As your business grows, you may need more time and capabilities to handle bookkeeping tasks. While numerous accounting apps offer DIY bookkeeping services, it is important to know if they offer the value you seek. Outsourced bookkeeping has many advantages where a real human adds expertise and experience to help you optimize your financials. Working with experienced bookkeepers can give you a better understanding of your financials and help you achieve new business goals with that added personal touch. Read on for a closer look at why outsourced bookkeeping is better than bookkeeping software.
3 Limitations of Bookkeeping Software Compared to Outsourced Bookkeeping
When you are starting out, managing your finances can seem simple. You can use bookkeeping software to update your transactions every day or every week when you have a handful of vendors, very few customers, and predictable expenses. However, as your business grows, bookkeeping can become more complex, you may also find less time to devote to financial records. As such, the benefits of outsourcing your bookkeeping can become even more important when compared to the limitations of just using bookkeeping software.
Some of the shortcomings of bookkeeping software include:
- Time-Consuming: Most business owners find that keeping track of all the transactions becomes more complex and time-consuming as their business grows. Complex accounting issues arise as monthly transactions increase, giving rise to challenges managing commissions, refunds, bank reconciliation, taxes, payroll, accounts payable, and accounts receivables.
- Costly Errors: Even with the best software, it is important to remember that you still have to enter all the data accurately. If errors are made when keying in data, it can lead to inaccurate financial reports that impact the accuracy of your tax returns, leading to penalties. A potential loss of financial data due to errors, omissions, or security issues can paralyze your business, while there are also risks of data manipulation.
- High Setup Costs: While sophisticated accounting software can be expensive, there are also additional costs related to data migration and personnel training. This can all add up. Apart from these expenses, the software will eventually need to be upgraded based on your evolving business needs.
4 Advantages of Outsourced Bookkeeping
Here are the top reasons why outsourced bookkeeping is better than bookkeeping software:
1. Ensures Proper Account Reconciliation
A licensed bookkeeper handles account reconciliation services to ensure the accounting software data matches the transaction details in your credit card and bank account statements. Regularly reconciling your accounts will help you avoid fraudulent charges, overdraft fees, or errors in recorded transactions.
2. Monitors and Manages Bank Feeds
Your outsourced bookkeeping expert also manages the bank feed that digitally links your accounting software with your bank account, giving you a real-time view of transactions. While the software, if effective, categorizes transactions automatically, the bookkeeper monitors them to ensure this happens properly. They can also manually add transactions that are not reflected in your bank feed.
3. Handles Accounts Receivable and Accounts Payable
One of the top reasons why outsourced bookkeeping is better than bookkeeping software is that your bookkeeping service provider can handle the entire spectrum of accounts receivables and payables, including:
- Preparing invoices and sending them to clients
- Assisting in collections and vendor bills
- Helping you obtain discounts from vendors on early payment
- Perform statement preparation
Properly managing both your accounts receivables and accounts payable will help you build strong, long-term relationships with customers and suppliers.
4. Prepares and Reviews Financial Statements
The three key financial statements bookkeepers prepare include the balance sheet, cash flow, and profit and loss statements. These insightful reports allow you to assess your operating expenses, liabilities, assets, cash flow, and the business bottom line. Working with a bookkeeper to prepare these financial statements can not only ensure accurate information, but they can help you review these statements and accounts to help you get a better idea of your business’s financial health.
Work with Bookkeeping For You for Outsourced Bookkeeping Services
At Bookkeeping For You, we are focused on delivering exceptional value that drives business success. Performing a complete range of bookkeeping services for small businesses, we can help ensure that your business financials are in order and even provide consulting and business advising services to help your business grow. Contact oursmall business bookkeeping experts to kickstart your journey to success.