If your bookkeeper system is good enough, do you really need financial accounting?

Bookkeeper skills and financial accounting sound quite similar but are in fact quite different. Both are also better suited according to the type of business you run. We show you what the pros and cons are of both bookkeeper systems and financial accounting, recommend bookkeepers in Melbourne and show you which one is better suited for your business.

What is a bookkeeper system?

 

A bookkeeper system is a system recording financial transactions including sales, expenditure, purchases and receipts. Bookkeeper records have been dated as far back as 2600 BC in ancient Babylonia where a rudimentary form of bookkeeping had been discovered. There are different systems like the single and double entry bookkeeper systems. A single system relies on one sided book entry and a double requires a corresponding entry for any transaction. Often a bookkeeper system will have a delay due to the fact it will be pending for an effect to take place from the transaction.

Bookkeeper systems tend to cater more for a local market rather than a multinational market due to the expertise in the local regulations with financial transactions. Bookkeeper systems are also more manual so would be a local accountancy firm. A local bookkeeper in Melbourne which is highly recommended is Bookkeeper Melbourne co and their website is www.bookkeeperco.com.au

What is a financial accounting system?

Financial accounting is the recording of financial transaction, but recording onto statements that will be made public. Financial accounting is subject to more stringent measures like GAAP (Generally Accepted Accounting Practices) and other accounting regulations. They must also adhere to five main principles in preparation for public use. It must be relevance for decision making. All the material and information provided must be truthful. The information must be reliable and error-free. The data must also be easy to understand. Finally, one should be able to compare the information to similar reports in order to derive an economic or financial trend in that report’s market.

An international financial consultancy like Deloitte, or an electronic software like ADP is better suited for financial accounting due to their understanding of international financial practices.  They are also trained and configured to cope with complicated algorithms and formulas.

What system is better?

Neither system is better, it really depends what your business model is. If your finances are fairly uncomplicated in nature (no international transactions and customers are local), a simple bookkeeper system would be better. For example, a business that might require a bookkeeper system is a local greengrocers or patisserie with one other branch in the neighboring town.  For a large company with over 100+ employees and multiple operations abroad, it would be better to get a professional financial accounting system. An example of this would be a chemical manufacturer who has headquarters in the USA, distilleries in Australia and financial, operations and technical support based in Europe.