There are many important issues that a business owner and management must deal with on a daily, weekly and monthly basis, to keep the company progressing towards growth goals.
See also Outsourced Accounting/Bookkeeping
Sales, production management, new product development and new market expansion can consume a large quantity of time. After all, owners and management assume their roles based on the love of the work and personal interest in leading the company to increased success. Depending on the size and focus of the company this could mean that other “seemingly” less important issues such as accounting and bookkeeping. Although it’s easy to delay addressing these items in favor of more strategic concerns, there is a price to pay for taking this approach. If the company’s approach to bookkeeping is a wait and see, or it’s delegated to a non-accounting professional, then it’s likely there are issues with the process. To help clients, prospects and other identify when it’s time to outsource bookkeeping, Hanson & Company has provided a summary of the top signs below.
Never Enough Time – This is a key reason that many business owners approach our firm to help manage bookkeeping issues. When the owner wears too many it’s common for certain things to “fall off the radar”. In many cases, this is the bookkeeping and accounting work. Although a necessary function of the business, most people don’t start a company for their love of compliance work. They start a company because they have passion about the service they are offering or product being delivered, not to manage accounting work. The result is the common excuse for why the work is not getting done – NO TIME! The result is incomplete accounting records and a perpetually ineffective process.
Outdated Books – One sign that a company needs to outsource its bookkeeping is a chronic case of outdated books. If a company relies on the owner or part time employee to update accounting information, then it’s more than possible this will occur. It’s important to remember that updated books are essential to providing management with the critical financial information needed to make important decisions. Failing to make this a priority will have negative results not only in bookkeeping but other areas of the company.
Lack of Internal Controls – This is an especially important sign that it’s time to outsource bookkeeping. If the same individual is writing checks, cashing checks and reconciling the bank records, the opportunity for fraud is outrageously high. Just consider how easy it would be to disguise improper financial behavior. If the company has a single professional that manages all these responsibilities it can be dangerous. Of course, no one wants to think that a trusted employee would engage in such behavior, but it happens all too often. As reported in the 2015 Report to the Nations on Occupational Fraud and Abuse, the average incident of frad resulted in an average loss to the company of over $140,000.
Delayed Invoicing – Almost every business owner and executive is more than happy to send an invoice to clients for work performed. However, when the accounting process is not functioning in an optimal state it’s common for invoices to be delayed. This generally occurs when a non-accounting professional is given the responsibility of preparing and sending out invoices. Rather than promptly issuing those at the end of the month delays occur. As the situation worsens because of no staff or lack of time, the number of days in the delay process increases. The worst thing about delayed invoicing is that it puts a strain on cash flow and may limit the company’s ability to make strategic moves due to cash constraint issues.
Maintaining an accurate bookkeeping process is critical to the health of the company today and in the future. If your bookkeeping process suffers from the symptoms listed above or is facing other issues, it may be time to make a change.For additional information, please contact us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon.