Building a Business Owner’s Sandbox The Bookkeeper: Your keeper of the cash flow

Dear Colleague,

Achieving cash flow wellbeing takes a team of trusted advisors. Your Bookkeeper is the starting point and center of your cash flow success. A truly core team member. So what’s their role?

Bookkeeping 101
The Bookkeeper is responsible for following the money into the business (Accounts Receivable), and for following it out of the business (Accounts Payable). Unfortunately, it is also the person whose function is often given the least amount of attention. This should not be the case since all financial reports are based on the accuracy of the Bookkeeper’s activities.

Often business owners take for granted this important task and try to either do it themselves or have a spouse or family member do it. However, if they do not have training in bookkeeping and accounting processes, such as preparing a bank reconciliation, credit card reconciliations and loan reconciliations on a monthly basis, the financials they are looking at most likely will lack the integrity that would come from good bookkeeping practices.

Don’t set out to make bookkeeping easy or convenient. You need to be aware of all money coming in and going out of your business, and it’s the bookkeeper’s job to account for it.

Make it a point to understand the importance of the bookkeeping role, especially in the cash flow arena. Follow your money like your life depends on it (because it actually does). Good bookkeeping is the first step on your path to healthy financials and business success.

From a tax compliance perspective (or a CPA’s point of view), the best person to help you follow the money is your CPA. But it’s not normally the CPA who delves into bookkeeping numbers.  It’s your bookkeeper who is responsible for recording the day-to- day transactions, and if they’re not done correctly, neither you nor your CPA will be looking at accurate numbers in your accounting system. The bookkeeper is the starting point for all financial transactions, and central to everything from your CPA’s tax strategies to generating your P&L and balance sheet.

How Do You Know if Your Financials are Accurate?
Always follow the money! Be sure your Bookkeeper is doing monthly bank reconciliations for:

  • All Bank Statements
  • All Credit Card Statements
  • All Loan Statements
  • All Lines of Credit Statements

Your numbers have to have integrity before you can use them to make good business decisions. If you are a CEO and are looking at your Profit and Loss report, but the bookkeeping has not been done correctly, you may as well make decisions from your gut.