7 min read
As businesses grow and reach the mid-market level, their leaders often face a challenge in reorganizing the back office structure, policies, and procedures in order to keep up with the business's changing and expanding bookkeeping and accounting needs. As a result, the volume of day-to-day bookkeeping processes quickly becomes overwhelming, and the quality of the company's financial data suffers.
Unfortunately, it's impossible to run a successful company without a well-functioning back office. So, in order to maintain financial health and continue growing, business leaders must consider the best practices, policies, and procedures that will keep their back offices, their business operations, and management decisions in order.
5 Bookkeeping Best Practices for Mid-Market Companies
1. Automate, Automate, Automate!
In smaller businesses, manual bookkeeping processes are more manageable due to the much smaller demand. Smaller businesses have a smaller volume of transactions, employees, vendors, etc. to keep up with. As a result, maintaining the bookkeeping and accounting function using manual processes is more realistically achievable.
As a business grows, its volume of transactions, employees, vendors, and everything else also expands. It can quickly become impossible to keep up with bookkeeping and accounting if manual processes are still in place. For this reason, it's essential to automate as many manual processes as you possibly can using bookkeeping and accounting software and integrated applications.
In addition to saving you valuable time, automated processes also increase the accuracy and timeliness of your financial records.
2. Use Scalable, Integratable Accounting Software
When automating your bookkeeping and accounting processes, be sure to choose software and applications that will integrate and scale along with your business.
Select accounting software that has an ample list of integrated third-party applications so that you can automate as many aspects of your business as possible. Additionally, choosing software that has good integrations will help you streamline your back office's workflow with the overall management of your enterprise.
While there are different packages available with the most popular types of accounting software (such as the products available with QuickBooks or Sage), you should select a software product that gives your business some growing room so that you don't need to switch over to a new product too soon.
3. Be Diligent About Your Financial Close (Month-End Close) With Continuous Accounting
What is month-end close? It's a vital bookkeeping process that should reliably take place at the end of each month-long financial period. At month-end close, your company should close out and finalize its transactions, financial activities, and books for the previous month. This ensures that you have a set and well-defined timeframe for your financial reports.
Additionally, all of this automation and integration means your mid-market company's bookkeeping can reliably keep up with not just your month-end close but also close out your books at the end of every single day. A daily accounting close means that you will always have accurate, up-to-date financial data and reports available to review. This means you can keep a weekly or even daily watch on your company's performance, sales, costs, and cash flow for improved management and better strategic planning.
4. Shield Your Company From Internal Fraud
As a mid-market company, your back office likely requires ample staff to function properly. However, no business with an in-house bookkeeping and accounting department should ever operate with fewer than three back-office employees. At least three individuals are necessary to ensure proper checks and balances, separation of duties, and separation of power. A back office with fewer than three employees is at an extremely high risk of internal fraud.
A well-staffed back office should have at minimum a bookkeeper, controller, and a CFO. Larger companies, however, can benefit from more than one bookkeeper and various levels of accountants.
5. Use Outsourced Bookkeeping, Accounting, and CFO Services
If instilling and keeping up with these best practices seems overwhelming or too expensive for your mid-market company to handle in-house, then outsourcing your back office function is an excellent option. Outsourced bookkeeping, accounting, and CFO services can save you time and money while greatly improving your back office and leveraging your financial data to improve every aspect of your business.
What Are Bookkeeping Services?
Bookkeeping services are bookkeeping services provided by a third party such as an independently contracted individual bookkeeper or an entire outsourced bookkeeping and accounting firm.
What Is Included in Bookkeeping Services?
Bookkeeping services take care of the day-to-day business of maintaining a back office. Bookkeeping services include tasks such as:
- Recording financial transactions
- Managing daily cash flow
- Preparing financial statements (balance sheet, income statement, and statement of cash flow)
- Management of accounts receivable and accounts payable
- Tax preparation
- Audit preparation
In addition to managing these basic, daily tasks, outsourced bookkeeping services usually also include controller services, CFO services, financial insights, and strategic planning.
Why Outsource Bookkeeping Services? 7 Benefits of Outsourced Bookkeeping for Mid-Market Companies
1. Save Money
Outsourced bookkeeping services cost significantly less than an in-house bookkeeping department. A bookkeeping and accounting department that is fully staffed with a bookkeeper, controller, and CFO can cost hundreds of thousands annually. Comparatively, outsourced services typically range from about $5,000 to $12,000 per month, depending on your business's needs and transaction volume.
In addition to reducing the cost of your back office, outsourced bookkeeping and accounting services can also help you identify other areas of your business where cost can be reduced, revenue can be increased, or profit margins can be strengthened.
2. Save Time
If your business has an in-house back office, chances are the business owner is spending too much time on bookkeeping and accounting tasks. As a business owner or leader, your time is the most valuable in the company, and you should be spending that time on equally valuable tasks.
Outsourced services will free up your time, ensuring the only time you spend on your business finances is the time you spend evaluating your financial reports, KPIs, and performance to improve your decision-making process and business strategy.
3. Reliable, Timely, and Accurate Reporting
With outsourced bookkeeping and accounting, you'll always have reliable and accurate financial reports and metrics available when you need them. This means you can rely on your financial data to help you prevent cash flow pitfalls, leverage financial opportunities, and make the best decisions for your business
4. Better Management and Operations
With an outsourced bookkeeping and accounting provider, you can rely on automated, streamlined, and integrated back-office processes to enable you to evaluate every aspect of your business's operations from a financial perspective. This makes it possible for you to easily assess the most and least profitable aspects of your business so that you can make decisions to focus on the profit drivers that will support your company's financial goals and promote growth.
5. Increased Efficiency and Productivity
In addition to improving operations and management with data-driven decisions, an outsourced back office can also help you identify efficiency and productivity drivers so that you can maximize your company's ROI across departments.
6. Reduce the Risk of Fraud
Outsourced bookkeeping and accounting also help to reduce the risk of fraud impacting your business. With outsourcing, you can always rest assured that you have the right number of individuals taking care of your books. Plus, you can rely on industry-tested software and security solutions to keep your data safe.
7. Facilitates SME Growth
Outsourcing can also easily expand and grow with your growing small or medium-sized business. With an outsourced back office, you can readily add to the services you receive to ensure your outsourced team is meeting your business's needs as it grows, changes, and expands.
Implement Bookkeeping Best Practices in Your Mid-Market Company Through Outsourcing
Outsourcing simplifies the process of implementing a variety of best practices in your company's back office. Outsourcing is an affordable and simple way to instill sound policies and procedures with the help of effective accounting software and a highly experienced team. With a scalable, outsourced back office, you can use your financial reports to make data-driven decisions to improve your business, management, and productivity while taking your business to the next level.