Bookkeeping entails creating and managing accurate and up-to-date financial records of an organisation. It is an ongoing process that makes the business stable through ideal outflow and inflow of cash, calculated investments, budgeting, and debt management.
It allows the business owner in Melbourne to have a clear understanding of the financial status of the business and helps make sound investment decisions.Thus, every business in Melbourne hires a qualified and experienced bookkeeper to attain their financial objectives, comply with rules and regulations and avoid fraud and unnecessary expenses.
Without the financial advice of the professional, controlling the cash flow and meeting other financial obligations can become challenging. The absence of efficient recordkeeping and other bookkeeping activities can lead to losses and failure. Thus, it is essential to have the best person on board who can complete the following vital activities flawlessly.
1. Recordkeeping
The first and foremost task of a expert bookkeeper Melbourne is to maintain a record of the daily transactions of the business. The debits and credits from the business account are carefully recorded in the general ledger without any errors.
The expenses are organised into different categories for clear classification, such as payroll, equipment, travel, lease, utilities, cost of sales, insurance, etc. These records help to understand the profit and loss made by the business in a specific period and its current assets and liabilities.
The traditional process of recordkeeping beings with taking note of a transaction and recording it in the journal under the correct category. The entry is then posted to the ledger, and the bookkeeper balances the account (the total on both sides is equal).
The next step is the preparation of the financial statements and their analysis, which is conveyed to the senior management. The use of accounting software has automated recordkeeping completely and reduced the laborious task of data entry.
2. Invoicing and Paying Bills
Maintaining a positive cash flow depends on efficient invoicing and on-time bill payments. Thus, the bookkeeper prepares and sends invoices to customers without delay. The invoice has the details of the payment methods and the due date. They follow up with the customers when the due date is approaching and make sure to get the payment from them.
Besides the utilities, lease, payroll, and insurance, they stay on top of monthly payments to suppliers and vendors in Melbourne. Similarly, they keep track of all the monthly and weekly payments. Paying them by the due date is essential to maintain excellent rapport and avoid penalties. Also, some suppliers offer early payment discounts, which help to save more.
3. Reconciling Bank Accounts
Reconciliation of bank statements is a part of the vital activities performed by bookkeeping companies in Melbourne. It involves matching the bank statement of the business account with the general ledger to cross-check the records for errors and missing entries. It aids in maintaining accurate records and financial statements and reducing the risk of fraud and losses.
Bank reconciliation allows complete transparency and helps to find out any delay in the clearance of cheques. It also helps keep the bank account safe from overdrawing by determining the correct balance every few days. It can be done weekly or monthly by checking the bank statement online.
4. Budgeting
Budgeting is a prerequisite for the financial success of a business in Melbourne. It ensures the correct allocation of funds to various processes and helps save capital by offering a roadmap for expenditures.
The bookkeeper liaises with the business owner in Melbourne to define the long-term financial objectives and then helps set the short-term KPIs for all the teams. They prepare financial projections and a guide map for expected spending and income in a defined period.
Budgeting aids in creating cash reserves that offer much-needed support in times of low sales. The financial plan is also needed to showcase to the investors and stakeholders the stability of the business.
It keeps the goals of the team aligned with the business objectives and helps manage debts effectively. Also, it has provisions for tax planning and preparation to reduce the tax bill and avoid penalties.
5. Inventory Management
Small businesses in Melbourne that sell goods need to keep track of the stock coming in and going out regularly. Since they do not have enough employees for the task, the bookkeeper takes charge of reviewing the flow of stock.
They order inventory, store it properly, follow its usage, and ensure selling at the right price. They take note of the damaged goods and get them removed or replaced quickly.
Inventory management aids in ensuring that the cost does not flare up and that the goods are delivered to customers without delay. It helps to improve customer relationships and prevents overstocking or understocking. It is also helpful in mitigating the risk of damage, theft, and returns.
Conclusion
Bookkeeping is integral to business functioning, and its essential activities are embedded in various operations. Thus, business owners in Melbourne need to stay on top of the books that are kept in order by the bookkeeper.
