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How to Maximize the Value of a Bookkeeper

Kelcee Blue | Director: Strategic Finance

Every startup and small/medium business needs a bookkeeper. This essential role has the important task of providing financial reports for required tax filings and performance updates for stakeholders. And, if well done, these financial reports can also provide valuable insight into the business, serving as the foundation for forward-looking forecasting and decision-making.

The Role of a Bookkeeper

A bookkeeper is more than an administrative position within a company. Competent bookkeeping serves as the foundation for managing a company’s finances and is an important first line of defense against potential financial issues. A bookkeeper is responsible for:

  • Recording financial activity (journalize/categorize transactions)
  • Reconciling ledgers to bank/credit card statements
  • Generating financial statements (profit/loss, balance sheet)

The role of a bookkeeper is focused on historical or actual data rather than projections and forward-looking, predictive models. To help conserve resources in some companies, this role may also support additional financial operation activities like issuing invoices, paying vendors, or running payroll.

Common Bookkeeping Challenges

A good bookkeeper is a great starting point, but it’s not the complete solution. They provide the basic financials that can show you what is happening, but they typically don’t answer the “why” it’s happening. 

For example, you may be able to see that revenue is trending down or expenses are up by looking at your monthly profit and loss statement that your bookkeeper provides. And although the trend is evident, you’re missing an important piece of information – what is causing this change? And what can you do to improve negative trends or enhance positive trends? 

For small businesses, this leaves a big gap. Cash is king, and clear reporting with a forward-looking road map is the most effective way to manage cash flow.

How to Get the Most Out of Your Bookkeeping Solution

Bookkeepers have access to financial data that could help you make strategic decisions. However, you have to be intentional about maximizing the value of that relationship. Here are four tips to help get the most out of your bookkeeping solution.

Request More Detailed Reporting

At a minimum, most bookkeepers will provide monthly statements like a profit and loss statement and a balance sheet. But those aren’t the only reports that your bookkeeper can provide.

Dial into your available data with detailed reports like:

  • Revenue by Customer
  • Expense by Vendor
  • Accounts Payable or Accounts Receivable Aging

These reports can tell you who your most valuable customers are and help identify concerning trends. They can tell you where you are spending disproportionate amounts of money so that you can make strategic, high-impact changes. And, they can tell you whether or not your internal processes are working effectively to feed cash into your business

Communicate Your Needs

The next thing that you can do to get more out of your bookkeeper is to communicate with them about your business. Don’t assume that they get your business model. Make sure that you sit down and have a conversation with your bookkeeper about your needs and any meaningful changes to your operations so that they get properly reflected.

Speak Up–Ask for Changes

If there is something about your books or the resulting financial reports that is confusing, don’t be afraid to ask for changes or request to see information presented in a different way. Your profit and loss categories should be meaningful for you and specific to your business rather than based on broad, default categories.

Hire a Strategic CFO to Supplement

Finally, recognize where bookkeeping ends and strategic finance begins. If you are doing more than $1M in revenue and looking to grow, you should consider partnering with a strategic CFO who can provide guidance and oversight for your bookkeeper. 

A strategic CFO provides the “so what” or the valuable insight that goes along with the financial reports produced by your bookkeeper. And, ideally, they are a strategic partner to the CEO/Founder, providing actionable advice focused on building for the future.

Your Business Can Do More with a Strategic Finance Partner

At Embarc Advisors, we are focused on what you need now–and in the future. We provide a full-service firm experience that can set you up for bigger successes as you grow, evolve, and eventually plan to exit.

Get in touch with our team to learn more about adding a strategic CFO to complement your bookkeeper.

See the Difference that Embarc Advisors Can Make for Your Business

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