Why is this important?

Maintaining accurate records for the business is one of the most fundamental tasks for any business owner. The role of the bookkeeper is to record and process the financial transactions of the business. Bookkeepers can provide the base level financial information owners need to make informed decisions about their business. As such, this is an important function within any business and the information the bookkeeper can provide tracks the very heartbeat of the business.

The key benefits of a good bookkeeper include:

• providing you with accurate information on a timely basis
• this leaves you to focus on what you do best, your core business
• you can then make timely and relevant decisions based on this information.

As you can see, the role of the bookkeeper is an important one. The following guide provides guidelines and steps on how to select and work with your bookkeeper in the most efficient manner.

What to do

Selecting your bookkeeper

Your bookkeeper will be privy to confidential information about the business, and as such, you will need to trust him or her with regard to their integrity and confidentiality. It's recommended you meet with a potential bookkeeper a number of times before you engage him/her so you can assess how you feel towards him/her, and whether you sense you can develop trust in him/her.

Determine your selection criteria

These would typically include such factors as:

• knowledge and technical skills
• communication skills and ability      
• recommendations from others
• understanding of your industry
• costs (must be within an acceptable range)
• compatibility between their firm and your business
• range of services provided
• level of interaction and engagement they provide and what level you are looking for.

How do you get this information?

The best way to get this information will be from meeting him/her and discussing the key areas you need assistance in. You may also find information about him/her from:

• their website
• referrals from people you know
• testimonials from their existing clients

Define role and expectations

This is the most important task in this function. It is vitally important that from the outset you clearly define the role and set clear expectations.

There is quite a wide range of functions which bookkeepers can perform, so you need to specifically identify which tasks you want them to perform. Typically these tasks include:

Data entry of:

• receipts and payments
  • sales invoices
  • suppliers invoices
  • petty cash
• bank reconciliation
• sales invoices to be entered into Accounts Receivable Ledger
• purchase invoices to be entered into Accounts Payable Ledger
• reconciliation of Accounts Receivable at month end
• reconciliation of Accounts Payable at month end

Advanced duties may include:

• debtor collection, follow up and updating of Accounts Receivable
• preparation of deposit slips for cheques and cash received
• weekly or monthly run of payroll
• payroll reconciliation
• Payment Summaries (Group Certificates) at end of year, including statements of earnings
• preparation of purchase orders
• preparation of Business Activity Statements (BAS) and Instalment Activity Statements (IAS)
• preparation of books and records up to trial balance stage
• processing of job costing information
• preparation of internal management accounts, of draft financial statements throughout year as required
• preparation of summary of key financial information including:
  • sales
  • gross profit
  • total expenses
  • net profit
  • liaison with external accountant for compliance purposes
  • provision of information supporting preparation of Income Tax Return by external accountant

Define access to information and provide the information as required

Your bookkeeper will need access to a wide range of information from the books and records of your business. To allow him/her to do his/her job, it is important that you provide him/her with the information he/she needs, or give him/her access to obtain the information. There may be some information which you consider too sensitive to be shared with your bookkeeper. This is fine, so long as you make him/her aware of this, and do not expect them to produce reports which require this information.

Commit to providing information in timely manner

It’s one thing to agree to give him/her information, but it can often be quite something else to actually provide the information. This can be as simple as giving him/her all the petty cash receipts you have (yes, even the ones in your glove box!) but may also include key information of which he/she would not otherwise be aware. You need to support your bookkeeper to ensure you get a good return on the investment you are making in him/her. Accordingly, you will need to provide him/her with controlled access to all records, invoices, cheque books, bank statements and payroll records.

Confidentiality Agreement

With access to such private and confidential information you must ensure you trust the bookkeeper and ensure confidentiality is maintained at all times. It is highly recommended that you have him/her sign a Confidentiality Agreement. There should be provisions in the agreement which include restrictions on any external use of any information obtained to as a result of exposure to books, records and information of your business.

Be prepared to explain issues

There will be many occasions where you will need to explain the background behind a transaction so the bookkeeper knows how to treat it in the books. He/she is not a mind reader and will need your assistance on some occasions. Make sure you make yourself available for them.

Develop ability to understand what the bookkeeper is saying

Many business people are not familiar with the intricacies of bookkeeping hence the need to engage one. It is important to develop your ability to understand what he/she is telling you about your business, or cashflow, or debtor collections, as he/she can see firsthand the financial impact on the business.

Understand and agree on costs

While costs are important, they should not be the sole determinant in selecting your bookkeeper. This is one area where getting the ‘cheapest’ may not always be the best idea! So long as the fees are within an acceptable range, and the bookkeeper provides you with the results you want, and the information you need on a timely basis, cost should be considered along with the other selection criteria.

Cross check with your accountant

It is worthwhile to consider having your external accountant involved to some degree in the selection process. This is important for two reasons. First, it is almost certain the bookkeeper will be involved with the accountant at some stage throughout the year, particularly in regard to year-end tax and compliance issues. It is therefore important to ensure they can relate to each other at a professional level. Second, it is highly recommended that the accountant cross-check the work of the bookkeeper at various intervals throughout the year. This should help to minimise any processing errors which may occur and also check the level of accuracy being attained.

Next Step

Once you have selected your bookkeeper, what’s the next step?

1. List the issues which need to be worked on
2. Meet with bookkeeper to review list and set priorities
3. Collect and collate the information you expect your bookkeeper will need
4. At all times, communicate openly with your bookkeeper, in regard to specific duties and your expectations
5. See to establish trust and rapport
6. Understand their limitations, (it is impossible to know ALL the answers!)
7. Seek possible solutions and options when met with difficulties
8. Take an interest in the information they provide back to you
9. Regularly review their performance and level of engagement with your business

10. Acknowledge them as an important part of your team.

Where to go for help

Do it yourself

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