What Are Bookkeeping Skills?
What Are Bookkeeping Skills?
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 key to communicating the overall financial health of the business 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 in a logical and sequential way.
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.