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By: Ronda PaynePublished On: August 30, 2019
To some people, numbers, spreadsheets and bookkeeping may sound boring, but for others, it is exciting. A certified bookkeeper has their finger on the pulse of a business’s financial health at any given time.
It’s anything but boring.
Money and finance is a language to and of itself, and certified bookkeepers know how to speak the language. They are vital to any business, and here’s why:
1. When you have a professional bookkeeper on your team, you don’t have to focus on the day-to-day dollars and cents. You get to focus on the bigger picture. The bookkeeper will ensure payroll is done on time, accounts receivable are properly recorded and shared with others to follow up, and general ledger entries are made in a timely fashion.
2. As a professional bookkeeper, some of the fun comes from being able to explore and examine how different types of businesses operate and respond to their unique financial needs.
3. A certified bookkeeper is also like being a sleuth. They need to look into things to find answers and uncover what’s happening.
On the business owner/manager side of things, there’s still plenty to enjoy and look forward to:
4. Reviewing financial reports can lead to insights that help you find and save money in the future. When a certified bookkeeper is making entries, that individual is simply recording the financial details. You can look at the reports to find out where most of the spending is taking place and why.
For example, the records show that Facebook ad spend was $250 for April, May and June then jumped up to $500 for July, August and September. You can talk to the marketing team to find out why the expenses have increased; who authorized the payment and so on. This way, you can track all the expenses across your business.
5. Tracking accounts receivable was mentioned above as one of the tasks your bookkeeper will do for you. If you want to get to know what money you are owed and how long it has been outstanding, ask for your accounts receivable report. You’ll be able to find out who’s behind on payments and figure out the best way to follow up.
For example, say you run a small food processing company, and one of the retailers is always late on payments. Knowing this allows you to have a conversation with the retailer to find out why they are always behind. They may not be good at record-keeping, in which case you will learn that sending them a reminder to pay at 30 days may get you your money faster. Or, if they are having cash flow issues, you know not to send more products until their previous payments have been made.
6. Put a stop to theft. If you regularly see a difference between sales and cash collected in a retail operation, you can drill down to find out if a certain person usually works each time the differences crop up. Does the cash turn up later? Meaning they aren’t closing the day’s receipts out properly. Or does the money vanish? It’s time to make sure what is sold is paid for and collected.
7. Get to know your best income earners. If you have various product lines, you may be at a point where some products are top sellers while others are asleep at the wheel. Looking at your revenue and sales reports will help you determine which product lines are performing at their best and which have seen better days.
For example, imagine you’re a candy company. When you dig in and take a look at the product lines, you find that licorice, which has always been a top performer, is still at the top. It isn’t growing in sales volume, but it isn’t declining either, it just carries on strong. However, those gumballs that you introduced last year, which did well for the past few months have now dropped in sales. Is it due to a dip in promotions or has the product lost its popularity?
Companies won’t always drop products just because they are low sellers. They also have to consider profitability. If the licorice earns 0.05 cents a package, but the gumballs make you 0.25 cents a package, you may be willing to keep a slower seller because overall it’s more profitable and is still adding to the bottom line without taking anything away from the company. Looking at the reports will help you understand what a low seller is, what is a low-income earner, and what you need to keep an eye on.
Knowing how to maintain and read financial reports can help you run your business and save you money. Good bookkeeping improves decision-making and helps companies analyze the overall business performance. It’s an interesting and rewarding career.