Is Your Bookkeeper a Good Fit

Scott Gregory
June 17, 2009 — 1,489 views  
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As you explore ways to improve your business and make it more efficient (and profitable), consider taking a closer look at the financial side of your business. This review would include the systems and staff that are in place handling accounting and bookkeeping tasks each day. They may be costing you more than you think!In this installment, let's explore several trouble spots where the wrong bookkeeper in a small business can get it into BIG trouble...

Are They Knowledgeable?

Unfortunately, I see it all too often - the person that handles the books for a business gets stuck with the task because nobody else wants it. Or even worse, the business owner staffs the bookkeeping spot with a relative because they were "cheap" or because they had some free time on their hands.

The reality is that your business finances are too critical to leave in the hands of someone that doesn't have a solid understanding of bookkeeping. I am not suggesting that they be a CPA and wear a green eyeshade to work each day. However, the person doing your books must know the differences between assets and expenses, the process of reconciling bank and credit card accounts, and the ability to stay on top of the invoicing and bill paying processes.

If your bookkeeper doesn't know even these basic job functions, the potential problems (and costs) may surface later. For example, if your bank accounts are not reconciled on a timely basis during the year, it means your CPA has to do it at the end of the year. That is an extra expense to the business and an unnecessary hit to your bottom line.

Do They Understand the Software?

Don't be misled by bookkeepers that "say" they understand QuickBooks, Peachtree, or other accounting packages. Ask them to demonstrate their understanding of the software. If you are not comfortable with this type of evaluation, turn to outside sources for verification. For example, you can do a quick Google search for "QuickBooks tests" and review a number of alternatives that can help sort out those who are knowledgeable from those who are not.

If you choose to hire someone that doesn't yet have a good understanding of the software used in your business, it's imperative to get them some training on the software immediately. Your investment in this training should pay big dividends very quickly.  If they don't get the training, it's a safe bet your employee will be stumbling around the software and making bad decisions that could be costly to fix later on.

By chance, if you are using some DOS-based accounting system that was created twenty years ago, you may be hard-pressed to find anyone who knows it and training for it may be non-existent. If that is the case, it's time to seriously consider updating your accounting software to something more current and user-friendly. This is simply a good investment to shore up the foundation of your business and strengthen your accounting department.

Do You Have Cross-Checks in Your System to Prevent Fraud?

Many businesses that I have seen have given their bookkeeper full control to all aspects of the business finances. The owners figure that if there is a problem somewhere along the way, their CPA will catch it at the end of the year and fix it.

The truth is that in most cases, your CPA hasn't been hired to look for evidence of fraud or other funny-business going on with your accounting records. They are simply taking the information you are providing to them from your accounting system and translating it for the purpose of preparing your tax returns.

The sad fact is that there are numerous stories where the bookkeeper has simply taken the trust placed in them and abused it for their own personal gain. I recently read a story that recounted the sad tale of a small business being taken for over $500,000 over a four or five year period because the owners weren't keeping an eye on things.

Problems such as these can be minimized by having a solid system of checks and balances put in place. These checks and balances don't have to be expensive, but they do have to be done on a regular basis to help ensure your business doesn't become the next news story.

These are a few examples of situations where having the wrong person doing the bookkeeping can create some serious problems for a business owner.

Scott Gregory


Scott Gregory is a QuickBooks Specialist, QuickBooks Enterprise Specialist and CPA. He has been helping businesses gain a better understanding of QuickBooks software and improve their accounting systems for over twenty years. Scott has trained hundreds of QuickBooks users as an instructor at his local community college. Prior to forming Bottom Line Accounting Solutions, Scott was the CFO for a manufacturing company, with direct oversight of the accounting, IT, inventory control, purchasing and HR departments. Contact Scott today at