Bookkeeping for the Mid-Market:Understanding Its Importance andRelevance

Middle-market firms play a crucial role in driving economic growth in the US, accounting for nearly one-third of private-sector employment. These businesses face unique hurdles to success, including access to capital, which can limit growth. These companies, however, are typically more resilient to economic downtowns when compared to large corporations. Because of that, mid-size companies assume a critical role in creating jobs as well as economic stability.

While it’s true that mid-market businesses play a crucial role in our economy, they’re usually less well-known than their larger counterparts, who often get noticed for major IPOs and flashy success stories. The truth is that mid-size companies make up a relatively minor percentage of all businesses in the United States. That doesn’t change the fact that mid-market businesses are considered by many to be the backbone of our economy. Their continued success is important for ongoing economic growth.

But as mid-size businesses grow, so does the complexity of their operations, especially as it relates to strategic finance management. Many business owners begin to solve financial problems by bringing in accountants. That’s a savvy move, but what many leaders fail to realize is that hiring a professional bookkeeper is also a critical step – one that is necessary not only for clear financials but for sustained success.  

Understanding the Importance of Bookkeeping for Mid-Market Companies

Bookkeeping is the practice of recording and organizing financial transactions, such as purchases, sales, receipts, and payments. The objective of bookkeeping is to maintain clear and concise records that can be easily accessed when needed. By keeping accurate and consistent financial records, middle-market businesses can ensure that their transactions are properly documented, archived, and securely stored.

Without detailed and accurate financial records, it can be downright impossible to see where your business sits and where it’s headed. For leaders looking to grow a company, that’s a big problem. Professional bookkeepers work with accounts to help solve that problem by keeping your financials up-to-date and ready to examine at a moment’s notice. Equally as important, they’re trained to identify tiny mistakes that lead to massive consequences, like running out of capital for expenses.

Perhaps more important is the fact that efficient bookkeeping fosters well-organized, accurate data that informs key financial decisions for mid-market owners and stakeholders. When you use a professional bookkeeping service, you can focus your time on big-picture initiatives while your bookkeeper handles important back-office tasks like:

• Daily Cash Flow Management
• Payroll and Invoice Processing
• Document and Record Financial Transactions
• Financial Statement Preparation
• Accounts Receivable and Payable Management
• Tax Preparation
• State and Federal Compliance
• Audit Preparation

What Happens When a Mid-Size Business Neglects Bookkeeping?

Businesses that refuse to incorporate bookkeeping into their operations can be exposed to a range of potential problems. These can include errors in financial reporting and missed deadlines for tax payments, which can have serious consequences. Without accurate and up-to-date financial records, businesses may struggle to make informed decisions or obtain financing when needed.

Inaccurate or incomplete bookkeeping can lead to audits or penalties from tax authorities, further exacerbating the problem. Some other problems that can manifest may include:

• Cash Flow Issues
• Lost Revenue Due to Fines and Fees
• Poor Short and Long-Term Financial Strategy
• Increased Risk of Fraud
• Untracked and Excessive Expenses
• Abstract Understanding of Your Company’s Financial Health

If you have been procrastinating about professional bookkeeping, the world isn’t going to end. However, doing so for too long could equate to poor strategic finance management, which in turn results in poor-decision making and limited financial opportunities.  

Accounting vs. Bookkeeping for Mid-Market Businesses: What’s the Difference?

Although bookkeeping and accounting are often confused with one another, they have distinct differences. Bookkeeping is the process of recording financial data, while accounting is the interpretation of financial data. Accounting cannot exist without proper bookkeeping since there would be no data to analyze without it.

In general, bookkeepers gather and organize financial data and may hold specific certifications for this purpose. Meanwhile, accountants typically have an accounting degree and may even be state-certified CPAs. Bookkeepers are responsible for maintaining the general ledger and accounts, while accountants create and interpret more complex financial statements.

Can’t I Just Do My Own Bookkeeping?

We should start by saying that there’s an obvious difference between having a small side hustle and owning a mid-sized company. Entrepreneurs who run a side business might be OK going the DIY route. As a business grows into a mid-market entity, owners usually don’t have the time to focus on bookkeeping alone. That’s when hiring a professional to help starts to make a lot of sense. 

Still wondering whether you can handle bookkeeping on your own? We get it. Many business owners ask the same question, especially if they’re somewhere between a small and mid-market company. To get closer to an answer, ask yourself these questions:

• Do I have the time necessary to dedicate myself to bookkeeping?
• Do I have the expertise needed to efficiently and effectively handle this task solo?

Expertise

It’s important to assess your level of experience in bookkeeping to determine whether you can manage it on your own or if you need to hire a professional bookkeeper. A qualified bookkeeper has the necessary expertise to handle the process and ensure that your financial records are accurate. Unless you’re analyzing federal and local tax codes frequently, doing your own bookkeeping can be daunting at best and devastating at worst. A professional will have the in-depth tax and finance knowledge needed for timely, accurate reporting.

Time

Bookkeeping is a laborious and time-consuming task, and as a business owner, you already have multiple responsibilities to manage. If you find yourself juggling too many tasks, adding bookkeeping to the list can quickly become overwhelming. Unless you have the time to update your records daily, it may be best to hire a professional. Outsourcing your bookkeeping tasks can help you regain valuable time and redirect your focus to the revenue-generating aspects of your business.

If you don’t have the time or the expertise to handle your bookkeeping needs effectively, it’s probably time to go pro. 

3 Biggest Benefits of Hiring a Professional Bookkeeping Service

As a business owner, you and your employees are dedicated to providing excellent services to your customers. However, it can be challenging to find the time to work on the back end of your business, such as maintaining your financial accounts. Don’t you think your business deserves the same level of attention and service when it comes to keeping your books up to date?

If you’re still unsure how to answer that question, keep the benefits below in mind. 

Know Your Business Inside and Out

To truly know your business – how much it makes, what your departments cost, how much it takes to generate a dollar of revenue, and what drives it – you have to know your numbers. To know your numbers, you need a productive back office. Without a bookkeeper, however, your back office won’t ever be complete. 

When a mid-size company’s back office is incomplete, outdated reports and unnecessary inaccuracies follow. When mistakes begin to compound, unreliable data is the result. By bringing in a professional bookkeeper, you can rely on your numbers and KPIs, so that you can set strategic goals and execute data-driven decisions to accomplish those goals. 

Cost Savings

Outsourcing your bookkeeping services is a cost-effective alternative to maintaining an in-house bookkeeping department. Creating and staffing a bookkeeping and accounting department with a bookkeeper, controller, and CFO can cost a business hundreds of thousands of dollars annually. 

In contrast, hiring a bookkeeping service can be significantly cheaper, depending on the size of your business and the volume of transactions. In addition to reducing the cost of your back office, outsourcing bookkeeping services can also help you identify other areas of your business where costs can be reduced, revenue can be increased, or profit margins can be improved.

Execute Decisions with Confidence 

When you outsource your bookkeeping to a reliable provider like CFO ReStart, you can take advantage of automated, streamlined, and integrated back-office processes. These processes will allow you to analyze every aspect of your business’s operations from a financial perspective. As a result, you can easily evaluate the most and least profitable aspects of your business. This way, you can make informed decisions about which profit drivers to focus on to achieve your company’s financial goals and support its growth.

CFO ReStart: Scalable Bookkeeping Services for Mid-Market Companies

Trying to grow a mid-market company without reliable, accurate data is like walking through your house without the lights on. There are pitfalls and hazards around every corner. Having a professional bookkeeper by your side is like having a high-powered flashlight to illuminate those hazards and find the proverbial power breaker for your business. Once you’re there, you can flip the right switches to achieve success. 

Unfortunately, hiring in-house bookkeeping and accounting experts in today’s market is extremely expensive. But there’s still hope for middle-market businesses like yours: professional bookkeeping services from CFO ReStart. Our bookkeepers do more than balance your ledger – they provide the accurate, strategic finance data you need to stay compliant and flourish within your industry. 

With an outsourced solution from CFO ReStart, your business can access the expertise and knowledge of well-seasoned bookkeepers without paying for services you don’t really need. You will have a professional on-call to help optimize your bookkeeping processes and systems, who provides the timely and accurate financial reports needed to run a mid-size company.

As a result, you will be capable of setting actionable goals and creating an operating framework designed around achieving those goals. You will avoid the pitfalls of poor bookkeeping systems and leverage your company’s assets as you achieve benchmark after benchmark. That’s the CFO ReStart difference.

Contact our office today to learn more about what makes CFO ReStart the premier choice for mid-market bookkeeping services.