Good financial record keeping is essential for every business. So what happens if your books suffer in the hands of an incompetent bookkeeper?
It could be something as simple as having key pieces missing or something as serious as criminal activity.
One small business we know – let’s call them Company XYZ – hired a bookkeeper through an online ad. For the first three months, everything seemed to be running smoothly, and then one day this bookkeeper vanished without a trace – leaving behind a mess of paperwork and stealing the business’s identity along the way. Sorting out the disaster led to eventual bankruptcy.
Don’t for a second think that all bad bookkeeping stories end in criminal activity and bankruptcy. And, not all bookkeepers simply vanish when the going gets tough, but the reality is that small businesses tend to overlook the importance of having a good bookkeeper. In small companies, an office manager or an assistant is often tasked with the bookkeeping duties, regardless of their qualifications or abilities. And even the hardest working and the smartest of staff don’t necessarily truly understand the process and end up missing important pieces of the puzzles.
A bookkeeper’s primary role is data entry but there is a lot of value in hiring someone who understands that role. In the long run, it could costs much more to clean up after poor bookkeeping than it does to hire a properly qualified bookkeeper in the first place.
So what should you expect when hiring a bookkeeper? A good bookkeeper should:
- Be detail oriented and be able to focus on the little things that need attention for the basic financial operations.
- Have a thorough understanding of bookkeeping and accounting terms.
- Appreciate the big picture of what your business is trying to accomplish and where you are heading.
- Be consistent in how they record expenses so that you can gain a realistic understanding of how and where your money is spent.
- Remain up-to-date and provide you with regular reports.
- Understand that sometimes mistakes do happen and have errors and omissions insurance to safeguard the business.
One thing your bookkeeper should not have is access to your bank accounts. Ever. Having the ability to review your bank statements is fine, as is offering assistance in setting up automatic payments or deposits. But there is never a reason for your bookkeeper to have access to your accounts and you should be wary of any bookkeeper that insists on that kind of access.