Question

companies need to stay afloat on a monthly basis. What would you do as a bookkeeper to ensure all payments are submitted on time and cash keeps pouring into the company . Justify your answer (would you extend credit to companies in the verge of default)

Answer 1

A bookkeeper has training in recording, categorizing, and reconciling financial transactions. Most accountants have a bachelor’s degree in accounting and are skilled in interpreting financial records to make business recommendations.

Many people are confused about the difference between bookkeepers vs. accountants, and the truth is that some bookkeepers also perform accounting tasks. For example, accounting software now makes it pretty easy for bookkeepers to prepare financial statements, a task that was traditionally reserved for accountants.

Bookkeepers ensure that all of a company’s expenses, income, and transactions are recorded in the company’s books and reconcile the company’s financial accounts, typically monthly. Bookkeepers might also help with financial statement and financial report preparation. Although bookkeeping can be an in-house staff position, most businesses employ bookkeepers on a freelance basis. Bookkeepers can wear many different hats depending on what a business needs. That said, most bookkeepers nowadays use business accounting software to do their work. Plus, there are a few things that almost every bookkeeper can take care of for your business. Though the role of a bookkeeper is multifaceted, there are some core tenets to what bookkeepers do.

The function of Book Keeping

There’s no simple way to answer this question. Just like any other field of work, bookkeeping can look different from business to business. However, these are the most common tasks that bookkeepers tend to tackle:

• Record financial transactions
• Reconcile bank accounts
• Manage bank feeds
• Handle accounts receivable
• Handle accounts payable
• Work with your tax preparer and assist with tax compliance
• Prepare financial statements
• Take on some payroll and human resource functions
• Make technology and process streamlining recommendations

If you run a very small business, you might be the bookkeeper – at least until you can afford to hire someone to do the work for you. Once your business reaches a certain size, it will start to make sense to have someone do the bookkeeping for you. Here are five ways that a bookkeeper can help:

Allows you to concentrate on business strategy
Bookkeeping involves tracking fine detail and recording it in accounts software. Working with these numbers can sometimes make it hard to see the big picture. So it's usually better to have someone else do this work.

Reduce your accounting costs
Are you using an accountant to manage daily transactions and run monthly payroll? If so, you could save a lot of money by having a bookkeeper do this work instead.

Have an extra pair of eyes watching your cashflow
If you want to avoid running out of money suddenly, you need to actively monitor your cashflow. We've discussed this in our guide to managing cashflow. It helps to have someone else checking the numbers, making sure your cash keeps flowing, and a bookkeeper can do that.

Get quick access to vital figures
Having an accountant manage your monthly business reconciliation and reporting is important. But what if you need financial information part-way through the month? Bookkeepers can give you the insight you need quickly, without you having to wait for your accountant to respond.

Keep control of your financial data
Few small businesses can afford to hire their own accountant, so most accountants work on a part-time basis for their clients. If they use quality online accounting software to manage financials, it makes collaboration much easier. Good software allows bookkeepers work on the same set of data as the accountant. They can both work together to deliver the best outcome and help your business grow.

Bookkeeping is a vital job in any business. This is true whether you do the work yourself or hire someone to do it for you.

Without proper bookkeeping, accounts will not be accurate. That means your accountant won't get a clear picture of your company's finances, and you can’t make strategic business decisions.

Just as importantly, your business has a legal obligation to accurately record its accounts and file company reports to HMRC. So it pays to get this right. Bookkeeping will help you do all of this – and will also provide you with useful insights into the financial health of your business.