How a Virtual Bookkeeping Service Can Increase Cash Flow

/in /by

online bookkeeping on a computer Your organisation’s cash flow is the lifeblood of your business. And if you don’t have an accurate picture of the money being transferred in and out of your bank accounts, it’s impossible to properly reconcile bank statements or forecast your success. Good bookkeeping makes it possible to increase cash flow. 

You might think online bookkeeping is just about tracking what you spend, but it is just as vital to track accounts receivable and catch unpaid invoices before they become bad debts. If you don’t have the budget for a full-time bookkeeper, the good news is you may not need one. Virtual bookkeeping helps you send your cash flow in the right direction without costing a fortune. 

Ways virtual bookkeeping helps to boost cash flow

Good bookkeeping practices always benefit your business. Virtual bookkeeping services have some unique benefits. Here are three ways that finding a trustworthy virtual bookkeeping service can help you increase cash flow. 

Better accounts receivable and accounts payable management

First and foremost, a virtual bookkeeping service allows you to track your accounts payable (the money you owe to other people and businesses) and accounts receivable (money that is rightfully owed to you). These two processes combine to create your cash flow. 

When you have improved management of your invoices and bills, there is a positive impact on cash flow management. Once your books are in good shape, you can strategise ways to:

  • Make it easier for clients to pay. An expert bookkeeper can implement new payment systems that allow for faster payments and payment reminders. 
  • Stay on top of late payers. Are you able to efficiently see all outstanding debts? Virtual bookkeepers can track your accounts receivable and create regular, reliable reports. 
  • Accurately report accounts payable. Your virtual bookkeeper can also create new systems to help ensure the cash flowing out is always paid on time. This helps you avoid penalties, late fees, and other unnecessary charges that increase cash flow. 
  • Encourage clients to pay on time. Would discounts incentivise your customers or clients to make prompt payments? Faster payments can mean more reliable cash flow, so they might be worth it. 
  • Reconcile bank accounts more regularly. Some businesses only reconcile their statements quarterly. But monthly bank account reconciliation allows you to catch errors, missed payments, and other inconsistencies sooner. 
  • Spread out long-term payments. A good bookkeeper can tell you whether you should have an aggressive pay-off strategy for your debts or stretch them out to improve immediate cash flow. 
  • Finding smart investments. Use your increased cash flow to invest wisely, and you may be able to pay off debts sooner than planned without liquidating other assets.  

Cut costs on staffing

Using virtual bookkeeping can also help you save money on staffing needs. Instead of hiring an in-house bookkeeper to be in your back office, you can hire a virtual bookkeeping team that grows with you as needed. You’re unlikely to  overspend on staffing needs this way, which can keep your cash flow in the black. 

Using a virtual bookkeeping service to help manage your cash flow enables you to:

  • Pay for only the bookkeeping hours you need. You won’t end up with a staff member in the back office who is paid for more hours than necessary. When you’re not spending extra on managing your books, your books start to look better. 
  • Scale up and down as needed. You can add more members to a virtual bookkeeping team as needed, then scale back down as necessary. You can even be paired with experts in your particular industry who know when you need more and less help. 
  • Avoid sacrificing quality bookkeeping just to save money. Some methods of avoiding a full-time staff member can cause mistakes to be made or create gaps in your records. For instance, if you try to do your books as an executive, you probably won’t have time to do it right. A virtual team means good bookkeeping and savings. 

Use your time to grow your business

Virtual bookkeeping also helps you increase cash flow by freeing up time to grow your business. When your bookkeeping team is on top of reports, you have newfound time to market your business, create new revenue streams, and have executives focus on big picture money making. Ultimately, more free time for the people who know your business best is likely to lead to more ideas and improved finances. 

Visory helps businesses increase available cash flow without overspending on overheads. Our advisers can connect you with industry expertise and help increase cash flow by cutting costs, managing payables, and recommending smart investments. If you want to learn more, check out our free financial health check here. A Visory Success Manager will analyse your business’ financials and identify areas where your back-office processes could be improved. If nothing else, it’s an opportunity to think through ideas for your business, and we can leave it at that.

Time to Reconcile: Importance of Bank Reconciliation and How a Bookkeeper Can Help

/in , , , , /by

Are you reconciling your bank accounts once per year? This may get you ready for tax time, but annual bank reconciliation is just the beginning. In order to grow your business at a responsible rate, you need to get a clear picture of your cash flow, understand the types of fees you’re paying, and catch fraud before it goes too far to fix. 

When you’re doing catch-up bookkeeping instead of regularly reconciling your books, you may think you’re in better shape than you are. Imagine hiring a new full-time staff member only to learn you can’t afford them? Learn more about the importance of regular bank reconciliation and when to call in a bookkeeper. 

What is bank reconciliation?

Reconciling your bank records means comparing what the bank has on record with your own internal reports. If you have a bank feed with an accounting service, you still need to reconcile your bank feed with your official bank statement. 

A lot of transactions are included in a reconciliation. According to The Institute of Certified Bookkeepers in Australia, you should periodically reconcile your internal records against the records of:

  • Banks 
  • Credit Cards
  • Barter Cards
  • Bank Loans
  • Petty Cash
  • Cash Drawer
  • PayPal

Why do you need to reconcile your bank accounts?

Your accounting records are only as useful as they are accurate. Sounds obvious, right? You’d be surprised how much missed bank fees and other small discrepancies add up and how many business owners may wave them off as unimportant. In reality, bank reconciliation can save you thousands of dollars per year. Combined with double-entry bookkeeping, which creates two records of every transaction, regular reconciliation keeps your books tidy. 

Here are some of the reasons reconciling your bank statements is so important. 

A bookkeeper looks over a bank reconciliation statement.

Catching Discrepancies

Your internal ledger says you spent $10,000 last month, but your bank statement says you paid fees totalling $500. This difference may seem small in the grand scheme of things, but if you make the same mistake each month — you’ll be off by $6,000 by the end of the year! Discrepancies can result from honest human error or fraud. If someone is skimming money from one of your accounts, you’ll notice it faster with a monthly reconciliation process. 

Tracking Cash Flow

Reconciling accounts each month gives an accurate picture of the amount of cash flowing in and out of your accounts. You’ll see if you’re actually in the black — or just thought you were. You can also reconcile your credit card receivables as a part of this process to make sure that everything has cleared that was supposed to. 

Managing Accounts Receivable 

One major source of reconciliation discrepancies is a cheque that did not clear because the account had insufficient funds. Checking your accounts receivable as a matter of routine allows you to catch these problems so you can either rebill the vendor or customer or write off the discrepancy as a bad debt. 

Making Sure Payable Transactions Have Posted

Comparing your statement balance to your internal records often also lets you confirm that important transactions have posted to your account. It would be a shame to forget that you still have an outstanding cheque out in the world — you could easily overspend on an account when it finally posts. 

Finding Systemic Issues

If you notice a pattern of individual errors or discrepancies, you may also catch a structural issue within your accounting system. Perhaps you need to change payment services or use a different bookkeeper if the same issues arise time and again. 

How often should I reconcile my bank statements?

The Australian government only recommends that you reconcile accounts “regularly,” which is a bit vague. Ideally, you should reconcile your accounts each time you receive a bank statement. If your accounts bill on different schedules, an end-of-month reconciliation is a good habit to get into. 

How can a bookkeeping service help with bank reconciliation?

An outsourced bookkeeping service can provide reporting and insights that your current staff aren’t able to keep up with. Partners like Visory provide an outside set of eyes to give your company an objective view of your financial affairs while saving you time and internal resources. Your team gets to use the insights and reporting to make smart decisions without having to do any of the work to create them. We call an outsourced bookkeeping service a win-win.