“What’s the difference between a bookkeeper, accountant and a financial strategist? When do I use one over the other?
A bookkeeper is required to keep records of its business transactions into an accounting system like Xero. These transactions include sales, purchases, payroll, collection of accounts receivable, payment of bills, bank reconciliations, and travel receipts. To be good at their job, at a minimum, they must have a basic understanding of accounting terms and your industry, be very organized and conscientious, and consistently meet deadlines. Timing is everything to a small business owner: they need their bills paid on time, invoices sent in a timely manner, money collected on time, and employees paid on time. A bookkeeper may or may not have a degree in accounting. Most small business owners lack the time or the skills to do their own bookkeeping, so they hire someone or use the services of a bookkeeping firm.
An accountant often provides expertise in two areas: financial reporting and income tax planning and preparation. For financial reporting, accountants will store, review, summarize, and present the financial information in various reports for analysis. They may also work with the business owner to create an annual budget. Once the fiscal year is closed, they may also prepare and file income taxes on behalf of the business owner as well as provide tax planning for future years. Unlike a bookkeeper, an accountant should be degreed with at least a bachelor’s degree in accounting. A good accountant will be knowledgeable, responsive, and have great communication skills, especially in explaining what the numbers mean in a way the business owner understands.
Where the bookkeeper and accountant create and provide historical financial information, a financial strategist helps the business owner understand the numbers. The financial strategist uses this financial information and other information to look ahead, collaborating with the business owner on the future growth and profitability of the business. A financial strategist analyzes financial data to understand what the business is currently experiencing but more importantly to make credible recommendations on the financial actions an owner needs to take to reach his or her future goals. They often focuses on cash flow (where’s the money coming and going), profit margins (how much is being made on products and services), labor utilization (percent of billable hours), inventory and accounts receivable turnover (how quickly are you getting your money back), etc. A good financial strategist listens and collaborates with the business owner on the owner’s growth and profitability goals, then provides the financial analysis and recommendations to make it a reality.
As you can see, bookkeepers, accountants and financial strategists all provide unique, critical accounting and financial expertise that all small business owners need. Where small business owners get in trouble is when they try to use a bookkeeper as an financial accountant, a financial accountant as a financial strategist, etc. At KREA Group, we completely understand this, so that’s why we provide services to assist you with understanding your business needs.
Choosing the right Accountant for your business!
An Introduction to Accounting
What is Accounting?
The Primary role of accounting is to provide reliable and relevant financial information for decision making. Accounting has been around for centuries and has developed significantly since its humble beginnings in ancient times when scribes recorded simple agreements between parties, and other information, on clay tablets. Today almost every person engages in business transactions in relation to the financial aspects of life such as purchasing products and paying bills. This means that accounting plays a significant part in society.
Accounting is “The language of business. It is a public means of communication where information flows from one party to another. For information to be effective it must be understood. Accounting, like many other professions, has its own terminology or jargon which is unique to the profession and can have alternative meanings in different context. Accounting Terms, concepts and symbols are used to provide financial information to a variety of users including managers, shareholders and employees.
The Accounting Process
Accounting is the process of identifying measuring, recording and communicating the economic transactions and events of a business operation.
Bookkeeping forms the foundation of the activities underlying accounting and these processes today extend far beyond preparing accounting records.
Diverse Roles of Accountants
Internal Users of accounting information are Managers who plan, organise and run the business. They do not need to rely on general purpose financial reports as they can obtain the financial information they need internally. EG: Directors, Supervisors and Managers.
External Users are resource providers and have an interest in financial information about the three main types of activities, financing, investing and operating.
WHAT IS THE ART OF MONEY?
Let’s talk, the art of Money, Is about sharing our views and opinions on talking about money. This is a judgement free space and everyone’s opinion matters.
WHY TALKING IS IMPORTANT?
Talking out loud about what’s going on in your head and explaining it to someone else, even if you think it doesn’t make sense, helps you to clarify the things that are worrying you. Saying things out loud, often makes them less scary, and at least by having to sort through your feelings you know a bit more about what you’re dealing with. Keeping things inside only lets them build up and can get confusing.
WHAT ARE YOUR THOUGHTS ON TALKING ABOUT MONEY?
As a family of 4, been brought up by our mum solo, we never spoke about money. However, “we were told how little we did not have and that we could not afford things.” This created a drive and determination in me to provide and money became a worry, fear and a concern that I will never have enough. Please know, that this in no way, any fault of my Mum's. We only know what we know. I was consumed by a poverty thinking that drove a subtle hunger to have money. Little did I know, that, that kind of thinking was the very issue that lead me down the path of financial hardship.
WHAT TALKING ABOUT MONEY DID?
“I now view money as a tool that can extend the well being of a situation and I am merely just a manager of the money. After 8 years of trying to understand why I went through financial hardship, it was the slow strangulation of holding onto what was mine. Is Money my priority, NO, not now, but I needed to journey a self discovery thinking of how I viewed money and why we don’t talk about money.
THE ART OF MONEY is to make a difference in the world by sharing what little I may know that has made a difference in my life.
I will every month create conversations that will be a safe space to release concerns and information about money, finances, investments and time. We believe understanding brings confidence, creating financial pathways, that will order and achieve your goals.
Thank you for reading