Therefore, outsourcing bookkeeping is an ideal choice to handle the finances more effectively. Regarding efficiency and productivity, doing all accounting tasks in-house isn’t the best option. Imagine a world free of bookkeeping where you would spend time expanding your business.
Here is where outsourcing bookkeeping comes in with many benefits to accountants!
What Does an Accountant Do?
Let us look specifically at a few essential functions of an accountant:
Regulatory Compliance
Every firm is expected and required to report its financial status for the year to any regulatory authorities mandated by the law of the land. For example, in the UK, every company must deliver information to the Companies House.
Not only regulatory compliance with government agencies, but an accountant must also maintain the company’s internal schedule for financial reporting.
These internal schedules are usually related to internal audits in the company, and the accountant must ensure that internal financial reporting is done regularly and is error-free so that the audit can proceed smoothly.
Completion of Financial Reports
A company’s monthly financial performance is also an area of interest for its senior executives. Therefore, the accountant must create a financial summary every month.
A daily bookkeeping effort is required for the monthly snapshot, and many companies use bookkeeping software for that. All these monthly flows would be collated to get the annual financial statement.
The annual report would not only help the executives get an idea of the year gone by, but it would be the basis on which budgetary forecasts and target setting for the next financial year would be done.
Analysis of Financial Performance
Several business decisions must be made after adequately analysing the existing financial data. The financial decisions are almost wholly dependent on the financial reports, but even business decisions can sometimes get more explicit focus after analysing the financial reports.
For example, the relationship between advertising costs, revenue generated, and overall expenses can be looked into for two to three years to see the efficacy of advertising. So, an accountant can open up new lines of thought regarding financials and other aspects of the business.
Management Of Data
This is the function of an accountant that is most closely related to bookkeeping. The accountant must use a bookkeeper’s daily financial records to keep his data clean and compliant; this data will later help prepare the monthly, quarterly or annual statements.
Some knowledge of bookkeeping basics is needed for financial data management.
The accountant must know how to do bookkeeping and then utilise that knowledge to develop databases. They must also use this daily and monthly data to maintain financial control of operations.
Financial Face of The Company
Often, a company must interact with external agencies, regulatory bodies, audit firms, and other companies. In such instances, the auditor is the public face of the company’s finances.
The Significant Role of Outsourcing Bookkeeping
Let us now examine the accounting role in a bit more detail to see what areas are where attention is needed and what the things that can cause problems for the company are if they have errors.
Reconciling Regularly
This would need error-free entries into books (in terms of correct numbers) and the entry under proper heads to balance the books on both debit and credit sides. The problem with wrong numbers is that the longer they go undetected, the more difficult it becomes to spot them later.
Keeping Track of Potential Defaulters
Not all clients pay in advance or precisely as per a particular invoice. The gap in every invoice amount and the amount paid must be tracked diligently so that any part of the payment doesn’t get missed later. These gaps must also be scrutinised carefully to ensure potential defaulters can be called out in time and corrective steps can be taken accordingly.
Avoiding Double or Extra Payments
Just like incoming payments, an accountant also needs to have a firm grip on the payments that must be made, so the payments are made only when goods or services are received.
There is a possibility of overcharging, too, maybe not intentionally but by mistake, and those must be diligently checked. When a company has different agreements with different vendors and suppliers, some are paid in advance and some afterwards.
Confusion regarding this might cause some payments to be paid twice, once in advance and then again after receipts, which must be checked against.
Categorisation of Income
Depending on the type of business, the revenue needs to be booked under the proper head. Income from a company could be due to sales, or it could be due to commission. A company might earn interest on its bank deposits or get an income by selling off some of its assets. The correct amount needs to be input into the right category to avoid wrong reporting later.
Currency Conversions
With the increased globalisation of so many businesses now, a good understanding of the dynamics of foreign currencies is essential for an accountant. A company in the UK might have customers from all over the world, and their payments would be converted into British pounds at the prevailing conversion rate on that date.
Most bookkeeping software would be able to update their currency rates in real-time, but the accountant needs to keep a close watch on the daily changes to ensure that every change is updated.
Consistent Practices
This could be a problem when there is a change in the company’s accounting team. A particular accountant might consider a certain income or expenditure under a specific head, and the new accountant who replaces him should understand the records entirely and ensure that he continues the same practice. Otherwise, the books would go wrong.
Tracking Cut-Off Date
Every financial statement has a ‘from’ and ‘to’ date, which means it is created for a specific period of a week, month, or quarter. Every accountant needs to decide whether he would go for the cash accounting system or the accrual system.
This means he could either record an entry into his books only when the money is received or keep the amount on his books as an ‘accounts receivable’. That will ensure that the cut-off date is adhered to.
Suppose the financial report is being made for a month, and a particular invoice is not received till the end of that month. In that case, the accountant can book the amount under accounts receivable. Later, when the money is accepted, he would debit the head of ‘accounts receivable’ and credit the cash head.
Cash Heavy Business
Many large corporations run almost entirely cashless transactions. Still, for medium or small enterprises, most transactions are in cash, while some companies work simply on money. For such companies, the accountant must have a system where the cash is checked and counted daily or even at the end of each shift.
As you can see above, the job of an accountant is pretty challenging both externally and internally. There are so many small and large issues to be taken care of. The accountant might know how to do bookkeeping, but the daily bookkeeping activities might not leave him enough time to do his compliance or analytical work.
Outsourcing Bookkeeping for Improved Efficiency
That is why several accountants and accounting firms are outsourcing bookkeeping work. Outbooks is one such company providing bookkeeping services.
We can do the bookkeeping on behalf of accountants since we are equipped with proper bookkeeping training and bookkeeping software so that there is no gap between the books maintained by the agency and the actual accounts in the company.
Instead of an accountant worrying about how to do bookkeeping and how to take time out from his other activities to take care of bookkeeping, he could very easily outsource the bookkeeping job to us.
This would allow him to focus on his role’s more analytical and regulatory functions.
What Are The Advantages of Outsourcing Bookkeeping?
Additionally, the firm or the accountant would get the following advantages:
- Bookkeeping is a daily task; an outsourced bookkeeper would devote adequate time to it.
- The accountant can have a supporting hand in maintaining daily accounts.
- The accounting team can quickly view the accounts daily without wasting time.
- This time can be more fruitfully spent on the other activities listed above.
- Sometimes, accountants worry about the money that would be spent in outsourcing bookkeeping, but the fact is that this move will end up saving much more money in the long run because the accountant can do his other work well.
Outsourcing Bookkeeping to Outbooks for Efficiency
Reach us at [email protected] or 44 330 057 8597 for all your bookkeeping needs!
