Manmohan Singh Bhachu, Partner at Oury Clark Chartered Accountants talks through the risks that businesses face when unqualified staff are responsible for their financial records, such as financial errors, missed tax-saving opportunities, and poor cashflow oversight.
Put simply, a bookkeeper’s job is to manage the day-to-day financial records of a business. Yet in practice, a bookkeeper is a business’ ticket to increased productivity and profits. Small businesses are often dissuaded from hiring a bookkeeper, wrongly believing that their PA or admin assistant is the better person for the job. This article will explain, however, that whilst this decision may save that business money in the short run, it is in fact a risky decision which can lead to costly mistakes.
Risks of DIY bookkeeping
When unqualified staff are given the role of bookkeeping, it is likely they will make mistakes. Simple errors in recording transactions, missing tax deductions, or miscalculating profits can quickly escalate into bigger problems. For example, late or incorrect VAT returns can lead to penalties, while poor cash flow management can make it difficult to pay suppliers or employees on time. Even small inaccuracies can distort your understanding of your business’s financial position, leading to misinformed decisions that could hinder growth. Time and again, I see situations where untrained staff are asked to handle the bookkeeping, only for key financial records to be entered incorrectly. The result is that the business either significantly overstates or understates what it owes, sometimes without realising until the problem has grown.
Accuracy is crucial to bookkeeping. As investors and lenders depend on accurate accounts, the business may lose funding opportunities from said investors if records are incorrect. If business owners realise too late that their records are wrong, they will often resort to paying an accountant to fix everything in a hurry – a service which will cost far more than hiring a professional bookkeeper in the first place.
Benefits of a bookkeeper
A professional bookkeeper brings accuracy, consistency, and expertise to your financial management. They can ensure that your financial records are correct and compliant with tax regulations, spotting things that the untrained eye may miss, and therefore reducing the risk of HMRC penalties. A professional bookkeeper can also help you plan to access any relevant rebates and improve tax-efficiencies.
By handling the day-to-day management of invoices, receipts, payroll, and bank reconciliations, bookkeepers allow business owners to focus on strategy and client relationships. Accurate, up-to-date records also provide vital insights into your business. This helps business owners make informed decisions, forecast cashflow, and plan for investments.
Professional bookkeeping also works hand-in-hand with accounting services. By keeping accurate records throughout the year, bookkeepers provide accountants with the necessary information to support growth and spending. This synergy is crucial. Firms that offer both accounting and bookkeeping services, such as Oury Clark, ensure that these two roles work together effectively.
It’s important to note that finding a well-trained bookkeeper is about more than just reviewing a CV. Business owners should observe how candidates perform in practice. To see how they handle daily tasks, they should include practical questions or exercises in interviews that reflect real bookkeeping duties.
How a bookkeeper can grow your business
Bookkeeping isn’t just about compliance; it’s a tool for growth. Businesses with accurate, real-time records can track which products or services are most profitable, find opportunities to cut costs, and manage cash flow more effectively. By linking bookkeeping with broader financial planning, businesses can make smarter, data-driven decisions that support long-term growth.
Professional bookkeeping is essential for any business that wants to operate efficiently, remain compliant, and plan for growth. Ultimately, cutting costs by using admin staff for bookkeeping will end up costing your business more in the long run. Hiring a qualified bookkeeper from the start saves money, reduces stress, and gives the business reliable financial information.