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How to know when you need more than just a bookkeeper

Most businesses have someone tasked with looking after company finance on a day-to-day basis. Normally this person is a bookkeeper, either on the staff or contracted for a certain number of hours per week.

There are a set of tasks they normally perform but it’s useful to know when your business requirements might be getting beyond the remit of your bookkeeper, either in terms of time available or skillset.

The normal duties of a bookkeeper

Bookkeeping is a role with a focus on the transactional. This will include regular tasks such as:

  • Entering financial data into your accounting software
  • Posting sales and purchase invoices
  • Paying your suppliers
  • Performing bank reconciliations
  • Preparing VAT returns

They will keep your financial records up to date and may also process your company’s payroll, CIS returns and credit control.

They need to have a good technical knowledge of accounting principles and practises to perform their role. They need to understand how to allocate income and costs accurately, accounting for VAT to the correct accounting codes (general ledger or nominal codes). This will ensure that supplier invoices can be paid and customer receipts allocated correctly. You may also ask them to run simple reports to reflect a true picture of your debtors and creditors.

Your bookkeeper is the primary method of financial data entry and attention to detail is paramount to avoid costly mistakes. They are an important step in the accounting process and should be considered as a valuable benefit to your business. Depending on the size of your business the above tasks may be a full-time job for someone just to ensure that they are always on top of your financial transactions on a daily, weekly and monthly basis.

The next level of financial control

Businesses that are developing or have more inherently complex finance requirements need more advanced accounting systems and controls. These help Financial Controllers manage finances effectively, control your costs and provide you with meaningful financial management tools and reports for financial visibility and planning.

It’s a fundamental of any business that staff cannot always self-supervise. Where much of a bookkeeper’s role is about paying attention to each and every transactional detail, where do they get the time or the realisation to look at the bigger picture?

This is where the role of a bookkeeper ends and that of a financial controller begins. Financial controllers perform a management function, with a broader, longer-term focus that provides a bridge between business operations and business finance, so that issues in one area are known and addressed by the other. Tasks that a financial controller would take ownership of include:

  • Managing or recruiting finance staff and ensuring transactional data is processed with accuracy and timeliness
  • Reviewing the quality of financial reporting, ensuring directors are getting meaningful reports that show clearly how you are performing.
  • Assessing the efficiency of your accounting systems and operations and recommending improvements. This can comprise of system automation and efficiencies for cost savings and enhanced reporting.
  • Controlling & reconciling your assets and liabilities (balance sheet) every month & taking your accounts to the next level to provide you with confidence and assurances in what you are reporting.
  • Generating monthly accounts, KPIs and presenting them as usable management accounts to provide greater insight into your performance and areas that need attention.
  • Involvement with confidential board-level discussions about how finance impacts the rest of the business and vice versa.

The ideal segregation of duties

It is important to clearly define these duties to ensure confidence in your financial records and to minimise risk. In essence, a bookkeeper posts the financial data and the Financial Controller supervises and manages the accounting process. The Financial Controller’s additional benefits are to proactively develop controls and systems in line with the growth of your business and assist your future planning.

If you have any issues around bookkeeping or company finance that would benefit from some expert advice then I’m always happy to have a conversation to steer you in the right direction.
Or why not come along to my Business Finance Club. It’s based in Dorset, meets monthly and is a friendly forum for business owners and accounting professionals to share knowledge. You’d be most welcome to join us.