As a business owner or CEO, when trying to manage every aspect of the business, some things can quickly take a wrong turn. You may not even see it coming until it gets too far.
Unfortunately, the proper management of a business's bookkeeping and accounting are oftentimes neglected or treated as an ornery stepchild. This is because, well, it may not feel as critical or important to you as building your brand or closing a sale. However, the finance function of your business should give you peace of mind and be a source of truth to leverage.
In this example, we'll start with the bookkeeper.
Frequently for small companies, the bookkeeping process is delegated to a single person. The associated responsibilities can be quite daunting, especially if the employee is not properly trained for the role.
Bookkeeping is completely unavoidable, and negligence always comes back to bite you. Maintaining records in some semblance of order is extremely important in order to understand the financial health of your company.
Some common pains we hear from business owners include:
- Hiring - Finding competent bookkeepers
- Training - Frequent turnover
- Workload Balance - A struggle to separate bookkeeping tasks and duties
- Costs - Dealing with the costs of time management, efficiency, and peace of mind
Hiring a Bookkeeper
Finding, hiring, and retaining the right bookkeeper with the right skill set for the right money is certainly a feat, but the payoff comes when the business owner is no longer messing with the books or handing off the duties to an administrative assistant or spouse. However, a single employee means a single point of failure - there is no system for internal controls to mitigate risk for human error or occupational fraud.
Without the necessary resources to delegate accounting functions to separate, and qualified staff, your financial integrity is at the mercy of the bookkeeper's knowledge and skills. Additional vulnerability results from any gaps in service due to absence or turnover. Downtime between employees and the hiring process can be extremely taxing, and it means valuable time is spent in bookkeeping crisis mode.
Training a Bookkeeper
Once a qualified bookkeeper is hired on staff, regardless of their background, time must be invested in systems and procedural training. Without a formal training process in place, most bookkeepers are left to their own devices, or time is taken away from the owner or manager's day for training issues. However, without proper introduction to your accounting procedures, even a "minor" coding error can lead to lost revenue. With a single bookkeeping employee, you are at the mercy of their experience, honesty and reliability.
Limited resources, including employees, is another common problem that small and growing businesses face. Oftentimes, small business owners can't afford to hire a full-time bookkeeper, and certainly can't afford an entire accounting department.
This means bookkeeping duties are delegated to another employee, regardless of their accounting knowledge. This almost always backfires at some point – the bookkeeper gets stressed, important tasks get overlooked, and the company is now exposed to many risks, including human error and fraud. The next issue that could start to happen from stress and disorganization, is the cycle of employee turnover issues.
In an ideal situation, a team composed of a Bookkeeper, Staff Accountant and Accounting Manager/CPA/CFO is involved to ensure the accuracy and integrity of the financial information. This reduces the risk for human error or fraud.
Finally, the costs associated with bookkeeping usually have a significant impact on small businesses. There's no choice –someone has to mind the books, but hiring, training, paying and balancing the workload take a heavy toll in terms of finances and energy. Depending on the lifecycle stage of your business, you need to question “When do you need more than the basics”.
Most small businesses can only afford one bookkeeper, and sometimes only part-time. Resources available to a larger organization, like an entire accounting department complete with a Bookkeeper, Staff Accountant and Accounting Manager/CPA/CFO, are not a realistic option for a small business.
However, without the ability to separate duties among several employees (at the very least, the check writing and bank reconciliation duties) the company's financial integrity is relying on a single point of failure.
A Solution – Bring in the Experts and Save Money
Outsourcing some or all of the bookkeeping and controller support functions can provide relief from these bookkeeping pains, as well as offer timely and accurate financial information.
For a growing business facing any or all of these common bookkeeping issues, outsourced bookkeeping and management accounting services can alleviate the pains so the business can stay focused on the bigger business picture. Instead of hiring a full-time bookkeeper and absorbing all of the costs and risks associated with that function, businesses can benefit from the expertise of an outsourced bookkeeping company to do the hiring and training of a bookkeeping team.
At GrowthForce, we hire and continuously train bookkeeping staff and associates, and use state-of-the-art technology to balance time and resources for our clients. By devoting an entire dedicated team of experts to each client, GrowthForce is able to streamline tasks and offer on-demand access to a team of experts, so there's no more sick days, vacations, or (gulp) turnover to worry about!
Additionally, by having a team review the books, human error can be detected sooner and fraudulent activities can be mitigated. Surprisingly, the level of expertise provided by GrowthForce's outsourced bookkeeping team typically costs less than what a business currently pays for one in-house bookkeeper.