By Joseph O’Brien
A business is never too small for outsourcing, but outsourcing your bookkeeping can be a delicate business. You know it’s a smart move, but the process is daunting. After all, it’s balancing the books we are talking about. And isn’t outsourcing expensive? But trying to save money by not outsourcing may actually be a false economy.
Bookkeeping swallows up valuable business time and you may end up wasting time fixing needless errors and chasing down endless paperwork. A bookkeeper can be a valuable business asset, but make sure you know what to expect from them before investing in one. Read on to find out more before you outsource your bookkeeping, and get ready to wave goodbye to those balance sheets.
What Does a Bookkeeper Do?
A bookkeeper (outsourced or in-house) is basically in charge of recording all your business’s daily financial transactions in a consistent way. Consistent in this context means tidy, easy to find, and up-to-date. Here are some simple bookkeeping principles you should already be following.
Good bookkeeping helps your business lay a strong foundation. Correctly balanced books mean you will be able to see at a glance what it going out of your business, and what is coming in. Tidy and consistent bookkeeping records are an absolute must, and will help you avoid costly accounting mistakes.
These transactions all come under a bookkeeper’s remit:
- All petty/one-off financial transactions (going in and coming out)
- Debits and credits
- Invoicing (producing invoices and purchase orders if you need them)
- Balancing the general ledger (records of all sales and purchases), subsidiaries and historical accounts. Some sales and purchases may also need supporting documentation that your bookkeeper would be able to provide.
Why Have You Not Outsourced Your Bookkeeping Before?
The main argument against outsourcing are the costs involved.
- Outsourcing is an extra business cost, but it might not cost you as much as you first think. After initial meetings, a bookkeeper should be able to get on with their tasks relatively unsupervised, only popping into the office a few times a month.
- Nowadays, cloud technology means that cloud bookkeeping is making bookkeeping services even more affordable. If going into the cloud, make sure you trust the credentials of the company you go for.
- Getting a professional to do your books means you are getting a reliable, fast, and accurate service, reducing the risk of slapdash records that can be expensive in the long run.
See outsourcing as a wise investment, rather than a cost. Here’s an accountant’s advice on outsourced bookkeeping for small businesses.
Benefits of Outsourced Bookkeeping
Let’s face it, managing your records can be a bit of a bore and you could probably do with some help from time to time. After all, bookkeeping doesn’t require the same creative flair as running a successful business or creating a new product!
Here are some key benefits of outsourced bookkeeping:
- Saving time (which equals saving money)
- Input from a professional, impartial third party
- Expert advice on your business and its processes
- Reporting means you’ll have more visibility on your company’s financial standing, which may in turn lead to better business spending
What You Need to Know About Your Bookkeeper
There are some key things you’ll need clarification on before you sign on the dotted line. These are the key questions you need to ask:
- Be clear on their bookkeeping qualifications. These are the certified educational bodies to look out for:
- ICB (Institute of Certified Bookkeepers)
- ACCA (Association of Chartered Certified Accountants)
- CIMA (Chartered Institute of Management Accountants)
- AAT (Association of Accounting Technicians)
- What accounts software will they use?
- Advance spreadsheets, Sage, MYOB, IRIS, QuickBooks and Xero are just some of the standard ones you’ll see in the industry.
- Will they be transferring your records over to their preferred software?
- Have they got any reviews, case studies, or testimonials?
- What’s their Service Level Agreement (SLA) like? Does it fit in with your expectations (and business size)?
- How do they compare price-wise with other services? Are they too good to be true?
- Is there an exit clause?
What You Need To Do Before You Outsource
Once you’ve decided on a bookkeeper, the fun of collating all your records really begins. It’s important to know that outsourcing will initially put a lot of pressure on you to provide the bookkeeper with everything they need to get started. This largely depends on how organised your records are, but you will probably have to have a few meetings to go through everything. Don’t plan to change over your accounts in the middle of your busiest sales period.
Bookkeepers need access to a lot of the raw materials of your business such as invoices, bank statements, employee salaries, petty cash etc. Make sure you know where they all are.
Obviously you want to hand this sensitive stuff over to people you actually trust, so making a sound decision on your bookkeepers is key. Spend time shopping around, getting on the phone and having meetings to make sure you get the right person.
The right outsourcing can benefit your business and help you streamline your accounts.
Would you consider outsourcing your bookkeeping? Tell us why, or why not, in the comments below.