- Posted by Vanessa Simington
- On June 5, 2017
It can be tempting for business owners to try to save money by doing everything themselves, especially in those early start-up years. But, in the long term, it makes little financial sense – and can cause more trouble than it’s worth.
Some excellent software exists that can help business owners manage their own accounts. But just because you can do something yourself, doesn’t always mean you should.
Chartered accountant Suzanne Janine is in no doubt about the benefits of outsourcing bookkeeping tasks. “Business owners are better off focusing on what they do best, and not wasting their time on their bookkeeping,” she explains. “Of course, it depends how well they can do it themselves, but generally by using the knowledge and skills of a good bookkeeper, you can get on with running the business.”
Nevertheless, she warns that business owners need to stay across the business, rather than just giving the bookkeeper free rein. To do this, Janine suggests they make sure they receive periodic updates and reports.
“Owners should be seeing profit and loss statements, balance sheets, accounts payables and accounts receivable reports at least once a month and even once a week so they can make strategic decisions based on those reports,” she says.
If everything is done correctly, employing a bookkeeper in some capacity will more than pay for itself. “If you are paying a trained bookkeeper, say, $35 an hour [bookkeepers can vary from $25 to $80 an hour in Australia], you can go out and make more than that yourself.”
By the book
One obvious benefit of employing an accomplished bookkeeper is that businesses can stay compliant with tax and superannuation, thereby avoiding unnecessary fines. Businesses can also avoid having to present their accountant with messy books come the end of the financial year.
“The accountant can therefore focus on the higher-level work that they’re paid to do – such as providing a tax and business overview,” Janine says. “This is much more efficient than having your accountant sort things out that a bookkeeper could have done.”
How often a business should employ a bookkeeper will depend on the size of the business, the number of staff employed by the business and the annual turnover. “Some businesses will require a bookkeeper only once a month; others may even consider employing one full time,” Janine says.
Garth Miller, managing director of industrial services company Alpha Integrated Solutions, based in the NSW Blue Mountains, is convinced of the benefits of outsourcing accounts management. He has moved from engaging a bookkeeper only quarterly to one day every fortnight as his company has grown in size and payroll duties have increased.
“It means one person is dedicated to the role of tracking inputs. As a small business, it can build up and gets put on the backburner until it’s a bit of a mess. Having a bookkeeper has helped enormously with this,” Miller says.
He finds that separating himself from accounts duties is also helpful for client relationships, especially when chasing up outstanding invoices.
“I don’t want to be the person calling companies when they haven’t paid their bills,” he says. “It’s not good for the relationship and having someone else do that means it gets done.”
Miller appreciates the opportunity to get up-to-date, accurate snapshots of how the business is tracking via regular reporting.
“It gives me a much better handle on cash flow and forecasting and I can focus on the core business,” he says. “Each quarter the bookkeeper and accountant can speak the same language about super and tax, which I don’t really want to be concerned with.”
The only pitfall he sometimes finds is in training of accounts staff. “You do have to provide training on your own internal systems which can be time-consuming,” he says. “But they can bring their own insights on how to do record-keeping of accounts.”
Not all bookkeepers are created equal, and this is another issue to consider. “There are bad ones,” says Janine, “which means you then have to go in and clear up their mess.”
Bookkeepers come with varying qualifications – and rates can vary widely in Australia. Both Janine and Miller recommend checking if they have knowledge of your company’s accounts software and thorough checking of references.
On the whole, though, Janine recommends business play the long game by taking on a bookkeeper as soon they can afford to do so.
“Without one, you could be losing money and not even know it,” she says.
Written by Liz Durnan, Westpac