While it is true that every business requires some level of accounting – to know how it’s performing financially – it is incorrect to assume every business needs a bookkeeper and/or an accountant. Some small business owners opt to balance their own books if they don’t have the funds or don’t want to spend money outsourcing financial help. For the purpose of today’s article, we are going to discuss the beauty of when a business has both.
Some people say that bookkeepers and accountants rival each other because they both use seemingly similar skills. This is sometimes why a business will choose to hire one or the other. However, rather than either being seen as the sole solution, we believe bookkeepers and accountants should be considered a matching pair. Independently, their work is important, but together, they can dramatically improve business growth.
First Things First
Before we get started, it’s important to understand both roles. Put simply, bookkeepers record a company’s day-to-day transactions. Accountants verify and analyse that information in order to inform decision makers.
It tends to be larger businesses who can afford to have both an accountant and bookkeeper on the payroll. But what’s the real benefit of the dynamic duo? Firstly, a business owner is able to offset the large majority of accounting responsibilities. This means they can then focus their attention on other aspects of the business.
The work of both professions complement each other. Bookkeeping could be described as a ridged role. They provide the structured, clear, necessary facts. An accountant’s job has been described as more creative in its use of company statistics. Accountants look at the figures from a different perspective. They have to decide how best to move the business forward by interpreting the company’s raw data. “An accountant’s analysis can provide information for forecasts, business trends, opportunity for growth and when to restrict spending to manage cash flow” explains Business News Daily.
When both parties are involved – the accountant and bookkeeper – there tends to be two types of working relationship. A non-existent one whereby contact is minimal and simply involves the handover of information from one party to the next, or a collaborative one. The latter relationship demonstrates trust. It is a support network where the accountant feels the bookkeeper is a reliable source of information, and the bookkeeper can look to the accountant for guidance and expertise. Acknowledging each other’s strengths is important for any relationship to develop. It is also crucial for the overall long-term success of a business.
When is the Time Right?
If a small business owner is balancing their own books and finds themselves with a little extra cash, it can be tempting to put that money aside rather than choosing to invest it in an accounting department. But while this may seem like a good short-term strategy, it can come back to bite them. 82% of businesses fail due to poor cash flow management skills – not because of lack of customers or bad employees – says ACCA. A bookkeeper and accountant can help ensure this doesn’t happen – it’s their job to detect issues before they arise. Even if a business is happy with their current size, with no intention of growing, it’s still a good choice to enlist financial help to ensure they continue in a healthy direction.
Considering a career in accounting or bookkeeping? Contact Aspiring Accountants today to discuss which role suits you.
For more information on the difference between bookkeeping and accounting, head to our Bookkeeper Vs Accountant article.