If you currently don't have a bookkeeper working with you in your business, you probably have a really really good reason for that, right?
Well maybe, just maybe it’s not a good reason at all, let me explain myself. Over the years I have had many a discussion with business owners who don’t use the services of a bookkeeper and in my experience, there are five main reasons that I hear.
You think you should do the books yourself because you want to be close to your cashflow.
Your current situation is embarrassingly out of control
You feel uncomfortable sharing confidential information
You think they're expensive.
You don't know how to find a good one.
Does any of this sound familiar to you? I get it honestly, I do, but there is another side to each of these.
You think you should do the books yourself because you want to be close to your cashflow. While I appreciate that as a business owner you want to feel close to what is going on in your business this absolutely the wrong thing to do. As a business owner you should be reading your Financial Statements, the Accounts Receivable and Management Reports not preparing them. Your time and skills are far too valuable to be doing work that others can do and probably do more efficiently because, after all, it’s their area of expertise.
Your current situation is embarrassingly out of control. Believe me I understand this one! Bookkeepers are used to walking into messes and have seen it all before. There is no need to feel embarrassed after all you are busy running your business and this isn’t your area of expertise you didn’t go into business to spend your time pawing over the books did you. You'll probably be astounded at how fast a competent bookkeeper can clean up yours and get you back on track.
You feel uncomfortable sharing confidential information. This is only natural and it's something you will need to overcome to be a successful business owner. You simply cannot maximize the value in your business without a small team of trusted advisors. This team starts with a qualified bookkeeper and a good accountant both of whom abide by a Code of Professional Ethics ensuring complete confidentiality, not only while they are working with you but afterwards too.
You think they're expensive. A qualified bookkeeper worth their salt will be able to offer you a package deal agreeing fees in advance, so you don’t get any nasty surprises when you received the bill. In fact, in many cases an experienced, qualified bookkeeper will be able to identify efficiency savings in other areas of your business, which, in some cases, could equate to more than their fees. A second pair of eyes looking out for your best interests, and you might even end up seeing a reduction in your accountancy fees if the books are prepared to trial balance with all necessary journals posted which will save your Accountant countless time in preparing your accounts.
You don't know how to find a good one. This can be problem especially because anybody can call themselves a bookkeeper. So how do you find a good one? Ask around other local businesses and see who they use and do your own research too. There are several professional bodies offering accreditation to bookkeepers, these professional bodies also ensure that their members follow strict guidelines, have the appropriate insurances, GDPR policies have Anti-Money Laundering compliance in place and complete ongoing training to ensure they are offering up to date advice, especially important where tax matters are concerned as these rules are changing all the time. Each professional body has a directory of members, their level of membership and their competencies. Please see the links:
Association of Accounting Technicians www.aat.org.uk
International Association of Bookkeepers www.iab.org.uk
Institute of Certified Bookkeepers www.bookkeepers.org
All told, a good bookkeeper is one of the best investments you can make in yourself and your business. Not using a bookkeeper can create some nasty problems that cause major stress, here are some of the issues I have come across
Invoices don't get created and sent to customers on time, and some even get forgotten about completely especially if the business owner is working onsite with their customers.
Outstanding invoices don't get tracked and followed up on, when a small business owner uses a word document to create their invoices and overwrites it, they don’t have a clue what invoices are outstanding or how much they are owed.
Bills are paid late, incurring late fees and ill-will among suppliers, this can cause credit accounts to be closed and hard-won discounts lost, which in turn will impact on profit margins.
Cash and inventory go missing, I have seen this many times especially where one partner/director in the business does the bookkeeping. One case I came across, a concerned Director asked me to look at his company books because he couldn’t understand where all the money was going, he thought based on their sales that the profit would be so much higher than it was. On investigation it didn’t take long to discover the Director in charge of the bookkeeping was paying their house mortgage and gym fees from the business account and hiding the payments in General Expenses.
Messy internal processes hamper growth, overcomplicated admin tasks that are time intensive can seriously eat up your time and as we all know time is money.
The lack of current or accurate financial information makes it tough to make sound decisions in a timely manner, meaning by the time you become aware of a problem you may have already lost a lot of money.
It's stressful not knowing how much cash is available, what money is expected in and when and what bill need to be paid.
It's SUPER stressful if cash is tight.
Government and payroll filings get done late, incorrectly, or *shudder* not at all.
Lastly but by no means least doing the books yourself eats into precious family time which can cause friction (and yet more stress).
All of this takes away your time, energy, and peace of mind, not to mention how badly it affects your business's financial results. Most importantly, it keeps you from your REAL job which is to maximize your business's value for you and your family.
Running a business can be tough, but with the right support of a valued bookkeeper your time and mind are freed up so you can focus on customers and gross margin. You get important information when you need it so you can make better more timely business decisions. Your cashflow is properly managed; invoices are going out, money is coming in, and bills are being paid. Your business has proper systems and processes in place to support cash management and prevent cash "shrinkage". And you are well prepared for growth.
Pretty magical, right?
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