Accounting vs. Bookkeeping
Most business have a person on staff who handles the day to day cash transactions of a business. Typically, they are responsible for making a record of receipts, paying day-to-day expenses, and maintaining an accurate record of the money the company is owed. While these are important functions, once a company cannot do without, the role of an accountant is integral to the long-term success of a company.
The Accountant’s Role
Having access to the information a bookkeeper provides is invaluable; however, the raw numbers do not provide the management of a company with the ability to identify the opportunity for growth, identify business trends, and even understand when it may be a good idea to reduce spending. All of these things require analysis of the numbers the bookkeeper records which is where the role of an accountant becomes critical.
Recording is Not Reporting
There is no doubt that an accurate record of the income, and expenses of a company is important. Good bookkeeping practices can help ensure you make timely payments to vendors, your bills are submitted on time, and you know your current cash flow situation. However, on a regular basis, you will need specific reports for your company including balance sheets, profit and loss statements, and tax returns. In most cases, unless they have special training as an accountant, a bookkeeper is unable to generate these reports; more importantly, they are unable to analyze the data to provide the management of the company the information they need to make decisions about the future of the business.
Looking at the Big Picture
One of the challenges you will face as a company manager is making decisions about growth, and expenditures. However, while your bookkeeper will have the relevant data, without proper analysis, you may not find the data particularly useful. Analysis of cash input, accounts receivable flow, and expenditures can help you gain a better understanding of the direction of your company. For example, during a downward trend in sales, it may be worth considering increasing your marketing efforts, or it may be a seasonal downtick which can be managed.
Everyone in the management team can benefit from a thorough analysis of your financial picture; when considering new contracts, applying for financing, or simply deciding whether to hire new staff members, a thorough understanding of the picture behind the numbers can be an invaluable tool. While the services of a competent bookkeeper cannot be underestimated, you can also benefit from the services of an accountant.
At Rue & Associates, Inc. we offer customized solutions to business owners in the Central Virginia area including, Mechanicsville, Richmond, Hanover, Henrico and the surrounding areas. Whether you need full-spectrum accounting services, or basic bookkeeping services, or a combination of the two, we can find a solution that works for your business. The “paperless office” is an integral part of all our Virginia accounting services; if you want to consider outsourcing your bookkeeping and accounting services contact us today.