I have written a few blogs over the years about the differences between an accountant and a bookkeeper and why I recommend that you use both a bookkeeper and an accountant for your business. That may be yourself as the bookkeeper, an employed bookkeeper or a bookkeeper external to your business - whatever works best for your business. During the last 12 months I have seen many situations where an accountant takes on the bookkeeping for a business as an extension to the annual accounts, be it tax return or statutory accounts but bookkeeping is not what they are best at and it shows.
Accountants and bookkeepers have completely different skills. Put simply, an accountant has an overview of the company finances whereas a bookkeeper will make sure that everything reconciles and that debtors and creditors are accurate. The bookkeeper will know whether you owe PAYE or VAT and ensure that you are aware if you have missed a payment. A good bookkeeper will make an accountants life a whole lot easier and able to focus on compliance and being proactive.
There is a lot of talk about accountants being proactive and giving their clients advice and support when they need it but my experience over the years has been "my accountant never told me about ......." or "if I had known that I wouldn't have .....". Unfortunately experience has told me that if you don't ask an accountant the right question you will never know what you need to know because they rarely volunteer information which may be relevant to you. Business owners often "bury their head in the sand" because they don't understand what they need to know and brown envelopes from HMRC worry them. They rely on their accountant to support them and tell them what they need to know. But so few of the accountants I come across actually give business owners the support they need.
There are numerous accountants now going down the route of automating bookkeeping, cash flow forecasting and reporting so that they can spend more time looking forward for their clients rather than backwards at historical data. This is a good thing as long as the reports and forecasting they are producing make sense.
I have come across situations where accountants have been doing the bookkeeping and they simply record incomings and outgoings from the bank statement. There is no identifying whether there is a VAT receipt or invoice to satisfy an HMRC VAT inspector and at the end of the day it doesn't matter to them because it is the business owner's responsibility. There is no recording of business expenses paid by any other means such as petty cash or by the business owner personally. The basics need to be accurate in order to produce reports which show a true reflection of the state of the business.
As a business owner do you know and understand what an accountant does for you? Is it what you need? Are they ensuring you are compliant? Do you hope they are doing what you pay them to do? Do they add value to your business?
As bookkeepers we take pride in the work we do, ensuring that the accounts we produce each month or each quarter are accurate and reconciled. Whilst we might be old fashioned because we don't use automated software to process invoices and receipts and we don't outsource our work either in the UK or overseas because we want to understand and be involved with our clients' business and its finances. By providing a hands on service we are aware of everything that is happening with the finances and can identify to our clients anything we feel they should know. We produce regular management accounts that make sense because they contain all the income and all the expenses for the period. Each period can be compared with the same period last year which helps businesses to see their growth or whether their expenses are getting out of hand. Accountants who, for example, lump the salaries together as one figure for the year at the year end produce accounts which are no use to anybody.
Business owners who want to grow their business need regular management reports that give them a true picture of how their business is doing now. To support that growth their accounts need to be kept up to date regularly and compared month on month and year on year. Businesses that are growing rapidly need prompt year end accounts to enable them to apply for funding to help their growth and to know what their tax bill will be so they can plan for it in their cashflow. Even sole traders need prompt accounts to help them apply for a mortgage or re-mortgage. This is what accountants need to concentrate on doing for their clients because being proactive has to start with producing timely year end accounts.
Businesses need accountants. They have knowledge and experience and can add real value to your business. But if they want to do the bookkeeping they need to do it in a beneficial way for their clients and not the quickest and cheapest way possible. They need to support their clients' business growth by producing accurate accounts promptly.
Whilst the world is changing and everything is becoming automated there is still a place for a real person to care about you, your business and its growth and take a pride in providing the customer service that we all expect now.
If you really want to know the numbers in your business and hear about the things which may be helpful to you you should be using a qualified, experienced bookkeeper on a regular basis and use your accountant for the compliance and more advanced knowledge and support you need.
As a business we support our clients as much or as little as they need. We choose not to be a jack of all trades and do only those things that we are qualified and competent to do. Clients value the support we provide and the information we give them. Our monthly newsletters keep them up to date with our weekly blogs and any other information which we feel they should know or will be useful to them. Some clients have monthly finance meetings with us to go through their accounts so we can help them understand how their business is doing. Other clients just give us a call when they have a question or want to arrange a meeting. They do this because their accountant isn't approachable or they don't understand what they are being told. Because we have built a personal relationship with all our clients they know they can contact us and know they will receive the support or advice they are looking for.
There is no reason a small business can't get value out of bookkeeping support just like a larger business. If you are a growing business who needs to get your accounts records under control so you can see where you are going with your business get in touch with us to see how we can help. We are friendly and approachable and you will find our accounts accurate, timely and useful.
