Some business owners will try to do their own bookkeeping to save money. After all, business admin doesn’t make any money. They don’t consider what the opportunity cost is.
In this instance, opportunity cost means: what are you giving up in order to do your bookkeeping? Are you giving up spending time with your family? Going to a festival? Going out and getting more work?
Engaging the services of a bookkeeper has numerous benefits, which include:
- Understanding your numbers. You should have a good understanding of your profits and losses and other financial figures, particularly if you’re keeping your own books. However, a bookkeeper can assist you in understanding any figures that are perplexing and identifying the source of irregularities.
- Reducing your accounts receivable turnover by effective invoicing. When your books are in good shape, you can invoice more efficiently and quickly. Whether your bookkeeper manages invoicing manually or sets up an automated system for you, you’ll be able to shorten your invoicing cycle and receive payments more quickly.
- Reducing and detecting potentially expensive errors. This is the most significant benefit. There are many ways in which books can go wrong, from data entry errors to misplaced transactions to confusing business and personal expenses. With a bookkeeper’s expertise, they are less likely to make errors in recordkeeping, and they are better able to identify problems when they occur.
- Eliminating the time you spend on bookkeeping. Hiring someone to handle your books (whether on a full-time, part-time, or occasional basis) means you no longer have to do it yourself. This frees up the time you were spending on recordkeeping. Depending on how complex your finances are and the number of transactions you usually handle, this could amount to a considerable amount of your time being reinvested in your business.
- Avoiding late fees by timely bills payment. When you’re juggling bookkeeping with managing your business, it’s easy to fall behind on paying bills and invoicing. A bookkeeper will assist you in organizing your bills and ensuring that they are paid on time.
Your analysis of the cost and benefits of hiring a bookkeeper will be determined by your specific circumstances and the bookkeeper you hire. Even the most thorough analysis may require estimated or averaged costs rather than completely accurate figures, so leave some room for flexibility when budgeting for bookkeeping.
In the end, you may determine that your books are simple enough for you to handle on your own for the time being. However, the peace of mind that comes with knowing you’re unlikely to encounter major bookkeeping mishaps may be worth the expense. As the business owner, only you can decide whether bringing on a bookkeeper is the right decision for your company at this time.
