Any business that earns money and spends it needs a bookkeeper. We often hear that they are the guardians of the financial records of companies. But most people are unaware of what precisely a bookkeeper does. In this blog, we are breaking down the regular day-to-day work of a bookkeeper and also exploring if this profession is on its path to ruling the world. But first, let’s quickly understand who a bookkeeper is.
Who is a Bookkeeper?
A bookkeeper is a professional who records and manages a business’s financial transactions, such as expenses, revenue, sales, invoices, purchases, etc. A bookkeeper is part of the accounting department, and they guarantee the upkeep of a company’s financial documents, known as the ledgers.
This accounting position requires excellent time management and organisational skills simply because it involves daily updating of financial information to appropriate accounts. A bookkeeper requires a good amount of training; however, there is no requirement for a degree to begin working in this field.
Now that you know who a bookkeeper is, let’s look at their skills, day-to-day work, and other aspects.
7 Tasks That a Bookkeeper Performs for a Business Everyday
- A bookkeeper uses advanced accounting software to enter your daily transactions into an organised system
- He assigns each transaction to an appropriate account so it can be tracked better.
- A bookkeeper evaluates these transactions to generate a weekly or monthly report that gives helpful information on your business’s performance.
Recording each transaction helps a company evaluate its incoming and outgoing money, so there is no wastage or chances of fraud. This data entry work saves time and money for businesses in the long run.
Besides recording your daily financial transactions, a bookkeeper also records your daily credit card and petty cash transactions. This helps to identify which department or person is spending how much of the corporate money, which reduces wasteful expenditure.
When your business blooms, verifying if you have been receiving all the goods for which you have made payments becomes difficult. Expense tracking comes in handy in this aspect. Simply keeping an eye on your finances can help curtail financial fraud significantly. It also leads to greater accountability for the money your business is spending.
Management of Invoices and Receipts
Is your business witnessing an influx of customers? You may be finding it hard to remember which of your customer has paid their dues and which of them has outstanding due. Bookkeepers can also do this process of collecting money owed by customers while he is managing your company’s financial records.
A bookkeeper will match the goods sent with the payments received to identify any outstanding amounts. They will then send invoice reminders to customers who need to pay their dues. A good bookkeeper also takes great care to pay unpaid invoices on time and tracks any overdue payments.
Maintaining cash flow for a business is a vital aspect that a competent bookkeeper can easily handle.
Processing of the Payroll
Suppose your business has a good number of employees. In that case, you may find that managing payroll is an added task that can be delegated to bookkeepers since they are already handling the financial aspect of your business.
A competent bookkeeper can check timesheets, assign due commissions, calculate payroll tax and superannuation, etc. In addition, a bookkeeper also keeps a record of employees’ bank details, which comes in handy while processing the payrolls.
A bookkeeper helps maintain proper employee records for a business, which can lead to the growth and scalability of your company.
With bank reconciliation, keeping track of receipts and payments has become increasingly easy. You can now link your online accounting software to your corporate banking accounts. This helps reconcile your banking information with your accounting details.
In addition to bank reconciliation, a bookkeeper keeps track of your debt levels and informs you of incoming payments. They may also suggest ways to reduce the interest payable on your debt.
Bookkeepers can also help manage your annual budget by keeping track of your financial data. Ledger management is a big part of financial wellness for businesses.
Keeps a Check on Cash Flow
Your cash flow determines the profitability of your business. A good cash flow indicates progress in the company, while a nasty or negative cash flow indicates that some of your expenditures need to be curtailed this month.
Calculating incoming and outgoing expenses helps determine the cash flow of a business. A bookkeeper informs you if you are running low on cash. This can help postpone any big purchases that are not urgent and may affect your cash flow in the worst possible manner. By doing so, a bookkeeper saves your business from a sudden cash crunch that can lead to problems like non-payment of salaries, etc.
A bookkeeper does not only maintain your financial records; but they also curate different financial statements that can help gauge the financial health of your business. These are:
- Income statements (profit and loss statements)
- Balance sheet
- Cash flow statement
- Statement of change in equity (statement of retained earnings)
This implies that bookkeeping involves not only filling numbers in spreadsheets, as some people believe it to be. Bookkeeping requires good senses and excellent skills that one can learn over time.
To Sum It Up
Bookkeepers are helping businesses survive the pandemic. They are already running a world of their own. A bookkeeper’s job requires meticulous spreadsheet analysis and knowledge of financial legalities. If your business is still unsure if it needs a bookkeeper, you must re-evaluate your financial standing.