Why SMEs Should Use an Outsourced Bookkeeping Service

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The last few years have been tough for small businesses in Australia and New Zealand. One study found that 63% of small businesses in Australia were negatively affected by COVID-19. 

In New Zealand, 43% of small businesses said they either had used or planned to use government wage subsidies to survive. When times are uncertain and cash flow is less reliable, it’s more important than ever to stay on top of bookkeeping to grow your business

Asking small business owners to manage their general ledger and strategise their recovery is a tall order. If you’re running a small- to medium-size enterprise (SME), outsourced bookkeeping service help can keep you on track. 

In this article, we’ll cover everything you need to know about outsourced bookkeeping services, including: 

  • What does an outsourced bookkeeping service do?
  • How an outsourced bookkeeping service can help your SME
  • When to outsource your business bookkeeping
  • How to choose an outsource bookkeeping service

What does an outsourced bookkeeping service do? 

You may be hesitant to start looking for an outsourced bookkeeping service because you’re uncertain of the benefits. Perhaps, you’re unsure how an outsourced bookkeeper will work within your existing business processes. 

Many outsourced bookkeeping solutions handle your day-to-day bookkeeping and back-office tasks. They also provide valuable insights that help you make better business decisions.

An outsourced bookkeeping service can free up time in your back office by tackling:

1. Bookkeeping  

Visory’s outsourced bookkeeping services optimise cloud accounting software usage, with clear workflows and platform integrations to create a connected workspace for you to access. Businesses get a dedicated bookkeeping team with industry-specific experience, to take care of bank reconciliations, journal entries, financial statements, and much more. 

2. Payroll 

With Visory’s payroll services, your staff will always be paid on time. An expert will prepare pay runs for you with clear review structures and automated payments where possible, whilst making sure your business is single touch payroll compliant. As a result, you’ll cut down the time you spend on payroll and free up more time for other parts of your business. 

3. Invoices and accounts receivable

An outsourced bookkeeper also makes sure you get paid. They keep your accounts receivable (AR) updated, so you don’t wind up with bad debts. Also, a bookkeeper will put best practices in place to stay on top of your AR, including:

  • Structured payment terms
  • Automated follow-ups 

4. Bills and accounts payable

Your bookkeeper handles accounts payable to make sure you pay supplier invoices in a timely manner. Staying on top of your accounts payable helps you maintain healthy relationships with vendors. Optimising payment schedules will also improve cash flow and reduce late payment fees.

5. Financial statements 

Quarterly reports and financial statements are time-consuming but they reveal how your company is performing. As a business, you’ll use them to help make informed decisions and monitor the financial health of your company. Also, investors, banks, and partners look over financial statements, so it’s important to have accurate reports. 

Outsourced online bookkeeping services can prepare profit and loss statements, balance sheets, and cash flow reports for you.

6. Ongoing reconciliation

Visory ensures that all transactions are accurately recorded through ongoing reconciliation. An outsourced bookkeeper matches bank statements with financial records to identify discrepancies and correct errors promptly. 

7. Budgeting 

An outsourced bookkeeping service can help you create realistic budgets and track performance against them. Budgeting can help you identify areas of improvement, lower costs, and allocate resources effectively to your business.  

8. Forecasting 

Bookkeeping experts can generate financial forecasts that provide insights into future revenue and expenditure. A bookkeeper will look at past performance or historical data and use that to better predict the future. 

With forecasting, you can anticipate financial challenges and adjust strategies. For example, a short-term cash flow forecast can tell you how much money you’ll have to keep your business running or invest back into it. 

9. Customer analysis 

A bookkeeper can analyse where your biggest sales are coming from. Visory’s bookkeepers can look at sales and revenue data to identify the most valuable clients and customer segments. 

10. Prepare for tax season

You don’t want penalties after lodging your tax returns. At Visory, we ensure compliance with tax regulations, accurate record-keeping, and timely filing. So, you minimise the risk of penalties and audits and focus on growing your business with confidence. 

How an outsourced bookkeeping service can help your SME

There are many benefits that come with outsourcing your bookkeeping and other business finances. For example, Visory can run a financial health check, so you know where your business stands. 

Here are some other benefits of outsourcing bookkeeping: 

  • Save time – Bookkeeping is time-consuming. Taking shortcuts for data entry and report running may lead to mistakes, and accounting mistakes can get costly. Your time is valuable—outsourcing your bookkeeping helps you focus more on running and growing your business.
  • Gain an objective view – You may be too close to your business to admit when one part isn’t working anymore. An outsourced bookkeeper may serve as a reality check by offering a new set of eyes. 
  • Get access to expertise – A company like Visory can match you with a bookkeeping team that knows your industry in and out. As you grow, an expert may be more helpful than a general bookkeeper. 
  • Save money – You may also save money on staffing when you outsource bookkeeping. You can reinvest those funds into research and development, marketing, and other company initiatives.
  • Better understand your cash flow – With an in-depth analysis of your spending, you can better manage your cash flow and stay in the black at the end of each month. 
  • Plan ahead with detailed forecasting – Bookkeeping is more than knowing what’s in your bank account. It’s also about keeping it full. Bookkeepers who are embedded in your business, even remotely, can update you regularly on your financial health. 

When to outsource your business bookkeeping

When your business grows quickly, you have more bookkeeping needs. These are a few signs that an outsource bookkeeping service is right for you

  • Bookkeeping and financial recordkeeping take more time than you can afford
  • Books are always out of date and in need of catching up
  • Your business isn’t taking full advantage of potential tax write-offs
  • You’re struggling to track your cash flow
  • Your accounts receivable and payable processes aren’t running smoothly

This isn’t an exhaustive list of signs that your business could benefit from using a bookkeeping service. Visory’s team helps businesses at all stages streamline their processes so you can stay focused on growth.

How to choose an outsource bookkeeping service

Selecting a competent and reliable outsourced bookkeeping service is key. The right provider will contribute to your company’s success and growth. Here are some qualities to look for when deciding on bookkeeping services: 

  • Qualifications – Ask if the bookkeeping service employs certified professionals with relevant accounting or bookkeeping qualifications and experience. These include CPAs or certified bookkeepers.
  • Industry expertise – Look for bookkeepers with experience in your specific industry They’ll understand the unique financial requirements and regulations that apply to your business.
  • Value – Is the cost worth the money and time you’ll save by outsourcing bookkeeping to an expert? Typically, outsourcing is more cost-effective than hiring in-house. 
  • Communication and support – Make sure the service in question offers clear channels of communication and timely assistance when you need it.
  • Integrations – Check whether the bookkeeping service integrates with your existing accounting software and other business tools, ensuring seamless data exchange and streamlined processes.
  • Flexibility – Will they be able to handle your bookkeeping and other back office needs as your business grows? As your business grows and evolves, your bookkeeping needs change.
  • Other services – What services do they offer outside of bookkeeping? For example, Visory also handles payroll. 

Outsourced bookkeeping keeps robust financial reporting affordable and reliable. Visory can match you with an expert who understands your industry and grants you 24/7 access to your double-entry bookkeeping, tax records, and more. Bookkeeping is a lot easier with a financial expert on your side.

Bookkeeping Basics: The types of bookkeeping accounts every business owner should know

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As a business owner, you’re the top expert on your company’s products and services. An expert on controlling a balance sheet? Umm… not so much. Yet, knowing the back office like the back of your hand is essential to running a thriving organisation. Understanding types of bookkeeping accounts and tax timetables help you better plan for business growth. 

Is the language of the back office a bit daunting? Don’t be scared off. Learn the basics of bookkeeping terms and various methods of accounting. Once you better understand your accounting practices, you can become an expert on your business’s financial health.  

Basics of bookkeeping

Even creative executives should know basic practices. Budgets for social media, marketing, and advertising will be informed by available funds, after all! You’ll hear these fundamental buzzwords in any bookkeeping meeting worth its salt. Here is what they mean. 

  • Accounts payable – Your accounts payable includes any amounts owed to a supplier or other business. If you have received a good or service but not yet paid for it, your supplier’s invoice goes into your accounts payable. 
  • Accounts receivable – These are invoices that reflect money owed to your business. In short: unpaid bills from customers or clients. 
  • Assets – Assets include a combination of your accounts receivable, property and equipment owned by your company, product inventory, and liquid funds. 
  • Liabilities – Your liabilities combine accounts payable with other debts like bank loans, outstanding payroll, and credit card balances. 
  • Revenue – This term relates specifically to the money your company makes from its goods and services. 
  • Expenses – Your expenses are more than what it costs to run your business and sell your goods and services. This factors in everything from utilities and cleaning costs to salaries and insurance. 

Photo by Mikhail Nilov from Pexels

Types of bookkeeping accounts

There are various types of bookkeeping accounts and ways to calculate your taxable revenue. The way you record transactions and manage debits and credits often varies depending on your organisation’s annual income and the complexity of your expenses. Here are the most common types of accounting any executive needs to be familiar with. 

  • Cash basis accounting – Under this accounting scheme, you only record a transaction when the cash actually trades hands. Cash basis accounting is ideal for small businesses. 
  • Accrual basis accounting – When your business uses accrual basis accounting, you record a transaction when the service is complete — even if you haven’t been paid yet. 
  • Single-entry bookkeeping – In single-entry bookkeeping, you only record each transaction once. For instance, if you make a sale of $100, you only record it as revenue of $100 when using the single-entry system. 
  • Double-entry bookkeeping – When you implement a double-entry bookkeeping system, each transaction is recorded twice. For instance, when you make a sale of $100, you note it once as $100 revenue and once as $100 in lost inventory. Double-entry bookkeeping balances your credits and debits. 

Other bookkeeping terms you need to know

  • Cash flow – Cash basis accounting is the best way to track cash flow accurately, but any accounting scheme must track how much cash is coming in and out of your business. 
  • Cost of goods sold (COGS) – This term relates to the total cost of producing your products, including materials, labour, and other overheads. 
  • Owners’ equity – If you calculate total assets and subtract the total liabilities, you can calculate the value of your ownership. 
  • Balance sheet – A balance sheet lists assets, liabilities, and owner’s equity. It provides a snapshot of your financial health at any time and a look at your net assets.  
  • Manual bookkeeping – Manual bookkeeping are records kept in paper form. The Australian Taxation Office recommends keeping your records for five years. 
  • Cloud bookkeeping – Electronic records are usually produced using bookkeeping software. You’ll also want to keep these records for at least five years. 

Running your business can often remove you from the day-to-day accounting processes of your organisation. But knowing your way around a balance sheet helps you track growth and know when it’s time to scale. When you enlist Visory as a bookkeeping service, you have access to a trusted team of bookkeepers who will do the heavy lifting of record keeping. If you don’t know your way around a general ledger, we’ll show you the way. 

Harnessing the Cloud: If cash is King, data is its Queen

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A recent study found nearly half of Australian businesses are looking to increase cloud infrastructure spending in 2020, and 59 per cent now have ‘cloud first’ policies when it comes to making new investments[1].

Cloud accounting allows your business, its administration employees and advisers to access its financial information live from online servers, anywhere at any time, which helps your business make better choices as it can use ‘real time’ information to assist its decision making.

The power of data lies in both its timeliness and its ability to be tailored to the individual business. Raw data by itself is difficult, if not impossible to utilise effectively. However, by using integrated systems such as optical recognition, live bank feeds, and industry specific software that is linked to the core application, your business can start to approach the detail and data integrity of larger organisations.

By increasing your business’ level of data accuracy, you’re not only better positioned to meet your day to day compliance needs accurately and efficiently, but you’re also setting up your business to take advantage of the data at its disposal by summarising and presenting the data in ways that are specific and useful to your business.

The key to making the most of the data available to you is to delve into the key drivers of your business and the industry it operates in. The lead indicators of a coffee shop will differ to the lead indicators of a freight business, so it’s critical to narrow in on the data points that really make a difference in your business.

Once decisions have been made about the core drivers of your business’s success, most cloud systems will allow you to tailor reports to focus on selected data points, either from the core platform or from a linked industry-specific application.

Undertaking an analysis of the key trends you have identified across these data points can then be developed into a set of visual management reports that allow you to have a finger on the pulse of your business on a day to day and week to week basis.

Identifying the key business drivers and the underlying data flow that reports on them is a great foundation for building a reporting pack that helps you as a business owner analyse current trends and make solid decisions about future direction, quickly and accurately.

To maximise the return on investment in your cloud data, diarise time each week, and each month to review the reports that your cloud system produces for you to assess your performance against current goals and re-set goals and actions for the next period.

Lastly, never forget the maxim, ‘rubbish in, rubbish out’. Good data quality should not be taken for granted in the world of data integration.

For assistance identifying your key business drivers and implementing cloud solutions, please get in touch with our team.

[1] Australian IAAS Market Soars Beyond $1.3BN