In Pursuit of Profit
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Do you know how much time your company is spending on bookkeeping activities like accounts receivable (AR), accounts payable (AP), bank reconciliations, financial reporting, and reimbursements?
Or are you of the opinion that it doesn’t matter as long as it is getting done?
In many small companies these responsibilities fall to the business owners, adding another hat to the stack that they are already wearing. In these instances, it can be difficult to determine how much time is truly being spent on bookkeeping because it is being squeezed in throughout the day and week where there is room.
However, until you know how much time you and your employees are spending on bookkeeping and accounting functions, you will not be able to do an effective cost-benefit analysis to determine if it makes more sense to outsource these activities.
Additionally, knowing where you are spending your time means you will better be able to define the role you are looking to hire or outsource to get the right fit for your company, which works to improve employee retention – not just among financial staff, but among all employees. This kind of information can help determine whether you need a bookkeeper or an accountant and whether the role should be part-time or full-time.
The solution is to use time tracking software to keep a log of which activities are being done when and how much time it takes to do them.
Using Time Tracking Software
The most widely used time tracking platforms vary significantly in features and pricing. Most time tracking software is geared towards tracking billable hours. While that may come in handy when employing a part-time offsite bookkeeper, simply keeping track of how much time you spend on keeping the books typically only requires a more basic solution (like Hubstaff or TSheets).
However, taking a proactive approach, you may want to utilize a version of time tracking software that also includes more robust functionality that will allow you room to grow into it. For instance, many time tracking platforms are really project management software (like Mavenlink, Wrike, and Zoho Projects) with the functionality to allow employees to assign hours worked to individual projects or tasks. This kind of software can be used across the company to not only keep tabs on bookkeeping activities but also better manage other activities across sales, marketing, product development, and any other team that needs a way to get organized and collaborate on projects.
Before deciding on which software to utilize, consider who will be using it, where, and for what by answering these questions:
Leaning on The Data
Remember, if your bookkeeping duties are being spread out between employees to maintain proper financial controls, ensure that everyone’s contributions are being counted. Use the data to inform your decision about what kind of role you need to bring in to oversee your bookkeeping.
Analyze the data to determine if there is enough work to necessitate a full-time role or if a part-time position would suffice. In instances where there are so many labor hours being put into bookkeeping that it seems like multiple people need to be brought in to cover everything, just understand that professional bookkeepers and accountants will almost certainly be more efficient because they are more proficient in these areas so they can work smarter and faster.
Look at where you are spending your time to determine if there is seasonality to consider that might make a project-based bookkeeper, accountant, or consultant a better choice. Similarly, if there are nuances or complexities in your financial operations that would make it important to bring in an expert in a particular area, like a tax accounting or international accounting, look for someone whose expertise will address those needs.
If you doing extra work to overcome problems with your existing accounting software, it might be time to switch. Remember, using an accounting platform with features that are too advanced for your needs is just as much of a problem as using software that you have outgrown. Find the right software to match your current and near future business needs as well as your personnel’s technical skillset.
While time tracking data can answer the big questions about what kind of activities you are spending time on and how much time you are spending on them, other decisions will rely more on gut feelings. Deciding on whether you feel comfortable letting a third-party do the work for your company remotely or you would rather have someone do the work in-house is a decision that each business owner will need to answer individually.
Find out more about which accounting services you should outsource to manage costs while providing ultimate customizability for your business.