Bookkeeping is an essential task that every company, Singaporean or not, should prioritise regardless of company size. However, some may wonder, what is bookkeeping? To describe it briefly, bookkeeping is an organised process of recording all financial details and transactions. It is crucial to have a good bookkeeping system in place to ensure the business runs smoothly and to make the accounting process easier. Orderly bookkeeping records are also important as all Singaporean companies are required to prepare and keep a book of accounts which should be in accordance with Singapore’s tax laws and the Singapore Financial Reporting Standard (SFRS) as mandated under the Singapore Companies Act and Income Tax Act.
Why is Bookkeeping Important?
1. Generate More Accurate Financial Reports
Some may question why it’s so important to have proper records of their financial details and how it benefits their business. Keeping proper records of your company’s financials is more than just filing mundane paperwork. When your business’s transaction records are updated, you’ll be able to generate more accurate financial reports and thus be able to better assess your financial resources to plan better for the future.
2. Better Insight & Understanding of Cash Flow
Furthermore, bookkeeping accurately records how much money has entered and exited your business, giving you more insight and understanding of the cash flow of the company while giving you more security as you’re able to see and track the movement of the cash.
3. Increase Auditing Efficiency
Bookkeeping can also be used as a tool to attract investors as it provides up-to-date and accessible information on the financial performance of your business. Proper bookkeeping can also increase auditing efficiency, be it internal or external, as your records would be in order and more easily accessible.
Accounting vs Bookkeeping: What’s the difference?
Accounting and bookkeeping services are equally important functions when it comes to managing your business’s finances. However, accounting and bookkeeping are different as they support different stages of the financial cycle.
Bookkeeping is more administrative and focuses on recording and organising the business's daily financial details and transactions. Accounting, on the other hand, is more for interpreting, analysing, reporting and summarising the financial data or transactions.
To put it simply, bookkeeping lays the groundwork for proper accounting. Therefore, both accounting and bookkeeping, whether done in-house or by outsourced service providers, complement each other and are the keys to a successful business.
Types of Bookkeeping Tasks
Now that we’ve got the differences between accounting and bookkeeping out of the way, let’s delve into the types of bookkeeping tasks there are in the following list:
General Ledger Maintenance
Accounts Payable Ledger Maintenance
Accounts Receivable Maintenance
Fixed Assets Ledger Maintenance
While we have highlighted the importance of bookkeeping in a company, we understand that not every business has the means to handle their bookkeeping records on their own – hence, finding alternatives for companies that cannot perform the task themselves or are rather unsure how to go about it is our goal.
Of course, there is always the option of hiring extra or outsourcing the task to professionals like us - Atriox. While there’s no shortage of professional bodies that are capable of providing bookkeeping services in Singapore, it’s important to find one that understands your business and can communicate well with you.
Benefits of Outsourcing Bookkeeping Tasks to the Professionals
1. Consistent in Accuracy & Efficiency of Records
A good outsourcing service provider can greatly benefit your company as they can not only keep your bookkeeping records on a consistently high level of accuracy, but they will also be efficient about it as they will be solely dedicated to the task as opposed to in-house staff who may or may not have other duties to tend to. The accuracy of a professional bookkeeping service is also important as inaccurate financial records can be detrimental to a business. Hiring a professional also means you won’t need to worry about training them, and you won’t have to deal with mistakes due to inexperience or lack of supervision.
2. More Cost-Effective & Provides Avoidance Against the Threat of Financial Misconduct, Occupation Fraud & Government Penalties
Outsourcing your bookkeeping to a service provider is also quite cost-effective compared to hiring your own bookkeeper. Hiring additional staff comes with many hidden costs such as equipment costs, utilities, statutory contributions and bonuses.
Another benefit of outsourcing your bookkeeping is avoiding the threat of financial misconduct or occupation fraud. According to the Association of Certified Fraud Examiners’ study from 2012, the most common victims of such frauds are small businesses that employ fewer than 100 employees, and the median fraud amounts to an astounding $147,000. Outsourcing a bookkeeping service is akin to bullet-proofing your business against penalties as inaccuracies, which whether intended or not, can often result in penalties by Singapore's Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Singapore (IRAS).
3. More Time-Efficient & Gain Assistance from Panel of Experts
Some Singaporean businesses may also think dedicating so much time to bookkeeping is too time-consuming, which further highlights the beauty of having outsourced bookkeeping services in Singapore – you can simply pass the task to the professionals and let them handle the nitty-gritty for you. Business owners can have more peace of mind and focus more on the growth of the business instead.
Furthermore, you can gain instant access to a panel of experts who adhere to the best practices and have knowledge of up-to-date accounting methods and even the latest software to further increase your business's financial performance.
4. Flexibility in Scaling the Team Size
You can flexibly scale the outsourcing team based on your company's needs by utilising outsourcing bookkeeping services. During peak seasons, you can scale up the outsourcing team, and when the workflow slows down, the numbers can be reduced to as few as you wish
In House Vs. Outsource Bookkeeping
Monthly salary, bonus, statutory contributions, equipment and space, training cost & any other additional benefits
Agreed Service Fee between the business and the service provider.
Experience and Expertise
Depends on the hired staff’s experience which also directly impacts the costing.
Experts who adhere to the best practices and are knowledgeable about current accounting methods in the market.
Depends on the software that was bought.
Depends on the service provider which may utilise the latest software in the market.
You may run the risk of staff resigning, staff not up to the standards of the task and also potential mistakes in bookkeeping.
Late submission of relevant documents may result in late completion date.
When Should You Outsource Your Bookkeeping?
You may wonder, when is a good time to outsource your bookkeeping? Is there a specific situation or requirements before you should opt to outsource bookkeeping to a professional? Well, there is no hard and fast rule about hiring professional help, but we can think of five possible reasons you should consider outsourcing your bookkeeping to a professional.
1. During the early days of the business
Budget may be a concern during the growth stage of a business. Hence it is advisable to keep costs low until the business has sufficiently grown by outsourcing your bookkeeping.
2. When strategically planning to get to the next level
Outsourcing bookkeeping is highly recommended when the company is interested in long-range forecasting, and you need high-quality financials to support growth decisions.
3. When facing time management issues
When things are getting hectic, and bookkeeping comes at the expense of the time you should be spending on primary business activities, it’s a sign that you should switch to outsourcing the bookkeeping to a professional instead.
4. Lack of dedicated bookkeeping personnel
When a business lacks dedicated personnel for bookkeeping, and it results in another key employee spending their time ineffectively in an area which is not their area of expertise, it’s a wake-up call to utilise a bookkeeping service before things get messy and resentment builds up.
5. When downsizing or experiencing a temporary downturn
In the face of a crisis such as the COVID-19 pandemic or other economic issues, your company may be forced to lay off staff. However, you still need quality bookkeeping services, so turning to an outsourced bookkeeping service would be your best bet.
Signs You Should Outsource Your Bookkeeping Tasks
This is by no means an exhaustive list of when you should outsource your bookkeeping tasks. If you are experiencing the below scenarios, you should outsource your bookkeeping tasks to professionals：
Spent too much time entering and sorting your financial transactions manually (mostly happens when your monthly transactions significantly increase).
Your business has experienced a phishing or malware attack and lost some vital business records.
Required complex financial statements, such as the Profit and Loss, Balance Sheet or Cash Flow Statement, but your current resource cannot do so.
Experiencing a messy tax season or when deciding to upgrade to double-entry bookkeeping or when you have bookkeeping questions that just can’t be answered by good old Google anymore.
Your business may have also started working with an accountant who needs access to professional kept books. Hence rather than stressing out and handling it yourself, it would be wiser to let the experts get to it.
In view of the common concerns of businesses both big and small in Singapore, we strongly recommend that you consider engaging an outsourcing bookkeeping service.
The benefits of outsourcing bookkeeping services and getting an expert to handle your financial record matters far outweigh the value of having an in-house bookkeeper, especially since their expertise can help ensure that your business complies with Singapore’s laws.
When it comes to something as important as your business, nothing short of excellence will do, so carefully consider all your options before hiring your preferred outsource bookkeeping service to ensure your business finances are not just in order but also hassle-free. If you’re in doubt or unsure where to look, Atriox is more than ready to assist you with all your outsourced accounting needs.
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