Companies in any business market need to have a solid understanding of their accounts and finances to grow and take part in other operations. But, tracking down each expense and financial operation is time-consuming and challenging without the proper use of technology. Speaking of digitization, firms can speed up all their accounting operations by using virtual bookkeeping solutions. It is a go-to approach for firms that lack full-fledged accounting teams. This blog will cover everything about virtual bookkeeping and present a guide to both for-profit and nonprofit organizations.
Table of Contents
What is Virtual Bookkeeping?
Before diving deep, let’s first quickly understand what virtual Bookkeeping is. The term refers to the use of technology to carry out daily accounting tasks. From entering receipts into the system to performing financial audits, virtual bookkeeping helps firms perform everything digitally. This approach allows new businesses to carry out all the complex operations without hiring dedicated professionals. For instance, not every startup owner can afford industry professionals to prepare tax reports and financial sheets. With virtual bookkeeping, businesses take all the accounting operations from paper-pen to digital.
Why do Businesses Need Virtual Bookkeeping?
Online bookkeeping for small businesses is a go-to solution for firms that want to streamline their bookkeeping operations. Small business owners find virtual bookkeeping to be a time-saving solution. Every entrepreneur understands the constant challenge of managing limited hours in a day. Keeping financial records updated is a task that can be effectively delegated, providing relief to busy business owners. For startups dealing with numerous customers or bills, virtual bookkeepers offer a valuable service by saving significant time each month.
In such cases, hiring a part-time bookkeeper to handle day-to-day financial tasks becomes a practical choice. Additionally, small businesses often engage external accounting firms for tax preparation, and this might be a separate entity from their day-to-day bookkeeping service.
How does Virtual Bookkeeping Work in 2023?
In the past, especially for small businesses, the conventional approach involved physically driving to a local bookkeeper’s office. This action was performed at the close of each month, carrying a box filled with invoices and receipts. The accountant or bookkeeper would then manually sort through these documents and input the relevant information into spreadsheets.
Digitization has brought a revolution in the bookkeeping process, with the emergence of virtual and automated bookkeeping services. This modern approach allows bookkeepers to maintain accurate financial records on a daily basis with ease, eliminating the need for manual data entry and physical visits.
Top 3 Benefits Firms Take From Virtual Bookkeeping
Virtual bookkeeping has a number of advantages for firms, not only startups but also large-scale corporate agencies. Following are the top 3 benefits of using this service.
Bookkeeping Tasks Automation
In the past, bookkeeping services had limitations as bookkeepers used to record a company’s financial transactions after they had already taken place. However, with the advent of virtual bookkeeping solutions, firms can now enhance their services by incorporating bookkeeping and accounting solutions with more flexibility. The introduction of bill pay software has brought automation to the accounts payable (AP) process, simplifying how companies handle invoices from reception to approval and payment.
Document Management
While dedicated document management tools can be expensive, some financial automation tools offer a cost-effective solution by providing unlimited cloud storage. Additionally, these tools allow users to easily link documents to client or vendor records. The advantage of having vendor invoices and related records stored in a centralized location cannot be overstated. It greatly simplifies the process of accessing and retrieving crucial information, contributing to a more efficient and streamlined financial operation.
Accounts Management
Bookkeepers often face a significant challenge when dealing with credit card receipts, which are frequently received in large volumes. Sorting through these receipts becomes a crucial task for the bookkeeper. Each receipt signifies money that has already been spent, requiring the bookkeeper to update the books, categorize each expense, and assign it to the appropriate department.
Modern solutions have emerged to address this challenge. Expense management software now offers integration capabilities for business credit cards, accompanied by tools that empower companies to establish clear budget limits in advance.
Final Thoughts
When the financial process becomes slow, companies run the risk of lagging behind. This causes addressing business needs that arose weeks ago instead of gaining real-time insights into their current status. With online bookkeeping, whether provided internally or by external services, firms can swiftly and efficiently deliver the necessary financial information for both for-profit and nonprofit organizations. This agile approach ensures that businesses stay on top of their financial standing, enabling prompt and informed decision-making in response to the latest developments.
