Backlogged Bookkeeping: Tips For the Past, Present, and Future
Here at SyncLedgers, we like to keep our eye on all kinds of trends. It’s an essential aptitude for anyone in our line of work since trends in cash flow can make or break a business. How do the past and present relate, and how can they together help us anticipate the future? If you have some backlogged bookkeeping to deal with, these otherwise abstract questions can lead to solutions.
With this theme in mind, we’d like to fill your head with some ideas.
First, a specific and practical look at steps you can take to get your bookkeeping up to date if you’ve fallen behind.
Next, if you have that problem or a similar one, and you’re reading this newsletter, you’re probably in the market for some bookkeeping help right now. We’ll show you what to look for.
Finally, once you’re in that market, you’ll want to know which way the winds are blowing regarding the possibilities of future automation, so we’ll tell you what we know.
Catching up on the Past
Somehow, you’ve found yourself wondering what to do with a huge desk full of accumulated financial paperwork. It’s been piling up for a year, but it’s either got to get done or you need another desk. Let’s be realistic: it’s got to get done.
There’s a lot of work involved in getting everything up to date, but there are three key steps to take to catch up on backlogged bookkeeping.
First, Collect Receipts.
It’s important to get all of your business-related payment receipts in one place. This applies to both expenses and sources of income. From there, it’s easier to categorize and put everything in order.
You’ll want to make sure that you have all of your customer invoices, and proof that vendor accounts are current. It’s also a good idea to be sure that you’ve taken care of any bad debt collection efforts. Any other business expenses should be kept together with all these. Be careful not to mix in personal expenses, though.
Second, Reconcile Accounts
The next step is to make sure that your banks haven’t made any errors in their records related to your accounts. Likewise, your bank records may reveal an error on your side.
It’s important to ensure that the records match either way. Locate any errors and make the necessary adjustments so that everything balances. This is essential to avoid additional costly work by your accountant.
Third, Review Expenses
Another essential step in clearing out your backlogged bookkeeping is to involve a professional tax preparer or accountant. They’ll look over your organized and categorized receipts, and reconciled account statements. This is to search for any and all opportunities for tax deductions and other savings.
Doing all of this work yourself can save money on these professional expenses, but only in the short term. The chances of missing a valuable deduction or otherwise making errors on tax forms are much greater with such a strategy.
“Making good judgments when one has complete data, facts, and knowledge is not leadership – it’s bookkeeping” – Dee Hock
SyncLedgers Bridges the Gap
If your backlogged bookkeeping is too huge a pile to deal with alone, or if you’d rather not spend your irreplaceable time organizing your business receipts yourself, we can do that for you remotely. Likewise, our professional bookkeepers will synchronize your accounts and review your bank statements to make sure they balance.
Since we’ll do all that for you, we’ll also coordinate directly with the tax professional of your choice. We’ll keep you informed all along the way. All of it comes at substantial savings compared to doing the work in-house or hiring local firms.
Minding the Present
Bookkeeping is an important business process and can make the difference between profit and loss when properly done. Because of that, it’s important to be sure that the person you hire to do the job is definitely able to do it. You want to avoid causing more backlogged bookeeping. Here are some of the most important qualifications to keep in mind as you search for your bookkeeping staff.
They Should be Good With Numbers
If your reaction to this subtitle is “duh,” we don’t blame you. It almost goes without saying. We’re not just talking about being good at math, though.
An ideal bookkeeper is more than merely good at arithmetic. They need to be deeply analytical and inquiring in order to reconcile apparent errors and discrepancies. They’ll need to be organized and comfortable with meeting deadlines while completing repetitive tasks.
It’s also clearly important for them to be good with computers, navigating online banking systems and accounting software with ease.
They Should be Good With Words
This may come as a surprise, but it’s a key trait of a good bookkeeper. They require strong communication skills because they work in between their employer and the company’s money.
Not only do they need to be able to understand what is happening with the money, they need to be able to explain it clearly. They are responsible for both creating and interpreting financial reports in ways that are easy to understand.
Bookkeepers are often required to speak directly with customers and bank representatives regarding the status of outstanding debts, which makes patience, confidence, and a strong background in sales all very useful, too.
“As a bookkeeper, you are responsible for the day to day finances of the business and, as such, the owner/manager of the business will expect to be working with someone who is confident of their own abilities and who can happily discuss the reports produced from the accounting package.” (Jane E. Kelly, dummies.com)
The accounting and communication requirements of the bookkeeping profession suggest that an Associate-level college degree is needed as a minimum for potential hires, but that’s not always the case. A high school diploma combined with relevant experience can be sufficient for a bookkeeper with the right skills. Postsecondary education does generally provide candidates with an advantage, though.
Predicting the Future
The big words in tech right now are automation and artificial intelligence. There’s a great amount of speculation, prediction, and even fear going around about the effects of these technological trends. Some figures, like Elon Musk, have made especially dire statements about the automated future.
We have to question whether we’ll soon be put out of business by technological progress. After all, whole industries have been relegated to oblivion this way in the past. It would be foolish not to consider the possibility. After some point, you just might never have to worry about backlogged bookkeeping ever again, right?
Fortunately for us, there are some things that humans consistently do better than robots.
However good the AI gets, there will always be a need for professional humans to make sure that it really is that good; to check the math, as it were.
Although we won’t necessarily be redoing calculations, what we will need are experts in the AI systems themselves.
AI software won’t be cheap compared to existing systems, even as it advances. It will require significant investment. Its complexity will call for the help of experts in its implementation and use. The best such experts will not only be proficient in programming the software but also have a strong background in bookkeeping itself. This would ensure that it’s optimized for our particular field.
AI can do quantitative analysis just fine, pulling raw data and generating reports, but it still lacks the ability to judge qualitative factors.
One role where human analysts excel and will continue to do so is in interpreting the reports and dashboards generated by AI software. These workers will be expert bookkeepers themselves but will focus on what’s important about the vast amounts of data they deal with. They will also be the ones who communicate that information to their employers, who will still be too busy to want to manage the process themselves.
The Human Touch
The final reason bookkeeping will never be fully and completely automated is the same reason that there are still blacksmiths working now in the twenty-first century.
“…while technology has an advantage over humans in many ways, there are other elements of financial services that it can’t replace. For example a 2017 study from consulting firm Accenture found that even with the advent of robo-advisers, 68% of wealthy clients preferred having access to both a human adviser and a robo-adviser instead of just one of those.
“’In a future where we are increasingly surrounded by AI, we will crave human interaction even more,’ Klassen Jamjoum points out. ‘And many jobs will be augmented by AI, meaning people can achieve things they never thought possible. Technology should empower, not take away.’” (Journal of Accountancy)