Bookkeeping is a core accounting function that involves recording a company’s financial transactions, such as bank payments and receipts, logging sales and purchase invoices, analysing expense and mileage claims, and reconciling bank accounts and credit card statements.
Traditionally, bookkeeping was handled by semi-qualified accountants. However, with the rise of accounting software and automation technologies, many of these tasks can now be streamlined or fully automated.
Despite this, managing bookkeeping internally can present several challenges. Below are six key reasons why a recruitment agency should consider outsourcing its bookkeeping:
SPEND MORE TIME MAKING PLACEMENTS
Recruitment directors should spend their time making placements and running their businesses instead of completing or managing the bookkeeping process. Although accounting software appears to make this easy to complete, it requires some knowledge of accounting processes to ensure that the figures are completed accurately and correctly.
ACCOUNTING FOR VAT CORRECTLY
Not all purchases and expenses have VAT that can be reclaimed, so using a bookkeeper with this expertise can ensure that the agency complies with HMRC’s rules and only allowable VAT is reclaimed. Also, some costs have different rules regarding the amount of VAT that can be reclaimed (such as 50% VAT can be reclaimed on car leasing costs), which need to be understood and accounted for.
COMPLETING OF JOURNALS
Bookkeepers can often complete basic journals when completing the accounting records, such as prepayments, accruals, payroll journals and depreciation, to ensure that the books reflect true costs monthly and ensure that the Profit & Loss shows a true reflection of the overheads of the business
RECONCILIATION OF BANK BALANCES
Although most accounting software has bank feeds to bring transactions into the software, there still needs to be an element of reconciliation to ensure that the balances match between the bank, credit card and invoice finance accounts.
RECEIPT MANAGEMENT
When dealing with expenses, bookkeepers will ensure that any company spend has a relevant invoice or receipt to match the transaction, especially when VAT is being reclaimed. Outsourcing companies will provide software/apps that can be used to store the receipts and match them to transactions shown on bank/credit card statements.
UNDERSTANDING WHAT CAN (OR CAN’T) BE CLAIMED AS BUSINESS EXPENSES
Using an external provider to look over the costs of the business and question any expenses that may not be business expenses ensures that the agency remains compliant. Bookkeepers may also question any missing expenses, such as mileage logs, to ensure that the director is claiming for all business expenses instead of paying for these personally.
MAYACHI works with many recruitment-specific back office and accountancy providers, which can take away the burden of completing bookkeeping internally. MAYACHI ensures that recruitment agency directors also understand the numbers that are being produced and are claiming expenses they incur as a business.
