A bookkeeper is vital to every business because they know where the business stands financially. Business owners need a bookkeeper for a number of reasons such as keeping track of finances, but they must also understand their business so they will know the essential documents that a bookkeeper must regularly present. Some of the essential information that your bookkeeper should know are the profitable client, the most profitable service or product line and the cash flow. Your bookkeeper may be rushing to carry out a task before the end of the week and may not have the time to discuss some details with you. Before you let your bookkeeper off the hook, you need to set aside at least 30 minutes so they can give you an update of your financial standing.
Things you need to discuss with your bookkeeper:
• Weekly Cash Flow Analysis – Although there are some aspects of bookkeeping that accounting software can take care of, a bookkeeper needs to deal with cash flow analysis and present financial statements to business owners in vivid details. This way, it will be easy for a business owner to understand where the business is going. Detailed cash flow projections will also help you determine payments for BAS and Superannuation.
• Weekly Bank Reconciliation – At the end of the week, your bookkeeper should also present your reports, which are related to your bank transactions. Make sure the bookkeeper presents up to date reports or it will be meaningless. You can determine if there are fraudulent transactions if you keep a weekly bank record. Your bookkeeper should be able to record all of the bank transactions that have taken place on a weekly basis. Aside from bank reconciliations, your bookkeeper should also have a weekly report for credit card reconciliations.
• Weekly Revenue and Margin Analysis – A detailed net profit analysis is important so you can easily track your revenue and gross margin. Your bookkeeper should show you a weekly Work in Progress report.
Why is it necessary for a bookkeeper to secure these reports?
Knowing what is going on with your business on a regular basis will help you identify some measures you need to take in case your business heads in the wrong direction. If you already have an idea that the financial aspect of your business is doing well, you will no longer have to worry about taking some drastic measures. You can immediately put a stop to fraudulent transactions if you make it a habit to check reports on a weekly basis or whenever necessary.
Although it is the bookkeeper’s job to keep financial reports in check, business owners must also take part in ensuring that the reports are correct. A business owner must understand the details that a bookkeeper providers. If you have a nagging suspicion that something is wrong with the reports, you should ask your bookkeeper for an explanation so you will know if you need to reassess your business. It is easy to lose track of your finances if you are attending to other business concerns, but bookkeeping should never take a backseat if you do not want to join entrepreneurs whose business has failed due to poor bookkeeping habits.