Bookkeeping is the recording of financial transactions, and all businesses have to do it. It is an overhead cost, so what can you do to save money on your bookkeeping fees? This article discusses the top 5 ways you can reduce your bookkeeping costs.
Most of the well-established accounting software packages have got excellent features for processing and capturing data, so you should choose a package that has all the functionality that you will need, rather than setting up and maintaining additional mini-systems as well.
For example, aim to raise sales invoices from within your accountancy package, rather than using a sales invoices template in Microsoft Word. If you use Purchase Orders, choose a package that includes a purchase order module, such as Sage 50 or Xero, rather than creating a purchase order log in a Microsoft Excel spreadsheet. By keeping everything within one system, drilling down is quicker, so there is no need to cross reference a second system, and errors (and subsequent corrections) are significantly reduced.
Stay up to date and avoid backlogs to ensure that ledgers are kept tidy. It is generally quicker and cheaper to keep bookkeeping really up to date by doing it little and often, rather than to have lengthy catch ups. Bookkeeping is not always straightforward and there are often queries, but it is cost effective to address queries promptly and resolve them. Memories fade over time and it is so much harder to resolve older queries than those that are fresh in our minds.
By keeping your business transactions completely separate from your personal transactions adds clarity. We always recommend that you run a separate business bank account, and never pay for personal transactions through the business account. Equally, for other trade accounts or payment methods. It might be quicker to make a business purchase on a personal Paypal account, or to make a private purchase on the business credit card, but it is these type of transactions that will take additional time for your bookkeeper to unravel.
These days software developers are constantly introducing new features and more automation with the goal of reducing the bookkeeping workload. In general, adopting this new software and new features can make cost savings for your business.
However, we offer a word of warning here. Software is good at automating repetitive and routine transactions, but they are often not as good at replacing the diligence and questioning of an experienced bookkeeper. If your business is not very repetitive or has additional complexities (such as operating in multiple currencies), the time savings from the reduced processing might be outweighed by additional time required from your bookkeeper to spot and correct errors. If your business is still small, there might not be sufficient volumes to notice any real time savings from automation.
Whether you are employing a bookkeeper or engaging an outsourced provider, choose someone where there is mutual respect, who is interested in your business and who you trust with your confidential information. Having chosen the right person for you, be prepared to work closely with them. Ensure that you obtain a letter of engagement which documents the services provided, the scope of the work and the agreed fee. If their fee is based on an hourly rate, then ask for timesheets to be provided along with the bill.
To get in touch with us to find out more ways that JRMA can help support your business, contact us here.
