As per a leading provider of bookkeeping and accounting services, bookkeeping is defined as a process where the financial transactions are recorded. It may include anything, from the salary of the employees to every type of money coming in and going out of business.
On the other hand, accounting refers to the complete financial process where the financial data is classified, analyzed, interpreted, and reported to the business owners.
These two terms might appear to be the same, but they have a very different meaning to them. Business owners are always trying to maximize their profits by reducing the costs of bookkeeping and accounting, which are discussed in detail below.
The Accounting and Bookkeeping Expenses
There is no expert in the world who can precisely tell you the “X” amount of money which you should be spending on your business. The simple reason being every business is different in terms of its incomes and expenditures, and more importantly, in its way of dealing with finances.
Some may need an expert controller for managing the finances, while some may be fine with an experienced accounting team. Apart from this, there are priorities for different processes like weekly, monthly, or quarterly bank reconciliations and bookkeeping. So, the costs of your bookkeeping and accounting processes will be directly proportional to your business requirements and attributes.
This is 2019! An age of digitization and modernization! Most of the business owners are aware of the new technological innovations that have transformed the way financial processes are managed.
Today, business owners are looking for automation and technology integrations to streamline their management accounting for business. This includes the use of software and the training costs, along with the set-up of infrastructure and system.
Again, the exact costs of implementing the technology into your bookkeeping, and accounting practices vary from one business to another. However, there are some definite ways which can bring down the overall costs of these practices, irrespective of the business size and objectives.
Top 6 Ways to Reduce Bookkeeping and Accounting Costs
1. Utilize Time Appropriately
In accounting, it is the amount of time that equates to the loss of money while managing recurring tasks like bookkeeping, spreadsheets, monthly and weekly reports, and more. Rather than spending time on such tasks, it is important to figure out the ones which will derive maximum results, and spend time on the same, reducing the overall manual effort, time, and the costs.
2. Take Accountant Help
You should definitely make your accountant know that you are trying to cut down on the bookkeeping and accounting costs. The simple reason being your accountant has in-depth knowledge regarding your incomes and expenditures, and as a result of his expertise, he can provide you with a lot of options to help you reduce the costs.
However, this is only possible when you talk to him in the first place. Also, sitting with your accountant and discussing your business expenses is always a good idea as you get a different perspective to it, which helps in devising effective strategies as well.
3. Keep Business and Personal Spending Separate
When you mix your business and personal spendings, tracking of your finances become complicated, making the bookkeeping process even more difficult. The best way to separate these two expenditures is by having a separate account for all your business transactions.
Apart from this, the time taken to figure out the right deductions during the tax season is also reduced to a great extent, along simplifying the accounts reconciliation process.
4. Advanced Billing & Payment Encouragement
When bills and payments come in advance, it often comes along with offers as the billers and vendors are able to reconcile their monthly accounts fast. For this, make sure everything needed for the invoices is collected beforehand like documentation, credit card number, proper address, and more.
Make a schedule on a weekly basis to know what all tasks to accomplish, along with calculating the processing days.
5. Assess your Balance Sheet –
Depending upon the number of credit cards, accounts, and loans you will have, the higher will be your bill for accounting. Close any unnecessary business as well as personal accounts, try to finish as many pending loans as possible or at least, try to bring down its amount by paying a percentage of the total amount.
All these things will not only save you time and money but also streamline your bookkeeping and accounting operations.
6. Limit the Use of Paper
As per a study, 45-50% of the paper which gets printed in the offices is eventually thrown away by the day’s end. This is a direct waste of money while managing your bookkeeping and accounting tasks.
The same text can be converted into digital documents, eventually saving a lot of money, along with making it more efficient in usage and sharing.
How Outsourcing Provides an Upper-Hand in Costs Reduction?
When it comes to reducing the bookkeeping and accounting costs, one of the most preferred approaches which the businesses adopt is the outsourcing approach, due to the various benefits associated with it. An outsourced bookkeeping firmhas the right equipment and knowledge already in place to manage your accounting and bookkeeping tasks.
This means they let you save on the hiring, infrastructure, and equipment costs. If we talk about the outsource rates, they are usually between $25 to $40 on an hourly basis.
This is way too less than the expense of hiring an in-house accountant who will charge a lot as per his experience and skills. You should not pay for his entire skills when all you need is a little bit of expert guidance or accomplishment of certain important tasks which can you get it done easily through outsourcing.
Apart from this, business owners save a lot on the payroll taxes of their employees through outsourcing. There is no need to invest time and money on classified ads, schedule interviews, or conduct training. All these costs and efforts are handled easily by the providers of outsourced bookkeeping services.
If we go by 2018Client Accounting Services (CAS) Survey,which majorly focuses on outsourcing bookkeeping and accounting services comprised the feedback from more than 1700 businesses to determine the importance and usefulness of outsourcing to them. The following findings have been established by the CAS Survey:-
- 80% of businesses who outsource their bookkeeping and accounting tasks had more time to focus on their core activities.
- 68% of businesses said accounting was made easy by outsourcing at large.
- Majority of the outsourcing clients do not worry about accounting mistakes.
- 30% of businesses have got additional advice from their outsourcing firms, eventually helping them increase their profits.
- Also, the majority of the businesses felt they could take better decisions owing to the expert advice of the outsourcing firms.
The bookkeeping and accounting tasks need skills and expertise, and they both come at a certain price. There are a lot of practices as discussed above to bring down the bookkeeping and accounting costs. However, it is actually the outsourcing services which not only provide the expertise needed to manage the various bookkeeping and accounting tasks to perfection but also let the businesses to save considerably on the costs of manual hiring, infrastructure, and equipment.
Author-Bio:- Telsea Greene holds seven years of experience as a financial advisor at Cogneesol. She specializes in writing about bookkeeping and accounting, technology, entrepreneurship, branding, marketing and passionate about helping businesses to plan and grow their money.