Knowing the ins and outs of your cash flow is essential for any business. An understanding of where your funds go and come from is essential to create and maintain a profitable organization. However, this process can sometimes feel incredibly daunting and complex for many business owners.
The process to balance your books and keep your financial reports in order usually consists of two key steps- bookkeeping and accounting. Though they may seem like similar terms, they are two distinct parts in a collective whole that help business owners stay on top of their funds.
Firstly, bookkeeping is a process that refers to keeping track of all the expenditures made by your company, such as sales, payments, purchases, etc. Through a variety of different bookkeeping methods organizations can note down every penny that has been spent in running a business.
Accounting however, is the process of taking all the data recorded by bookkeepers and using it to see if the business is operating efficiently. Accountants tabulate data from financial reports and balance sheets and analyze them to create a clear picture of the organization’s monetary usage. In the simplest of terms, the bookkeeper records the expenditure details in their reports while the accountant uses those reports to tell the company how well they are operating.
Even though small business owners represent 99% of businesses globally
, only about 67% of them are satisfied with their accounting services. Many business owners are wary of outsourcing their accounting jobs. However, the digital era has opened up avenues where businesses can choose to use free accounting programs to complete their accounting tasks whilst maintaining full ownership over their financial matters.