What Are The Necessary Bookkeeping Skills?
Bookkeeping and accounting often get used interchangeably. However, there are a few differences between the two. Both accountants and bookkeepers are essential to the successful operation of a business, and both are great assets to the financial side of things. However, some people will refer to an accountant as a ‘giant sifter’, with bookkeepers being the process of pouring stuff into the sifter. You can’t be an accountant without being a great bookkeeper. So what skills do you need to be a great bookkeeper?
Bookkeepers record and classify financial transactions. As well as being comfortable with numbers, organisational skills are particularly crucial for people in this role. If you are applying for a job as a bookkeeper, review the following list of bookkeeping skills, along with information on how to highlight these skills throughout your job application.
Bookkeeping is more than being good with numbers. It encompasses many soft skills and other abilities which wouldn’t spring to mind when you think of accountancy or bookkeeping.
Being a good bookkeeper means being able to represent an exact picture of the financial aspects of your business on paper or electronic files. You need all sorts of skills to become a great bookkeeper; soft and hard skills, and above all, an interest in having an overview of the financial functioning of the business.
The hard skills you need to be a brilliant bookkeeper are, among other things, to have an understanding of numbers and an eye for detail. You will need to have a certain level of maths. You will need to learn or hone your natural talents for accurate record keeping.
The soft skills you will need to be a first-class bookkeeper are to have a strong commitment to the work and to be able to obtain an overview of the company; to see the bigger picture. As the bookkeeper, you will find that you are able to see trends in the flow of finances and part of your role will be to work with your findings to enable the business to grow and prosper. As well as being vital in communicating the overall financial health of the company you will need to attend to the nitty-gritty, the details. Of course, no-one is perfect, and you may make mistakes sometimes. Your role will also involve double-checking all your accounts and correcting any errors you or anyone else may have made in doing the record-keeping.
Basic bookkeeping skills are learned and used by accountants, although a bookkeeper is not an accountant. The accountant will use information compiled by the bookkeeper to create the end of year accounts. Being an effective bookkeeper also means you have to be a great communicator. Your work should be clear and logical. The accounts you keep should follow basic bookkeeping principles that are understood throughout the industry.
You will need to learn bookkeeping and accounting language. You will need to learn the definitions for phrases such as debits and credits, accounts payable and receivable, accruals and auditing as well as the Balance Sheet. You will learn to closely track the activity in the bank and link it to what is happening in the business: e.g. bank deposits and reconciliation. A bookkeeper will also need to have a good grasp of how the value of equipment changes over time (‘depreciation’). You will also have to work your way through financial statements and learn about journal entries and in some cases VAT and the way that this is managed in the accounts.
You may need to train and obtain some qualifications. There are numerous courses available; some people train in-house as they work. Others prefer to apply for their first bookkeeping role, having completed a course. You may be thinking of starting your own business and as a result, need to become your own bookkeeper.
These days it is essential to be computer literate and to have a grasp of current technology as so many companies now use computer programmes to keep their accounts. So this is where your hard skills learning to touch type and using computing software will be useful. Your soft skills will also be relevant as you will need to have a good overall understanding of the company in order to oversee the maintenance of the figures and to present them in a coherent and comprehensible way to third parties.
A bookkeeper needs above all great data entry skills. Accurate recording of figures and the relaying of the numbers onto the ledgers or into the computer programme is key to the job of bookkeeper.
The information should be stored safely and securely. If the data is kept on physical copies, these should be stored in lockable cupboards, and another hard copy should be kept off-site. Therefore keeping brilliantly well-organised records is one of the key factors in being a great bookkeeper.
If you use technology to keep your company books, then you need to secure your electronic data just as well if not more so than paper copies. An encrypting programme/software should be employed to reduce or minimise the chances of your company information falling into the wrong hands.
So a bookkeeper needs to be orderly, methodical and strictly accurate.
The theory of bookkeeping is to have a paper/data trail to show where the money you are making came from and also where it is going to. So you must be disciplined in your approach. No transaction should be omitted; every entry should be clear and concise, reflecting the reality of the business.
All receipts should be stored neatly and in a numbered sequence which is then logged for future reference. This will help ensure that any query will be easily resolved. In effect, every transaction should be clearly logged. Your skills as a bookkeeper are to be able to show a third party what was spent where and how the funds were used and accrued. Again every incoming financial transaction should have an invoice logged against it. These also are numbered logically and sequentially.
A bookkeeper needs to be able to have a handle on the whole financial picture of the company, and as the bookkeeper your efficient work and clear logging of records will save the company time and money, so increasing its overall profit margin.
In conclusion, bookkeeping skills are many and varied; however, there is one basic requirement that I have not yet mentioned which is essential above and beyond all others: you need to be open and honest. That way, you will create fantastic records and also give the business the tools it needs to grow and prosper. In some ways, the bookkeeper is the key to a successful company. Without a clear picture of the finances, any company is bound to flounder. Your dedication to keeping accurate and clear records is essential to the ongoing life of the company. Your bookkeeping skills will become core to the welfare of the business and as a result you will be irreplaceable and respected.
What is a Bookkeeper?
A Bookkeeper is responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. The bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an accountant. While there is a general overlap between the two professions, there are a few distinctions that are later discussed in this article.
Bookkeeping and Accounting make some of the most essential functions of any business organisation. They both require a sharp eye that keeps track of relevant data, yet, they do have their differences.
But nowadays we are noticing a tendency to merge both of these roles into one. The line that used to divide accounting from bookkeeping is slowly disappearing, with each one absorbing something from the other.
For the sake of clarification, we want to make sure you know where an Accountant and Bookkeeper differ.
Put very simply, a bookkeeper is responsible for the recording of financial transactions, whereas an accountant is responsible for interpreting, classifying, analysing, reporting, and summarising the financial data. When you put it in the context of decision making, the management of a company can’t make a decision based on the data provided by a bookkeeper.
However, they can take long-term critical decisions based on the data provided by the accountants. Overall, the nature of an accountant is more complex, yet the two professions have several similarities when it comes down to the set of skills you need to perform.
Bookkeeping Skills You Need
This is the number one quality you will need to succeed as a bookkeeper. You will be receiving plenty of data that you will have to organise in the short-term or long-term. People will be coming to you with multiple questions per day, as they consider you to be some living encyclopedia of information. That’s why you must have a sense of organisation of things, for whenever they start to get hectic.
If you’re the type of person that gets sweet relief from organising files and numbers, then you would be perfect as a bookkeeper. Being able to organise and maintain financial records is essential to the role, and it certainly helps if you enjoy working in this kind of position. If you’re more of an “outdoors” person who hates sitting in front of a PC for extended hours looking at numbers and figures, bookkeeping might not be for you.
Your employers and clients will set you deadlines and you also need to work to Tax Return and VAT deadlines, as well as Financial Year End deadlines. Organising your time around these will not just shape your career, but how competent you are and how potential clients/employers view your services. You will need to plan your months and years ahead and how you work will depend on these tight deadlines.
Attention to details
Of course, this quality is inter-connected to your sense of organisation. However, we want to highlight it specifically as your attentive approach makes a huge difference. As we stated above, a company may base critical decisions upon the data you provide for them. So it is essential to try not to miss any valuable details.
You are dealing with a company/client’s financial data, and so you need to ensure all the data you are logging is accurate down to the last penny. This is so you can monitor financial transactions and make sure financial policies are being adhered to. This will ensure your career isn’t called into question, and you are following all moral obligations and measures of integrity.
Integrity and Transparency
The fact that you are considered the main source of information for most people in your workplace means that they are putting their complete faith in your abilities. That is why you must reward them with the same input that involves honesty and commitment. The data you are given may be very confidential, specifically the ones involving financial transactions. So make sure to keep them that way, and at the same time, provide a transparent approach to your co-workers when needed.
We have to break it to you now – you will have social interaction. Some people think that bookkeepers deal with numbers only and analytical tasks and that communication is not needed. Which is wrong! You will have to communicate with people to gather the data. In fact, you need to have excellent communication skills so that you can ask them exactly the information you need. This communication may be face-to-face or electronic; nevertheless, it is very much important.
If working in a large company, you may be required to work alongside accountants and other departments within the company that may require your assistance. Being able to communicate with everyone easily and effectively will make your job (and everyone else’s) a lot easier. Whether it be face-to-face communication or phone and email, being able to communicate effectively is essential to the role.
This is another quality that people expect bookkeepers to own. In the world of finance, problems and issues will undoubtedly be knocking on your door every once in a while. Hence, you need to possess the calmness to first, spot those issues long before others, and then solve them.
The trend of data going electronic has arrived long ago. That is why to survive this ongoing trend, and you must be updated with the newest software and working tools. Your analytical skills will be required to connect many dots, and since the technology is here to help you, then why not give it a shot. By searching for new ways to make your job more efficient, you will never become outdated for the company or business you work for.
Time Management Skills
Every one of your abilities would be useless if you can’t divide your tasks properly when the timing is right. That’s why you must always have a schedule and make a list of your priorities, deadlines, or related activities that must be completed in the foreseen timeline. You will surely have many projects or people to deal with, so having the right time management skills can boost your day-to-day productivity.
A way with numbers
All the tasks that a bookkeeper has to perform throughout his/her career involve ciphers and numbers. That’s why it should serve as a heads up to you that if you want to pursue this career, you will have to be comfortable dealing with a little bit more than just elementary arithmetic skills. In some cases, the knowledge you are required to have with numbers depends on the kind of business you work with. But yet again, there is no escape from a routine that will certainly oblige you to deal with calculations.
Significant use of memory
We know that this is not always manageable and that we all tend to forget things every once in a while. However, as a bookkeeper, you must note down everything and try to remember details related to your evidence. Every bit of information matters when it comes down to putting together a spread out puzzle.
At the University of Potomac, we can lead you towards a successful career as a bookkeeper. Through our program in Bookkeeping Administration, we prepare you to take the QuickBooks Certified User certification exam. This exam enhances your skills in some of the most popular bookkeeping programs related to managing income, expenses, bank accounts, receivables, inventory, job costs, fixed assets, payables, loans, payroll, billable time, equity, and more.
Great data entry skills
Having great computer skills is a necessity when working as a bookkeeper. Knowing how to keep up with technology and being able to add in data in an accurate and timely manner is going to benefit you greatly. Touch typing skills are an added bonus that will save you time in the long haul. If you have trouble with new software changes, technology upgrades, or learning these kinds of skills quickly, you may find that you will struggle slightly with this kind of role.
Discipline comes in many forms. It comes in stress management and how you work under pressure, but also how you handle yourself in the professional environment. An entire company’s financial situation can rest on your integrity and morality in dealing with their money. If fallen into the wrong hands, this could be disastrous for the company and for your reputation should you be caught. Heed this warning!
Bookkeeping is the start of a solid career path in the accounting industry and provides a good foundation with which to begin. In order for this career to be successful, you need to showcase good commitment levels to get the job at hand complete, with minimal costs and use of resources to your employer or client.