As a $5-$25MM company, you’re probably well-versed in the art of juggling. You keep multiple projects going, oversee employees, and seek out new clients. You collaborate on exciting marketing initiatives and always address customer concerns. At this stage of success, it’s not unusual for your day to go in 10 different directions. Your business is growing! But as you already know at this point, expansion and complexity go hand-in-hand. 

You know that managing outlay and receipts is both time-sensitive and crucial for best practices and solvency. You know that optimized financial processes are needed to maintain and control your growth, but hiring a bookkeeper for your company is still on the “to-do” list.

At CFO ReStart, we’ve worked with many business owners who are in your position. We’ve heard a range of reasons why bookkeeping won’t work, such as:

• “I’ve been handling the books for years. Why change now?”
• “Bookkeeping is just entering financial data. It only takes up a couple of hours each week.”
• “I’m not sure I can trust a bookkeeper with my business’s finances.”

The truth is that bookkeeping isn’t fun or glamorous, but it’s necessary if you want to grow your business and get your financials in order. In this blog, we’ll examine why it’s a wise move to invest in professional bookkeeping services and why they are essential for $5-25MM revenue companies.

Key Takeaways From The Article:

• Growth Complexity: As businesses expand, managing finances becomes more complex, necessitating professional bookkeeping to ensure accuracy and compliance.
• Bookkeeper Value: Professional bookkeepers are essential for maintaining detailed financial records, preventing errors, and ensuring organized, accessible financial data for decision-making.
• Misconceptions: Many business owners undervalue bookkeeping, seeing it as simple or unnecessary, which can limit growth and financial clarity.
• Bookkeeper Responsibilities: They handle various financial tasks from balancing books to generating important financial reports, forming the backbone of strategic financial management.
• Signs You Need a Bookkeeper: Indicators include spending excessive time on financial tasks, lack of financial checks and balances, and making decisions without accurate financial data.
• Benefits: Professional bookkeeping services offer tax preparation ease, support accurate budgeting, ensure accessible records, and aid in strategic decision-making based on reliable financial data.

What Makes Bookkeepers So Important?

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.

They’re also familiar with the nuances of your expenditures and income and can track pay for supplies and invoices quickly. When tax season comes around, they reconcile your data and make sure everything is accurate on state and federal levels.

Unlike many CEOs and owners, bookkeepers are also highly organized. They spot the devil in the details and organize expenditures based on categories and the individuals who spend money. Should those expenditures ever come under scrutiny, they can quickly access gross receipts, purchases, financial assets, tax obligations, and expenses at the drop of a dime.  

If you’ve been procrastinating about hiring a bookkeeping service, fire isn’t going to rain down from the heavens. However, you could be limiting finance opportunities for your business or making poorly informed decisions based on incorrect financials.

What are the Responsibilities of a Professional Bookkeeper?

Organizing, managing, and maintaining financial data is a foundational task for raising capital, budget allocation, and strategic finance analysis. While the best professional bookkeeping services – such as those offered by CFO ReStart – will change depending on the client and the size of their company, most bookkeepers share a few common duties:

• Bookkeepers can balance your books, giving you and your team more time and energy to grow your business.
• Bookkeepers maintain ledgers in which revenue and expenditure data is tabulated and documented.
• Bookkeepers reconcile your company’s books with recurring statements from investment funds and banks.
• Bookkeepers provide reporting that assists in evaluating performance and compliance with loan covenants.
• Bookkeepers create invoices for customers and help integrate receipts from your accounts payable department.
• Bookkeepers compose profit and loss statements, balance sheets, and other reports that assess your company’s financial status. This reporting is fundamental for strategic finance management.

Put simply, bookkeepers play a core role in providing your company with accurate financial data, which is a core component of strategic finance management.

3 Signs That Your SMB is Ready for Professional Bookkeeping

A lot of hardworking leaders avoid bookkeepers because they think they can manage and organize their company’s finances solo. That strategy may work early on, but with time, it’s bound to fail. If any of these signs are beginning to manifest within your business, it may be time to consider a contracted bookkeeper.

1. You’re Becoming a Chief Bookkeeping Officer Instead of a Chief Executive Officer

Multitasking may be harming your business productivity. According to a study cited by the American Psychological Association, frequently shifting between tasks can lead to mental blocks that cost up to 40% of a person’s productive time. If you spend as much or more time handling financial records, payroll, and other accounting services as you do working with clients, think about outsourcing your bookkeeping services.

When it comes to creating an exceptional bookkeeping department and developing best practices for financial systems, trying the “do it all”’ approach can cause more pain than gain. Both under-trained and overworked staff and incorrect or inefficient bookkeeping procedures can lead to slow financial reporting, inaccurate financial data, and even fiscal uncertainty.

Outsourcing bookkeeping functions can be a viable alternative to building internal capability from scratch if your business is heavily reliant on a few key employees to fulfill numerous roles and tasks for your company. Even if things seem “good enough,” you might be missing out on a valuable opportunity to turn a status quo task into a valuable strategic finance opportunity.

2. Your Separation of Duties is Non-Existent

It’s important to have proper internal controls and separation of duties in your business to prevent the risk of fraud. If the person who writes your checks is also the one who reconciles the bank statements, then your business may be at risk. The unfortunate truth is that employees use different methods to steal your profits, such as:

• Check Tampering
• Payroll Fraud
• Billing Fraud
• Skimming

Implementing risk-reducing systems and strategies based on bookkeeping records is a wise investment. According to the Association of Certified Fraud Examiners (ACFE), median losses for smaller organizations are estimated to be $150,000.

3. You’re Not Making Business Decisions Using Accurate, Timely, and Actionable Financials

When you hire an experienced bookkeeping professional to maintain accurate record keeping and Key Performance Indicator (KPI) reporting, you can rely on your financial figures and stay updated with the financial health of your business.

Having precise, timely, and actionable financial data will also help you to make informed decisions and avoid costly mistakes. A survey conducted by the Geneva Business Bank revealed that businesses that plan their cash flow annually have a survival rate of only 36% over five years. Those that do it monthly have an 80% survival rate – and having a bookkeeper is key for such a task. Cash flow is the lifeblood of any business, and knowing your business’s cash inflows and outflows is crucial in making the right decisions.

Does it Really Make Sense to Hire a Professional Bookkeeping Company?

If you’re running a $5M-$25M revenue company, does it really make sense to work with a bookkeeping service? Sure, larger companies need them. But what are some of the ways they can help you?

Peace of Mind During Tax Time

Tax planning can be a daunting task for business owners. However, proper bookkeeping can simplify the tax filing process. The complicated web of deductions, credits, exceptions, schedules, and potential penalties can be overwhelming. Without a well-organized record of documentation to support your claims, it may be tempting to give up and surrender to the IRS.

This is where a dedicated bookkeeper becomes an invaluable asset to a small business. Such a professional can be worth their weight in gold. For example, a business dinner deduction can be backed up by receipts, names, and dates. Similarly, charitable contributions can be enumerated and accompanied by relevant information on the charity and its payment details.

Having all this information in order and close at hand makes it easier to file your tax return. It’s important to remember that the federal government takes tax filing seriously.

Sound Figures for Budgeting

For any business to make financial decisions about investments, purchases, raises, and other expenses, they need to have a clear understanding of their income, spending, and assets. This information is obtained through bookkeeping and helps businesses create a well-planned budget.

Easy-to-Access Records

Business leaders must have a clear understanding of the financial inflows and outflows of their company, including the sources and destinations of these funds. They must also consider the frequency of payables and receivables and other identifiable patterns when making financial decisions. To make informed comparisons and contrasts between the costs of doing business with multiple vendors, comprehensive documentation of transactions is essential. Keeping records of internal and external disputes is also important, as it provides evidence to resolve such disputes efficiently and quickly.

Achieve Goals

In order for a business owner or management team to plan for future success, they need to have access to understandable, detailed, and factual data. This data can help them answer important questions such as whether they need to hire more staff, whether they can afford to do so, whether they need financing, and what their current debt situation is. It is essential to have a modern and accurate summary of cash flow, assets, and obligations in order to set a clear path forward.

CFO ReStart Pro Tip: One of the added benefits of hiring a bookkeeping company is to gain access to the other capabilities offered by the service provider. Additional services such as forecasting strategy & budgeting can help your business achieve a competitive edge and avoid costly training.

Your Foundation for a Secure Financial Future Starts Here

CFO ReStart is the go-to company for professional bookkeeping services because we provide your business with a team of highly-trained experts who know how to clean up a financial mess. We make it a point to dig in and work alongside your accounting team. That way, we learn your processes and your books – not someone else’s. This crucial distinction separates us from others and helps provide you with a solid foundation for strategic finance.

Whether you’re looking to keep payroll straight or get a better handle on your cash flow, bookkeeping services from CFO ReStart will help you plot a course toward success.