For small business owners, keeping tabs on financial records at all times and ensuring good cash flow are some of the most important parts of running a successful business. However, there are challenges that prevent business owners from doing these tasks as often or as consistently as they should. Most business owners report feeling like they don’t have time to take care of their books or feeling confused by their accounting software – that’s where your bookkeeper comes in!
So what exactly does a bookkeeper do?
A bookkeeping professional is someone who helps businesses keep their finances running smoothly by keeping track of their various accounts and transactions, generating key financial reports, performing account reconciliations, and providing key updates and insights to the business owner that can help them improve their financial position. Depending on what type of bookkeeper you work with, they may also provide some additional or industry specific services that can help business owners grow their business faster and more efficiently.
But before we get into all that. Let’s start with the basics. What is bookkeeping?
On the most basic level, bookkeeping is the practice of recording, classifying, and reconciling the financial transactions of a business against their bank and credit card statements. This ensures that every transaction your business makes is recorded appropriately and classified correctly in your books to ensure that your finances are accurately reflected on your taxes and in your financial statements. Once you get the basic data entry done (and done right!), you can use this data in all sorts of inventive and useful ways. We’ll get to that in a second!
Why hire a bookkeeper if I can do all this data entry myself?
This question is as old as time, and we’re glad you asked! While the most basic definition of bookkeeping may seem simple on the surface, the reality is that your company’s bookkeeping is a little more complicated than you might think. Not only do your books need to be recorded 100% accurately in order to maintain compliance and use it for any more advanced purposes – like cash flow forecasting or KPI analysis – but simply maintaining your basic financial records won’t help you use this data to truly grow your business.
A bookkeeping professional will help you go beyond this basic data entry process and actually read between the lines. By generating key financial reports like your profit and loss statement, your cash flow statement, and your balance sheet on a regular basis, your bookkeeper will gain a clear understanding of your company’s financial health and use that understanding to provide helpful insights and suggestions to improve your financial performance.
How to Get Small Business Financial Data to Go to Work for Your Company
If you’ve done your own bookkeeping in the past or have received financial reports but not a lot of context, you might be wondering: how can these reports actually help me grow my business? We have a few ideas! When we generate these reports for our clients, we have a special attention to detail in terms of how their profits are being made, how well their cash flow is performing, and how business debt is impacting their company. We also use specific strategies to more easily translate this data to our clients.
For example, we work with digital marketing agencies who often take on many different types of projects, from web design and branding to social media and copywriting. We categorize these different types of income and the expenses that go with them so that our clients can easily identify where their money is being made and which services are the most profitable. This goes a long way in helping our clients understand how best to scale their agency and where their budget should be expanded or cut.
We can also use their past data to run projections based on solid financial data that help them answer questions like:
- What should I delegate in my marketing agency?
- What is my budget to hire new staff?
- How much can I expect to make this quarter or this year?
- What seasonal shifts can I expect in my business?
- And so much more!
How to Unlock the Power in Small Business Financial Data
If you are interested in using your financial data to streamline business decision making and understand more about your financial performance, we highly recommend seeking support from a qualified bookkeeping professional. Our team here at Terrain Bookkeeping specializes in supporting creative and digital agencies who are looking to say goodbye to tedious bookkeeping and hello to advanced financial data that helps their business to grow.
Interested in learning more? Schedule a free, no obligation discovery call today!