What Do You Value in a Bookkeeper?
A good bookkeeper is one of the best partners a business owner can have. A bookkeeper who is experienced, efficient, and organized will offer business owners the information they need to accurately track business financials and make well-informed decisions to grow their businesses. Let’s face it: if there is no money, the business cannot go on. Take a look at a few of the differences having a bookkeeper can make:
1. An experienced bookkeeper will help enter, track, and reconcile credit card transactions so that expenses are accurately posted to the accounts under which they fall, and not bunched into an account called “Credit Card.” This helps with budget review and forecasting, and also assists business owners in finding areas where spending cuts may best be made.
a. Without a bookkeeper, you may have $500 in the “Credit Card” account.
b. With a bookkeeper’s help, you would have $150 under Office Expense, $50 under Postage and Mailings, $200 under Cost of Goods Sold, and $100 under Meals: Client Meeting.
2. An efficient bookkeeper will help find ways for a business owner to better assess their financial transactions. Making Inventory Items double-sided, for instance, will help tie a particular Item to both its purchase price and its sales price. This information aids the business owner in finding areas for improving markups, or finding where they need to look for more cost-effective suppliers.
3. An organized bookkeeper will be able to show a business owner where they are making and losing money on jobs. If a business owner is concerned about a particular job, a bookkeeper can provide the financial information on both the labor and the parts for the job. This data can be helpful during a job by providing information to help alter decisions on labor and materials to keep a job on budget. The information can be helpful after a job as well; allowing managers to look back and assess how well the job was planned and what changes would need to be made for similar jobs in the future.
a. Without a bookkeeper, worker time may just be logged as hours worked per day, and not allocated to any particular customer or job. Materials purchased may simply be added to inventory and not allocated to the job for which they were purchased.
b. With a bookkeeper, a business owner would see that Jim, a job foreman, spent 18 hours on the ABC job, along with Tim, also a job foreman, who spent 18 hours on that job as well. $875 was spent on the materials used on the ABC job, and $3,062.50 was charged for those same materials (which is consistent with the company’s 3.5% markup policy).
c. Also with a bookkeeper, the business owner will be able to see that for the last 10 jobs that were similar to the ABC job, the labor hours remained constantly around 20 per worker, but the other jobs were performed by one (higher paid) foreman and one (lower paid) apprentice. The labor on this job was nearly 30% higher because two higher-paid foremen were assigned instead of one foreman and one apprentice. Materials costs also rose by nearly 20% in a six-month period.
4. A good bookkeeper will create a Chart of Accounts that is meaningful to their client, and ensure a detail level on reports that will serve the needs of the client in making sound business decisions. A pet food store, for instance, would be better served by seeing income by product line than by animal.
a. Without a bookkeeper, a pet food store manager may see that Dog Food brought in $3,000 and Cat Food brought in $2,800.
b. With a bookkeeper, a pet food store manager would see that of the $3,000 in Dog Food sold, $1,800 was Fido’s Friend brand, $1,000 was Woof Woof Good brand, $200 was SnackEm Organics brand, and Ruffies brand didn’t sell at all.
5. An experienced bookkeeper will notice trends in financial transactions and will be able to alert the business owner or manager.
a. Without a bookkeeper, employee expense reports — which have nearly doubled in amount in the last two months -are entered and paid as usual.
b. With a bookkeeper, the manager is alerted and given a report that shows that the Meals and Mileage expenses are unusually high for a new salesman. This alert triggers an audit of the salesman’s records to see if the charges are indeed legitimate.
While the list can go on and on, it is clear that a good bookkeeper’s love of making the numbers tell the financial story of a business is truly a valuable asset indeed.
Still have questions? Visit www.accurabooks.com. We are happy to help!