The Real Cost of Inefficient Bookkeeping

The real cost of inefficient bookkeeping

The profitability of your business depends on how quickly you are able to make data-driven decisions. For that, you will need timely access to accurate financial statements of the company, which will be aided by the finance and accounting department of your business.

The entire process should be completed in a predetermined time frame, and for that, you need highly competitive, productive, and efficient bookkeepers.

The reason why the efficiency, trustworthiness, and competence of a bookkeeper is being accounted for is that they are the individuals who are responsible for correctly and accurately recording the daily financial transactions, which will later be used to prepare consolidated financial statements.

Without any detailed financial transparency, you cannot trust any bookkeeper for its productivity or even rely on them with your business's critical yet confidential information.

This article briefly talks about the red flags you need to identify to restrict your bookkeepers from shaping their ill thoughts, ideas, and intentions. The article will also talk about the benefits of outsourced bookkeeping services. So without wasting much of your time, let us begin with the same.

Bookkeeping red flags

If, at the beginning of your business, you have performed the role of a bookkeeper, then you would obviously know what efforts, policies, procedures, and time it takes to meet the obligations. So, you would obviously get an idea of whether your bookkeeper is messing up with anything or not.

If you haven’t done any bookkeeping functions or you don’t even have the basic knowledge about the same, then you must look for the red flags to sense the wrong intentions or ideas behind the same.

Here are the bookkeeping red flags that you must focus on as a mitigative measure.

How well they know the most used software of the industry and how fast or seamlessly they can set it up as per the demands and requirements of your business.
Are they able to quickly respond to the questions asked by you in order to make timely data-driven decisions?
Do you trust their overall methodology of working in favour of your business? Do you really think they are giving their best and the services provided by them are highly reliable, accurate, and trusted?
Are your bookkeepers compliant with the latest rules and regulations of the industry?
How often do they commit mistakes, and how many mistakes have they made to date? Where is any one of them suspicious?
Are they effective, efficient, and productive enough to prepare reliable, timely, and accurate month-end financial statements and reports?
Are they working at their utmost efficiency and using their expertise to the core in order to help your company in any possible way? You can identify this by gathering information related to their interest in using various or multiple software and finding ways to automate most of the processes and reduce manual effects. Also, this should give you a fair idea about whether your bookkeeper is in favor of automating processes and reducing manual work.

If your bookkeepers are not efficient, you have to bear a hefty cost not just in terms of money but also in terms of your brand goodwill, and the repercussions can be irreversible.

Let us have a look at what’s the actual cost of inefficient bookkeeping functions of your business.

Actual Cost of Inefficient Bookkeeping

Suppose the bookkeeping department of your business is highly inefficient. In that case, the charges are pretty high that you might have to bear with the additional costs along with your monthly retainers and the amount spent on their training and development.

Also read 10 Repercussions of bad bookkeeping in your business.

If your bookkeeper is not competent or lacks expertise and experience, it will be a huge trouble for you. The business is required to make data-driven decisions. For that, the bookkeeper has to be competent because they are the ones responsible for recording and maintaining the daily transactions in a systematic and easily accessible manner.

Not a single business will be able to reach its desired position if they have an inefficient bookkeeper who is neither experienced nor competent even effectively to perform the essential tasks of the business.

Not just the bookkeeping, but if your business also has an incompetent team of accountants, you are unknowingly inviting double trouble. At the same time, a bookkeeper is held responsible for recording and maintaining all the financial transactions that take place in your business on a daily basis. But an accountant is someone who is accountable for creating accurate financial statements timely.

If your financial statements are not correct, you will not be able to make effective decisions that ensure the growth of your business. If the actual financial statements of your business are faulty, how can you trust something else? Plus, if the health of the financial information is not reliable, then it has the potential to bring the growth graph of your business experience a dramatic downfall.

However, if you had outsourced the bookkeeping function of your business, you would not have experienced incompetencies in any form because the employees of the accountancy and bookkeeping service providers are not just experienced but also able to moderate any situation to work in favor of the business.

Your bookkeepers are the first ones to know about any transactions or cash flows of your business. This might excite them to do something completely unethical in the name of fraud or manipulative activities.

The primary reason behind why people pursue the course of fraud is because they have a sudden debt to be paid, or their loved ones are under some distress which they need money for or nothing but to earn a lot of money in no time in the most unethical manner and by breaking the rules and trust of the individuals.

Can you imagine the benefits you would get in the world where you do not have to hire full-time in-house professionals like accountants or bookkeepers, and you can simply outsource their functions in the best possible manner?

Let us have a look at the benefits of outsourcing the bookkeeping function.

Benefits of Outsourcing Bookkeeping Function

Here are the ultimate benefits of outsourcing your bookkeeping function.

Outsourcing the bookkeeping function is a relatively cheaper option to get all the transactions of your business recorded and managed systematically.
It gives you an ample amount of time to focus on other essential aspects of your business and take it to new heights.
Facilitates you with an option to access your books of accounting at any given time.

Also read Can Outsourcing Transform Your Business Accounting And Bookkeeping Function?

Final Words

You need to decide whether your bookkeeper costs your business money or not because having answers to this question will help you identify the need and importance of outsourcing the bookkeeping function of your business.

However, if you decide to outsource your bookkeeping function, then CFO UAE is the name to trust with all your heart. CFO UAE will not leave a single stone unturned when it comes to helping its clients in the best possible ways.

The Real Cost of Inefficient Bookkeeping