Bookkeeping. What is bookkeeping, and what are they “keeping?”
A bookkeeper is “a keeper of books,” not too different semantically from scorekeeper (keeper of score), housekeeper (keeper of the house), and timekeeper (keeper of time). What’s the common thread with these vocations? At first blush, they are dull, boring, unremarkable. They are things many wish not to do. But bookkeeping (at least for small businesses) is absolutely necessary.
When companies are doing well, it’s great. Cash is coming in, new accounts abound, territories are expanding, and there may just be an IPO looming. But when this happens, if a dollar is lost, stolen, or misplaced . . . no one notices. The mentality seems to be, “The cash is coming in. We got it covered!”
When companies are struggling, it’s an entirely different situation. The mentality pivots: “We need to upsize that line of credit! Can we ward off the bank’s credit committee? How did we get boxed into this financial condition? You want me to meet our future equity partner?” These are Dickens’ “worst of times.”
Now let’s talk about bookkeeping. It is suddenly important, yes? That loan increase or loan forbearance will not happen, not if the integrity of your books is compromised, not if the system of checks and balances is scaring the credit officer. And what if you’re looking for some equity cash? Sure, no problem, but the books are not current, and they are unreconciled, so the price point certainly will adjust for that.
Good bookkeeping departments or, if outsourced, good bookkeeping services can make or break a company. But once the strong cycle has transitioned to tough times, it is too late to package a clean and polished financial statement for banks and investors. The books are already closed, for better or for worse. As Chick Hearn would say, “The books are in the refrigerator, the P&L is cooling, and the miscodes are getting hard.” It is too late.
The requirements of bookkeeping can be simply stated. Book your GAAP accruals, reconcile cash, and close the books quickly. Begin with properly trained, reliable resources. Employ oversight and/or coaching by a competent supervisor. Establish accounting processes and practices with great internal controls.
Arima Business Solutions provides full-service bookkeeping. If you need an influx of talent and new perspectives, make sure they can bind the day-to-day bookkeeping so that it supports and does not detract from the company plan. Good consultants can sniff out fraud. They can identify red flags and mistakes. They can distill the information for easy understanding by owners, presidents, and Boards. They can speak to the financial trends, positive and negative. The competition is crowded and fierce in most industries today. High credibility from very well-kept books is, indeed, a strategic weapon.
Companies that are not focused on bookkeeping? Well, you know. The miscodes are getting hard.
ABS Financial Services consultants are eager to meet with you. Reach out to us today. Let’s have a conversation about your needs.