Please stay with me for a couple of paragraphs while I set the scene for this very important blog.
According to Wikipedia “Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organisation/corporation. There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system, but, while they may be thought of as “real” bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.
Bookkeeping is usually performed by a bookkeeper. A bookkeeper is a person who records the day-to-day financial transactions of a business. He or she is usually responsible for writing the daybooks, which contain records of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring that all transactions whether it is a cash or credit transaction are recorded in the correct daybook, supplier’s ledger, customer ledger, and general ledger; an accountant can then create reports from the information concerning the financial transactions recorded by the bookkeeper.
The bookkeeper brings the books to the trial balance stage: an accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper”.
As I was reading the Wikipedia explanation of bookkeeping it dawned on me that this description needs to be updated. Why? Because while the functionality of a bookkeeper has changed due to cloud accounting software programs, the underlying elements still remain. It’s just that Wikipedia refers a bookkeeper as a person – unfortunately now days a lot of the bookkeeping work is just not done by humans any more. Sad, but true.
Let me give you a couple of examples. The Day Book is now replaced by a phone app, taking photos of receipts and coding directly to the general ledger. Tablets are being used to take café orders and performing stock controls, tradies are enjoying their job and time tracking apps that filter through to invoicing and medical practices are finally coming on board with integrated software that actually has accounting and payroll programs linked to their medical point of sale system.
So what does this mean? Yes, apps are changing our world as bookkeepers, in many cases meaning that it’s the app which is becoming the “bookkeeper”. However the key point is that there still remains one absolutely critical area where the apps cannot and will not replace us. Let me explain.
If you have been in the industry for a long time you will know that your relationships with your clients can become very close. That closeness can even get to the extent in some cases where the trust level is so high the client may give you third party access to pay their bills. When it gets to this point bookkeeping has well and truly crossed beyond the pure administration realm and we become part of their trusted inner circle.
Can an app step in and replace your personal bookkeeper/client relationship? I don’t think so – an app is a tool, not a relationship. And it’s only a relationship that builds the sort of trust that gets any advisor in any sphere into the trusted inner circle.
When I read comments about cloud software on most bookkeeping support pages there is a mixed message going out to bookkeepers about how their job is becoming obsolete and being replaced with automation. While I agree to a certain extent that automation has changed the bookkeeping landscape I still don’t believe we are down for the count just yet.
Picture this scenario: The small business owner gets hold of the Receipt-Bank App (that I love by the way) and starts clicking away. She has a go at coding the transactions, doesn’t understand what is tax deductible so claims everything, claims GST on everything, doesn’t check that the transaction goes to the correct account, has no idea how to perform a manual bank reconciliation review, and certainly never thinks to check if the bank feed has stopped working.
In the meantime, they are still running their business, actively being the technician in their business. It comes to end of month or quarter, does the BAS, naturally in the circumstances without checking because “hey, I’m using an app, what could go wrong” so just assumes it’s all okay. The end of year rolls by, and she gives access to the Accountant, who looks at it and says, OMG, what have you been doing. End result of relying on bookkeeper app is there is a need to call in an expert to ‘fix’ it who charges twice as much to do so as it would have cost to do the job correctly in the first place by a bookkeeper person.
Now let’s quickly review how wiki sums up our role: The bookkeeper brings the books to the trial balance stage and an accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
Bringing the books up to trial balance stage is no mean feat. No app, (at least at this time) can do all the work of a bookkeeper who can carefully ensure that each line of the Balance Sheet and Profit & Loss is correct. Sure, when we use an app our time spent to do the work is substantially cut, but that simply leaves us more time to take on more clients or enjoy more downtime, whatever your goals are.
Synergy Bookkeeping is dedicated to helping you get on board with automation.
If you don’t know Receipt-Bank, XERO, Intuit or any one of the 100’s apps out there, check out our Cloud Accounting page and read up on some of the ones we have embraced.
Hi there, thanks for the great tips by the way. However, I
do have a question that I think you could answer for me.
I was wondering is there a free online resource for learning bookkeeping?
If you could give me some insight I would greatly appreciate it!
Hello Automate Bookkeeping – we are not aware of any Free online bookkeeping classes however the Australian Taxation Office might be a good start.