What Does a Bookkeeper Do?
Oct 11, 2024When searching for a bookkeeper, you might encounter professionals offering various services, making it challenging to compare them. To clarify, I’ve created a guide to explain the key roles a bookkeeper can play and how they contribute to your business.
Understanding the Role of a Bookkeeper
A bookkeeper’s primary role is to manage your business's financial records. This can range from focusing solely on historical data to providing daily cashflow support and even strategic budgeting advice. If you find a bookkeeper who can do all this, you’ve found a valuable asset to your business!
Let’s explore their core responsibilities:
Historical Bookkeeping
Most bookkeeping is historical—reviewing and recording past transactions to ensure your financial records are accurate. Here’s what a skilled bookkeeper will handle:
- Transaction Recording: Entering data into bookkeeping software and ensuring all financial records are up-to-date.
- Bank Reconciliation: Matching transactions to bank statements to ensure accuracy.
- GST Coding: Understanding industry-specific GST intricacies (e.g., GST on food, insurance, or software) and applying them correctly for accurate BAS lodgement.
- End-of-Month Reporting: Preparing reports and explaining them to provide clarity about your business’s financial health.
- Compliance: Keeping your records organised—whether paper-based or digital—to ensure you meet tax and legal obligations.
A great bookkeeper will also stay up-to-date with technology, using tools like bank feeds and rules to streamline processes, saving you time and money.
Software Expertise
Bookkeeping is not about mastering specific software—it’s about understanding how to manage financial records. However, experienced bookkeepers will often specialise in certain platforms. Whether it’s Xero, MYOB, or another tool, a professional bookkeeper should be able to adapt quickly to your preferred software. Over time, familiarity with a platform improves efficiency and accuracy.
Cashflow Management
Some bookkeepers go beyond historical data to actively manage your day-to-day cashflow. These professionals are often referred to as Cashflow Managers.
Here’s what they do:
- Day-to-Day Planning: Monitoring incoming and outgoing funds, prioritising bills, and ensuring there’s enough cash for taxes, superannuation, and other expenses.
- Payment Assistance: Preparing and loading payments into internet banking systems (with safeguards like dual authorisation for security).
- Payroll Management: Processing payroll based on timesheets or contracts, with a solid understanding of award rates and industry requirements.
- Debt Collection: Following up on unpaid invoices, sending reminders, and ensuring you’re paid on time.
By focusing on your cashflow, a bookkeeper ensures that your business remains financially stable and avoids cash shortages.
What If Your Bookkeeper Lacks These Skills?
If your bookkeeper isn’t offering the level of service you need, consider encouraging them to upskill. Programmes like Business Skills Training can help them develop the expertise required to transform your business finances.
Choosing the Right Bookkeeper
The right bookkeeper does more than keep your records tidy—they provide insights and support that can help your business thrive. Whether you need historical bookkeeping, cashflow management, or strategic advice, finding someone with the right skills will make all the difference.
For more tips on choosing a bookkeeper or improving your financial processes, explore our other blog posts.
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