Outsourcing bookkeeping services
What good bookkeeping should include
Good bookkeeping gives you accurate financial records, useful reports and a better understanding of what is happening across your business.
Accounting software can provide fast access to financial information, key performance indicators and cash flow reports. However, the information produced by the software is only as reliable as the records entered into it. When transactions are missing, incorrectly categorised or left unreconciled, reports can give you an incomplete or misleading picture of the business.
Consistent bookkeeping also helps you stay on top of supplier payments, payroll, superannuation, GST and other obligations. It gives your accountant accurate information to work with and allows you to identify changes in income, expenses and cash flow before they become harder to manage.
So, what does good small business bookkeeping involve, and when does it make sense to outsource your bookkeeping services to a professional?
Why accurate bookkeeping matters
Bookkeeping is a fundamental part of the financial management of your business. Without accurate and current records, your accounting software has limited information to work with, your reports may be unreliable and your accountant cannot see an up to date picture of the business.
Your bookkeeping records show what the business has earned, what it has spent, what it owes and what is owed to it. They also provide the supporting information needed to prepare reports, complete reconciliations, manage GST and meet other reporting and lodgement requirements.
Australian businesses are required to keep records relating to their tax, superannuation and registration affairs. These records generally include documents relating to business income and expenses, along with enough information to explain the purpose and details of each transaction.
Accurate bookkeeping also helps you understand the difference between profit and available cash. A business may be profitable on paper while still experiencing pressure when customer payments are delayed or several expenses fall due at the same time.
When your records are current, you can see what is coming in, what is going out and when payments are due. This supports better cash flow planning and helps you prepare for payroll, supplier invoices, GST, PAYG withholding, superannuation and other commitments.
First Class Accounts Ovens & Murray can manage your day to day bookkeeping and reporting so you have reliable information available when you need it.
How to get more from your bookkeeping
Bookkeeping gives you a record of your transactions and provides the foundation for financial reporting. Its value increases when the work is completed accurately, consistently and within a suitable timeframe.
A reliable bookkeeping process should make it easier to find supporting documents, check transactions, prepare reports and understand the financial position of the business. It should also reduce the amount of time spent searching for missing information or correcting avoidable errors.
The following steps help create a more reliable bookkeeping process.
Capture and store financial documents
The first part of the bookkeeping process is collecting and storing receipts, tax invoices, supplier invoices, remittance notices and other supporting documents.
Digital copies make documents easier to locate and connect to the relevant transaction. They also reduce reliance on paper records that can be misplaced, damaged or left sitting in vehicles, bags and inboxes.
The document should contain enough information to explain the transaction, including the date, amount, supplier or customer and the purpose of the purchase or payment. GST details should also be recorded where relevant.
Receipt capture and document management apps can reduce manual data entry by sending documents directly to your accounting system. First Class Accounts Ovens & Murray can help assess whether tools such as Dext, Hubdoc or another suitable app fit your existing processes and accounting software.
Record transactions promptly
Income and expenses should be recorded within a consistent timeframe and matched with the relevant supporting documents.
Leaving transactions unrecorded can create gaps in reports and make it harder to understand the amount of cash available to the business. It may also delay reconciliations, BAS preparation and other financial processes.
Regular transaction processing means reports are based on more current information. This allows you to review sales, expenses, amounts owed by customers and upcoming payments without relying on figures that may already be several weeks out of date.
The appropriate processing schedule will depend on the size and activity of the business. Some businesses need daily bookkeeping, while others may be well served by a weekly schedule. The important point is that the process is consistent and suited to the volume of transactions.
Categorise transactions accurately
Transactions need to be allocated to the correct accounts so your financial reports show where income is being earned and where money is being spent.
Incorrect coding can distort expense totals, profit figures, GST reporting and comparisons between reporting periods. It can also make it difficult to identify changes in costs or determine whether an area of the business is performing as expected.
Consistent categorisation is particularly important when several people enter transactions or when bank rules are used to automate part of the process. Automated rules can save time, although they still need to be set up correctly and reviewed regularly.
A professional bookkeeper can create consistent coding practices and investigate unusual transactions rather than allowing errors to continue through subsequent reporting periods.
Reconcile accounts regularly
Reconciliation involves comparing the transactions recorded in your accounting system with bank statements, credit card statements, payment platforms and other financial records.
This process helps identify duplicated transactions, missing payments, incorrect amounts and transactions that have been entered into the wrong account. It also confirms whether the balance shown in the accounting system agrees with the external financial record.
Bank reconciliations should be completed regularly rather than being left until a BAS, tax return or financial report is due. Depending on the business, this may mean reconciling accounts daily, weekly or monthly.
Regular reconciliations also support cash flow management. When bank balances, outstanding invoices and upcoming payments are accurate, you can make decisions using information that reflects the current position of the business.
First Class Accounts Ovens & Murray can manage reconciliations as part of an ongoing bookkeeping service, reducing delays and helping keep your records ready for reporting and lodgement work.
Use cloud accounting software properly
Cloud accounting software such as Xero allows authorised users to access financial records, process transactions and review reports from different locations.
These systems can import bank transactions, apply transaction rules, connect supporting documents and reduce some repetitive data entry. They can also connect with payroll, time tracking, inventory, point of sale, payment and job management apps.
The software still needs to be configured and maintained correctly. Poorly designed account structures, outdated bank rules, duplicated app connections and inconsistent processes can create additional work and affect the quality of the data.
The right accounting system and connected apps should suit the way your business operates. Adding more software does not automatically improve a process. Each app should have a defined purpose, connect reliably with your accounting system and be used consistently by the people responsible for the work.
First Class Accounts Ovens & Murray provides business app advisory, setup and implementation support. This includes reviewing existing processes, identifying suitable tools and helping your team use the selected system correctly.
Use your bookkeeping information to support decisions
Bookkeeping should provide more than a record of completed transactions. Current and accurately categorised data can help you understand how the business is performing and what may require attention.
Useful reports may include a profit and loss statement, balance sheet, aged receivables report, aged payables report and cash flow forecast. The reports you need will depend on the type of business and the decisions you are making.
For example, an aged receivables report can show which customer invoices are overdue, while an aged payables report can help you plan supplier payments. A profit and loss statement can show changes in income and expenses, and a cash flow forecast can help identify periods when available cash may be tighter.
Reports are most useful when they are reviewed regularly and the underlying records are accurate. First Class Accounts Ovens & Murray can help you understand what the figures are showing and prepare useful information for discussions with your accountant or other advisers.
Outsource your bookkeeping to a professional
Managing your own bookkeeping may seem practical when the business is small or transaction volumes are low. As the business grows, the work can become more time consuming and may require a greater understanding of GST, payroll, reconciliations, reporting and accounting software.
Outsourcing gives you access to people who work with bookkeeping systems and financial processes regularly. It also removes the need for the business owner or another team member to fit bookkeeping around their other responsibilities.
A professional bookkeeping service can manage transaction processing, reconciliations, accounts payable, accounts receivable, payroll, reporting and BAS related work, depending on the support required.
The quality of the service model is also important. First Class Accounts Ovens & Murray provides reliable continuity of service, so bookkeeping tasks continue to be completed accurately and on time when individual team members are unavailable. This provides continuity and reduces the risk of bookkeeping tasks being delayed because one person is away.
Outsourcing also gives you access to support with accounting software, connected apps and process improvements. This can reduce duplicated work, improve the way financial information moves between systems and make regular reporting easier to manage.
Make bookkeeping one less thing to manage
Cloud accounting software has made bookkeeping more efficient, although the work still needs to be completed regularly and checked carefully. Transactions must be processed, documents attached, accounts reconciled and reports reviewed.
When bookkeeping is fitted around customer work, staff management and other operational responsibilities, it can easily fall behind. Delayed bookkeeping affects more than record keeping. It can leave you without current information when you need to plan payments, review cash flow or make a business decision.
First Class Accounts Ovens & Murray provides outsourced bookkeeping services shaped around the needs and transaction volume of your business. We can manage your regular bookkeeping, reconciliations, payroll, reporting and BAS related processes while helping you improve the systems that support the work.
We can also review document capture tools and connected business apps to determine which options suit your accounting system and workflow.
With accurate records and consistent support in place, you can spend less time managing financial administration and more time focused on the work that needs your attention.
Contact First Class Accounts Ovens & Murray to discuss your current bookkeeping process and the support your business needs.
Frequently asked questions about bookkeeping services
What does a bookkeeping service include?
A bookkeeping service may include recording income and expenses, processing supplier bills, reconciling bank and credit card accounts, managing accounts payable and receivable, processing payroll, preparing reports and supporting BAS related processes. The exact service should be based on the size, transaction volume and requirements of the business.
How often should business bookkeeping be completed?
The appropriate schedule depends on the number of transactions and how quickly the business needs updated information. A business with regular payroll, supplier payments or a high volume of daily transactions may need bookkeeping completed daily or weekly. Businesses with fewer transactions may use a weekly or monthly schedule. Reconciliations and processing should still occur frequently enough to keep reports accurate and obligations on track.
When should a business outsource its bookkeeping?
Outsourcing may be suitable when bookkeeping is taking time away from other work, records are regularly falling behind, reports cannot be relied on or too much knowledge sits with one person. It can also help when the business needs support with payroll, accounting software, connected apps, reconciliations or more consistent financial reporting.