As a business owner, you can’t keep up with everything. So unless you have a background in finance or accounting, you probably don’t know every single thing your bookkeeper does each month. That’s why many businesses find themselves stuck in one of the following situations:
1) You hire an outside bookkeeping service that uses a very standard set of accounts and processes. They slap a template on you and that’s what you’re getting — you may or may not even receive a cash flow statement, arguably the most important document for a business owner to have.
2) You have a loyal employee – let’s say, Aunt Millie – doing the bookkeeping. She’s helped out for 25 years, and she’s doing everything she (and you) think she needs to do, but not without a lot of hassle. Aunt Millie doesn’t always know exactly what your accountant needs in order to do the business taxes each year, and by the time the back and forth communication is done, your accountant’s bill is through the roof. And forget what happens if you need to get an audit to satisfy a customer contract!
And to top things off, for businesses in these situations, neither of these scenarios usually benefits from an in-house finance lead, someone who’s linking that bookkeeping to the tax accountant or getting value for the business owner out of the financial statements that the bookkeeping is generating.
Why Is It Important To Link Your Bookkeeping & Accounting?
It’s easy for business owners to miss the vital link between bookkeeper and accountant, so let’s first look at why this connection is so important. Bookkeeping is performed for three purposes:
- To understand and manage the internal workings of the business (the “value added” from bookkeeping, but often never extracted)
- For the tax accountant to use when filing tax returns
- To satisfy regulatory or audit requirements
Since business owners are often unaware of their power to make bookkeeping a business asset, they’ll just throw an accountant at their accounting needs. Then the accountant will tell them they need a bookkeeper, so they hire one.
The bookkeeper talks debits, credits, depreciation, amortization and GAAP, which is all Greek to the business owner. Therefore, it’s only natural that the owner says, “Just do whatever you need to do in order to gather the information necessary for my accountant to file my tax returns.”
That is how many bookkeeper/accountant/business owner relationships are set up. Unfortunately, in both cases bookkeeping is merely an expense. All of the real value leaks out of the process without being captured.
The secret? There is GOLD in those bookkeeping records! They hold a treasure for the business owner as a tremendous tool for business management. Good financial reporting uses that tool to provide you with vital information for leading your business.
What Should You Expect From Your Accounting And Financial Reporting?
Financial accounting and reporting should be relatively painless to you, as well as completely tied into your business levers. When you pull on Lever A, next month you should see the impact of that action in the metric that told you to pull that lever in the first place. Moreover, it should be making your accountant’s job easier and helping you understand exactly where your company is in financial terms.
Priorities Group can give you a clear overview of what you’ve been doing, and how you can forecast what’s coming based on your business strategy. We help you, the business owner, understand that you have a cost from which you can extract very tangible value.
It can be frustrating to get your books three weeks after a month has ended, leaving you wondering what actually happened, how to run your business, why your expenses are so high, and why your bank balance isn’t doing what you’d expect it to. We can help you derive a reporting package that contains exactly and only what you need to see. Instead of wasting hours trying to understand your financial reports, you can spend half an hour every month looking at an overview of the most important elements, and more importantly how to use them to focus on the right things.
Let Priorities Group see your books and sit through a monthly closing process with you. We’ll watch what your bookkeeper and clarify your tax accountant’s needs. And mostly, we’ll listen to your own needs and frustrations, and then work with the whole team to quarterback them to align the whole process to exceed your expectations for accounting and reporting; and to identify with you the hidden secrets in the resulting reports.
During this process, we will dig into the aggravating elements for you, your bookkeeper, and your accountant. Truth be told, it isn’t usually the bookkeeper’s fault that things are so frustrating. We’ll fix the process with an eye on eliminating the pain points so that all of the components are more streamlined.
Look at your issues this month and evaluate the triggers. List those things that make you want to put the financial reports in a drawer and ignore them again until next month.
Are reports always late? Are they incorrect? Is the language in them confusing? Are things in the wrong place on the reports? Why is your cash balance going down when you are getting profit every single month?
Everyone has different triggers, but the solution is uniform: It’s a call to Priories Group. You can love your financials again; the flexible, but incredibly experienced team at Priorities knows how to make it happen uniquely for you.