As I got asked to start writing a blog for Lendio, I thought I would pick a quick topic related to something I was asked about recently: what does a bookkeeper do? What should I look for in a bookkeeper? Can I just use someone in the office to enter the data?
A good bookkeeper is more than just an entry level data entry person. Good bookkeepers and accountants get the data in the right classifications in a timely manner to make it possible for the controllers, CFO, and management to make quick and accurate assessments and decisions.
However, bookkeepers, Controllers and CFOs often get pulled in various directions for specific office needs, including projects and analysis of historical data and financial projections.
If this happens too much, the basic accounting of the company becomes a secondary priority and critical information required to make correct decisions is unavailable. This is what I refer to as the dial tone of the accounting department.
What I mean by this is most business professionals, including CFO’s, controllers and accountants use Smartphones and they’re great. However, with all their functionality if the phone component of the Smartphone doesn’t work it’s basically useless. The same goes for a bookkeeper. If they’re overloaded with other office functions and can’t focus on bookkeeping they’re essentially hurting the management team’s ability to get information to make decisions and hence the idea of dial tone being consistent and timely as needed comes into play. I cant take credit for this analogy of the dial tone as I read it years ago in an article and adapted it to my own experiences in business.
So some keys to the right characteristics of a good bookkeeper and some key items for helping the bookkeeper be successful include:
- Ability to complete tasks on time. A good bookkeeper will know and understand what it means to meet a deadline. I always say, “Nothing drives like a deadline” and I need my bookkeepers to believe and follow that in their work.
- Attention to detail. Even the smallest mistakes are costly.
- Ability to work with spreadsheets.
- Formal training in accounting, at least a bookkeeping certification or associates degree in accounting. A friend or colleague who’s good with numbers will not cut it.
- Strong ability to work in the accounting package your business uses.
Expectations: Realize if you expect your office manager or receptionist to answer phones, greet customers, and other duties related to general office items AND be the bookkeeper responsible for routing and entering expense reports, processing timesheets, reconciling bank accounts, you’reasking a lot of one individual. What I’ve found in my experience is that hiring a dedicated, part-time bookkeeper or accountant, with formal training in accounting, to work a couple hours a day or a week, is a more efficient use of time and reousrces because it allows a bookkeeper to work uninterrupted for appropriate periods of time for the quickest reconciliations and most accurate data entry. Often a business will combine the responsibilities of an office manager and a bookkeeper which is confusing as the respnsibilites are completely different and business critical reports are not up to date and organized like the owner, CFO and/or accountant needs it to be. When this happens it interrupts the flow of business and creates more work for the CFO by requiring him to go back and fix the bookkeepers’ work.
In working with clients over the past 18 years, our staff at The Accend Group has dealt with just this exact scenario time after time. Sometimes a business owner will justify having one person do these multiple roles by either hiring someone that knows accounting. I think its great that any business that can afford to have someone formally trained at some level doing the accounting.
But if that person isn’t working full time or near full time in an accounting role, do the other duties that are required of that accountant utilize that persons pay rate? In other words, could the lower level items be done by a lower paid person and the accountant be a part time person, only focusing on those accounting issues on an as needed, and much more efficient and less expensive manner? There isn’t always a set answer to this. But with some simple, quick calculations, it can be determined.
And then sometimes, it isn’t about saving the few dollars when a full time staff member, with or without formal accounting training is asked to perform accounting and the other miscellaneous tasks: its about getting that dial tone done quickly without the frustration of not having the numbers to support the quick, timely business decisions the management often times needs to make. A few dollars spen on getting timely reports, that enable the team to take action to cut costs, increase sales, and make customers more satisfied with the company’s efforts could become a great return on the investment if the dial tone is otherwise not being addressed.