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Tue 29th Jun 2010

Bookkeeping Vital In Recession

Cashflow is hugely important for businesses at the moment as they try to stay afloat with constrained finances, yet there is a shortage of people qualified in bookkeeping, according to an expert.

Malcolm Trotter, chief executive of the International Association of Bookkeepers (IAB), says people who are trained in accounting and finance are playing a vital role in helping firms, particularly small businesses, to emerge from the recession.


Cashflow Management

"Clearly, accurate and timely bookkeeping means that a business then has, at its fingertips, up-to-date financial records and the benefits can be several fold as long as the business actually makes use of those records," he asserts.

Mr Trotter explains that bookkeepers can immediately tell which customers owe the business money so that the company can chase up its debtors. By the same token, a trained professional can also identify creditors and those payments that can be delayed in order to keep cash within the business.

"Both of those two things are absolutely vital at the moment, particularly, because of one, the recession and the need to maximise your cash flow and secondly with the lack of finance around, the tightening down on the overdraft and so on by the banks," he adds.

Mr Trotter reveals that small businesses often say that bookkeepers know the business better than an accountant or even an external financial analyst, as they work with the figures on a weekly, monthly or even daily basis, meaning they can play an important role in identifying areas where a business can tighten its spending.

"They're the ones who know the ups and downs of the business financially, its cycles, whose paying, who's not paying and it's often the bookkeeper that makes constructive suggestions to the small business," he confirms.

"It's often the bookkeeper that suggests ways of trimming costs without people losing their jobs, the way they can save on purchasing, because the bookkeeper has a wider view of what's being used," reveals Mr Trotter.

Saving With Book-keeping Courses

Undergoing bookkeeping training can be an ideal way for employees of a business to help the company save money, according to Mr Trotter. He suggests that by having a worker do a bookkeeping course, a firm can save money on paying accountants.

Through training, an employee can gain enough knowledge to oversee some of the more straightforward aspects of a company's finances, such as keeping files and possibly even doing VAT returns, Mr Trotter says.

"A little bit of training can go a long way in terms of reducing professional fees and also again making the business more aware of its own financial records and patterns," he asserts.

Career Development

Furthermore, bookkeeping courses are also beneficial in terms of professional development, says Mr Trotter. "From a career point of view, there has been a skills shortage, particularly in bookkeeping but also in accounting as well for some time," he explains.

Mr Trotter reveals that recruitment firms have sometimes seen no applications for bookkeeping and accounting jobs, suggesting a skills shortage in this area.

"If they're looking to give themselves more opportunity for the future now is the time to go out there and do a bookkeeping course, or to improve their skills in bookkeeping and accounting because those jobs will come through again, if they're not already there, as we come out of the recession," he asserts.

Furthermore, for those who are already working in the profession, taxation changes and government regulations require bookkeepers to always be one step ahead of the game.

Regulatory Changes

Keith Wymer, of Pitman Training in London's High Holborn and Notting Hill, says the recent reduction in VAT to 15 per cent requires bookkeepers to take a different approach.

"How do you set up your bookkeeping systems for such a change? And what will you do when it goes back to 17.5 per cent in November?"

Mr Wymer adds that the government is continually sending out mixed messages concerning accounting standards, so bookkeepers need to learn to be sufficiently flexible in order to keep up with changes in Inland Revenue guidelines.

These are skills which can be acquired by attending bookkeeping and finance courses in London, according to Mr Wymer.