With Covid-19, a lot of businesses were unprepared on how to assess their spending.
While most knew they had to make cuts, knowing all the avenues for where those should go under such a stressful situation wasn’t easy. Even with a solid financial advisor or accountant by their side, some still had a hard time figuring out what their cash flow was and what it should look like moving forward. However, that’s why having a solid bookkeeper is such an essential for any accountancy.
To help introduce you to the world of bookkeeping, we’ve put together a breakdown of what it is, what quality bookkeeping can do for your business, and how to find the perfect person to handle it. Take a glance and get hip below:
What is quality bookkeeping? Why do it need it in addition to my bank statement?
The simple definition of a bookkeeper is someone who keeps track of the transactions for your company. However, a quality bookkeeper is so much more than that.
While you can get a list of transactions from your account statement, a good bookkeeper can help you understand your finances, as well as puts them in terms that others can understand as well.
Although that sounds elementary, you’d be surprised by the number of businesses that don’t understand the numbers a bookkeeper has put together, ultimately wasting time for the owner, accountant, and anyone else who might need to view that information. An exceptional bookkeeper speaks the language of numbers, putting it into digestible terms that anyone can understand.
How it can help in an emergency:
Beyond just developing a ‘big picture’ view of your finances, bookkeeping can help prioritize and strategize what to do in the case of an emergency. Here are a few primary examples:
Knowing How Much Cash You Have On Hand
Bookkeeping will help you understand how much cash you have on hand, including assets. This is helpful in figuring out your spending power, as well as what should be cut back on.
With a good understanding of where your expenses are going, you can prioritize where your spending should go, as well as what can be nixed. This is helpful in ‘going lean’ if you have to, giving yourself the opportunity to catch up on building cash reserves.
Having A Cost-Reduction Plan
Another helpful resource from bookkeeping is having a cost-reduction plan ahead of time. Similar to prioritizing your expenses, this is essentially knowing what can go first regarding costs so you’re not making that decision under duress. Plenty of business owners lose their heads in times of crisis, failing to address the proper priorities.
Assessing Future Costs
On the flip side, a good bookkeeper can help you understand where to open up spending in tough times, as well as during recovery. While they’re not financial advisors, they can provide insights into where spending has had a better ROI than in other places, ultimately helping you spend smarter.