management skills to your company via your outsourced partners, in times when your staff does not possess the required skill set.

If one considers advantages, you may wonder what the disadvantages are. The downsides to outsourcing your accounting department have to be considered before making your decision on which service provider to choose.

A major disadvantage of outsourcing the accounts of any business, is the staff are not situated onsite with the rest of the core operations of the business. This could be disruptive to business operations where clear and prompt communication mechanisms do not exist within the business between staff and outsourced accounts personnel. Overcoming the communication dilemma is the single biggest hurdle to having any outsourced accounts operation function efficiently. The best way to do this is to ensure expectations are clear from the beginning between both parties and to make sure there is a strong flow of organized information in the form of regular reports being issued as well as status updates of key business objectives being fed back to business management.

Data security and confidentiality is also a core issue of the outsourced accounts initiative. Expectations once again must be made clear by both parties. However, any outsourced accounting operation should have procedures and systems in place to ensure the integrity of all data is maintained. But even beyond this there is a sensitivity which is associated with the finance function of any business which must be addressed and preserved especially the payroll aspect. Outside of having strong information technology systems and confidentiality agreements in place there is a strong element of trust that exists in these business arrangements, as such both the business and the outsourced accounting personnel need to be comfortable working with one another.

Though physical distance and data security may pose an initial hurdle, consider this: how do you feel about the prospect of having your back office have the accounts up to date and processed by professionals who are qualified and experienced at a minimal cost?

These are some of the key considerations wise business leaders have resolved for themselves in making a choice to outsource their accounting department. Once you’ve found possible partners, weigh carefully the advantages that they bring to your company. You may just find outsourced accounting departments to be the best solution for your needs!