Bookkeepers are essential to a company as they are responsible for providing accurate and current financial information about a business.
The information a bookkeeper documents may help business owners and managers calculate the company’s expense budget, as well as help accountants better analyse and manage company finances.
When it comes to managing the books, the bookkeeper’s core function is to correctly record all of the company’s financial transactions. These financial transactions can include:
- Wages
- Payments
- Sales
- Credit card purchases
- Petty cash purchases
- Receipts
- Sales revenue
Five Things A Bookkeeper Helps A Business With
There are many things involved with keeping track of a business’s financial transactions, keep reading to learn about five things a bookkeeper or virtual bookkeeping service are responsible for.
1. Data Entry
One of the key responsibilities of a bookkeeper is to accurately record information and data.
Whether the bookkeeper is reconciling accounts, tracking expenses or preparing financial statements, everything a bookkeeper does involves data. They are responsible for putting the right data into the right spreadsheets, making sure numbers add up and all information is recorded correctly.
2. Accounts Receivable
While some people may say they are ‘not in the business to make money’, the fact is all businesses need to maintain a healthy cash flow to survive.
One of the roles of a bookkeeper is accounts receivable, which involves invoicing customers and tracking payment of those invoices.
A diligent bookkeeper will understand the importance of this process and will endeavour to have invoices prepared and sent out swiftly. The bookkeeper will also be responsible for following up on any overdue payments.
3. Accounts Payable
As the saying goes, you’ve got to spend money to make money!
This is certainly the case when it comes to accounts receivable and accounts payable because for every invoice the bookkeeper sends out there is a high chance they will receive one in return.
While no one likes paying bills, business debts need to be managed proficiently and in a timely manner. A bookkeeper will need to consider the company’s cash flow and account balances when authorising payments. Ideally, the bills will be paid on time and in a scheduled manner.
4. Reconcile Your Bank Accounts
Account reconciliation is an important task the bookkeeper is in charge of conducting. The main purpose of reconciling a bank statement is to cross-check it with the company’s internal bookkeeping records.
The bookkeeper will need to ensure all transactions are accounted for and record any discrepancies. Regularly reconciling bank accounts may help prevent incorrectly recorded transactions, overdraft fees and fraudulent charges.
5. Prepare Financial Statements
Whether the bookkeeper needs to document a company’s invoices, payments, sales revenue or business expenses, preparing documents comes with the nature of the role.
A bookkeeper will regularly provide financial reports to the business owners and managers. These reports, or financial statements, will provide an insight into the company’s financial activities, performance and status.
The financial statements a bookkeeper typically prepares includes:
- Balance sheet
- Cash flow statement
- Income statement
- Accounts receivable statement
- Accounts payable statement
- Profit and loss
- Statement of changes in equity
Why A Bookkeeper Is Important
Bookkeeping lays the foundations for accounting as it involves keeping track of a business’s financial transactions.
In business, money is constantly going in and going out of accounts. Keeping track of all these movements is a legal requirement but also crucial when it comes to understanding the financial health, spending habits and expense budget of a business. If you need help keeping your books in order, you may find it helpful and useful to consult a streamlined online bookkeeping service.
Whether you use an in-house bookkeeper, freelance bookkeeper or virtual bookkeeping service, bookkeeping involves some of the most essential functions of any business.
