As a business owner, you may be feeling the pinch at the moment.
Deloitte recently reported the weakest rate of economic growth outside of the COVID pandemic since the 1990s recession, and warned that Australia’s economy is on a knife edge.
Your first thought as a business owner may be survival by any means necessary.
This usually entails cutting costs somehow.
Outsourced business services are often first on the chopping block.
But, is it a good idea to get rid of your outsourced bookkeeping, even if it looks like a big red line on the books?
Bookkeepers are a financial resource
We have two kinds of assets in our business – performing assets, the kind that actively makes us money (e.g., the coffee machine in a cafe) and non-performing assets (e.g., the chairs and tables.)
Though a bookkeeper seems like a non-performing expense you could do without, good bookkeepers are highly skilled at finding ways to save you money and guide you through a recession.
In times of economic uncertainty, it is crucial to have a clear understanding of your financial situation.
Accurate bookkeeping allows you to monitor cash flow, identify potential issues, and make informed decisions regarding budget adjustments, cost reductions, and investments.
Without bookkeeping, you risk being blind to the financial realities of your business, making it challenging to navigate the recession effectively.
Case study: Using terms to your advantage
A hospitality client of ours was having cash flow issues.
They had regularly run out of operating cash halfway through the month. We found out that they had 14th-day/end-of-month terms with a supplier, but were not using them.
By shifting their order to the first business day of the month instead of the last business day, they gained an additional four weeks to settle their accounts. I.e., by ordering on the 1st of May, they’d have until the 14th of June to pay. This freed up their cash flow to ensure they had more than enough for payroll, rent, tax, and other expenses.
Bookkeepers can analyse your expenses and come up with solutions to improve your cash flow reserves.
Business grants and assistance – being in the know
Bookkeepers are inundated with information about government grants and assistance that may be relevant to your business.
As we have two feet in the finance world, it is much easier for us to pass on the information as we get it – it is hard to find if you are not looking at it all day like we are!
During a recession, access to credit becomes more challenging as lenders scrutinise a business’s financial records more closely. Having well-maintained bookkeeping records can enhance your credibility when seeking loans or financing options.
It is not all or nothing
Though you might think that we can turn a bookkeeper on and off, it doesn’t really work that way.
If you are desperate to save money in the business, it’s better to negotiate with a bookkeeper to see what they can do for a lower rate or fewer hours than normal rather than cancelling their services.
This might mean a bit more work at your end uploading receipts and reconciling payments while we take care of the big and complicated (and ATO scrutinised) work like BAS, reporting, and PAYG lodgement.
Inaccurate or missing records can result in penalties, fines, and legal complications. Moreover, poor record-keeping can hinder audits, delay financial reporting, and tarnish your business’s reputation, which can be detrimental when seeking new opportunities or partnerships.
Keeping your bookkeeper involved in the business at any level can save you from errors creeping in and blowing out; which can cost way more to fix in the long run.
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