As you explore ways to improve your business and make it
more efficient (and profitable), consider taking a closer look at the financial
side of your business. This review would include the systems and staff that are
in place handling accounting and bookkeeping tasks each day. They may be
costing you more than you think!
In this installment, let’s explore several trouble spots
where the wrong bookkeeper in a small business can get it into BIG trouble…
Unfortunately, I see it all too often – the person that
handles the books for a business gets stuck with the task because nobody else
wants it. Or even worse, the business owner staffs the bookkeeping spot with a
relative because they were “cheap” or because they had some free time on their
The reality is that your business finances are too critical
to leave in the hands of someone that doesn’t have a solid understanding of
bookkeeping. I am not suggesting that they be a CPA and wear a green eyeshade
to work each day. However, the person doing your books must know the
differences between assets and expenses, the process of reconciling bank and
credit card accounts, and the ability to stay on top of the invoicing and bill
If your bookkeeper doesn’t know even these basic job
functions, the potential problems (and costs) may surface later. For example,
if your bank accounts are not reconciled on a timely basis during the year, it
means your CPA has to do it at the end of the year. That is an extra expense to
the business and an unnecessary hit to your bottom line.
Do They Understand
Don’t be misled by bookkeepers that “say” they understand
QuickBooks, Peachtree, or other accounting packages. Ask them to demonstrate
their understanding of the software. If you are not comfortable with this type
of evaluation, turn to outside sources for verification. For example, you can do
a quick Google search for “QuickBooks tests” and review a number of
alternatives that can help sort out those who are knowledgeable from those who
If you choose to hire someone that doesn’t yet have a good
understanding of the software used in your business, it’s imperative to get
them some training on the software immediately. Your investment in this
training should pay big dividends very quickly. If they don’t get the training, it’s a safe
bet your employee will be stumbling around the software and making bad
decisions that could be costly to fix later on.
By chance, if you are using some DOS-based accounting system
that was created twenty years ago, you may be hard-pressed to find anyone who
knows it and training for it may be non-existent. If that is the case, it’s
time to seriously consider updating your accounting software to something more
current and user-friendly. This is simply a good investment to shore up the
foundation of your business and strengthen your accounting department.
Do You Have
Cross-Checks in Your System to Prevent Fraud?
Many businesses that I have seen have given their bookkeeper
full control to all aspects of the business finances. The owners figure that if
there is a problem somewhere along the way, their CPA will catch it at the end
of the year and fix it.
The truth is that in most cases, your CPA hasn’t been hired
to look for evidence of fraud or other funny-business going on with your
accounting records. They are simply taking the information you are providing to
them from your accounting system and translating it for the purpose of
preparing your tax returns.
The sad fact is that there are numerous stories where the
bookkeeper has simply taken the trust placed in them and abused it for their
own personal gain. I recently read a story that recounted the sad tale of a
small business being taken for over $500,000 over a four or five year period
because the owners weren’t keeping an eye on things.
Problems such as these can be minimized by having a solid
system of checks and balances put in place. These checks and balances don’t
have to be expensive, but they do have to be done on a regular basis to help
ensure your business doesn’t become the next news story.
These are a few examples of situations where having the wrong person doing the
bookkeeping can create some serious problems for a business owner.
Scott Gregory is a specialist with QuickBooks Pro, Premier and Enterprise.
He is also a CPA, so he understands the "accounting side of
QuickBooks" and the "QuickBooks side of accounting". Reach Scott
at (440) 527-5696 or at Bottom Line Accounting Solutions