Bookkeeping Butchers or Superstars? Directors: Protect Thyself!
Sep 17, 2014
A lot of small and medium business hire full time, part time, casual and outsourced bookkeeping staff; and the skill level of these people can range from superstars to butchers. As a decision maker in a business you may make the decision based on cost – a cheaper bookkeeper may seem like a no brainer; but it is like night and day between experienced, trained bookkeepers and someone who has no idea.
Bad bookkeepers can have major impact on a business – unreconciled accounts; debts unsettled, duplication of invoices and bills, paperwork missing or not accounted for, bad data entry; or even worse: the ATO hasn’t been given a BAS or IAS.
Bad cash flow, getting into trouble with the ATO for no lodgements, massive debts you (as director) weren't aware of: these are things that can cost you dearly personally; and you are liable for. So – as an owner – how can you make sure you are covered? Directors: Protect Thyself!
Reconciliation Reports – proof work is getting done.
Our superstar bookkeepers are going to have reconciliations done of your bank accounts, your PAYG payable, superannuation payable, loan and hire purchase accounts. ASK FOR THEM!
Not only will this prove all data is in the system (and all other reports are only as good as the amount of data in your system), but you can see how up to date your accounts are; and how often they are getting done.
Ageing Summary – know what is owed, and who owes you
As bills come in, they should be entered straight away. If a lot of them are sitting in 60 or ever 90+ days, do you know about them?
What is being done to clear them out (to either have money coming in or payments going out)?
Have you paid them; and its not been recorded? Or are they duplicates? If so, why hasn’t this been picked up on before you’ve looked at it?
An amazing bookkeeper will do debt collection, and keep talking to their counterparts at both your clients and suppliers to make sure your aged payables and receivables reflect what everyone you do business with has you down for too.
Balance Sheet – Read it; know the truth!
Superstar bookkeepers. They like to keep it real; and have your accounting software based on fact.
The balance sheet shows you exactly what the business owns and owes. It should have a realistic picture of the financial wellbeing of your business, and show you exactly where everything stands.
Look at the assets; items owned by the business. Is your petty cash balance correct? Pay special attention to the various bank and cash accounts – those balances should be a replica of your bank statement balances. Look at your fixed assets (your equipment, vehicles etc.) they should be the total purchase price.
Now read through your liabilities (items owed by the business); your superannuation, credit cards, and PAYG accounts should be correct. Loan accounts, and GST accounts should also be correct. if you are on an accrual basis, then only the amount owing since the last return should be in the accounts; if you are on a cash basis, then the balance is 1/11th of the outstanding invoices and bills plus the amount owing since the last return.
Bookkeeper - Know thy Software
Superstar bookkeepers know their stuff; including the software and tools at their disposal. Bank feeds can save time and limit human mistakes. BAS reports within accounting software can act as a double check to ensure there aren’t mistakes present.
If your bookkeeper is spending significant time on any single task (Superannuation, Bank Reconciliations, BAS,) I would be questioning their abilities or understanding of software and tools that are there to make their lives easier.
Bookkeeper – Certified.
Any bookkeeper not a direct employee of your business MUST be a registered BAS agent to do BAS returns. In a lot of ways this is a very important thing.
TO be a BAS agent, they have to be accredited, and have passed courses and tests to get to wear that badge of honour. It’s your piece of mind.
It’s important to know what state your business is in so you can make decisions for your business. The quality of information in and out of your accounting software is only as good as your bookkeeper, or the information she has and shares with you. There are amazing people out there who will help your business reach new heights, but there are also horror stories as well: make sure your business is covered; so you are too!
Tropical Business Solutions offers a number of admin services including bookkeeping, superannuation, BAS & IAS lodgements, payroll, and we can help do a health check on your business. Contact us or call 08 8922 0000 to setup a meeting.
Tropical Business Solutions
Director at Tropical Business Solutions.