The duties of a bookkeeper within a business are far-reaching and need to be understood and appreciated by both the employee and the business owner. The bookkeeper must be a trustworthy employee who can be relied upon to safeguard the business against fraud and wrongdoing. It is most important that the duties of the business bookkeeper are fully documented. Everything the bookkeeper does should be set out and followed meticulously. It may sound harsh but the bookkeeper is not in a position to make decisions.
Protecting the Business
As bookkeeper you are in a very responsible position, ensuring that the business rules are 100% complied with. You must also ensure that everything you do is independently authorised. You must never be in a position where doubt can arise which could lead to your honesty being questioned and a loss of trust in your professionalism. The approach to your job is best thought of as “covering your back at all times”.
All transactions you record must include a full explanation so that anyone checking the accounts can fully understand the entries. Your records could be checked by a tax inspector, an auditor or an accountant and that inspection could be up to six years later and in your absence.
An important duty of the bookkeeper is to ensure that all payments to the suppliers of goods and services are 100% genuine. The checks to be completed before authorising the payment include:
- Ordering of the goods/service – Who ordered the goods and do they have the authority to do so?
- Delivery of the goods – You will require confirmation from an authorised person that the goods have been received and inspected, confirming the quantity and quality of the consignment. The confirmation will normally be by a signature on the delivery note which accompanied the goods.
- Invoiced as per order – The bookkeeper will check back to the original order document to confirm that the goods invoiced agree to the quantity ordered and to the quantity confirmed on the delivery note; that the description or specification of the goods agree to the order and that the prices invoiced are those included on the order form.
- The supplier invoice – It is the bookkeeper’s responsibility to ensure the supplied invoice has been correctly calculated.
- Returns – If any of the goods were returned or there were errors in the invoicing the bookkeeper will set aside the invoice awaiting a credit note from the supplier.
In summary, these checks confirm that the goods/services invoiced agree to the original order, that the goods received have been inspected and approved and that the invoice is correct in all respects. When all is approved the signed delivery note and, where applicable, a copy of the order should be attached to the invoice and filed alphabetically in an Unpaid Purchase Invoices file.
When the invoice becomes due for payment we will present the paperwork to our bank signatory with the number and date of the cheque written on the invoice(s) being paid. If an electronic payment is being authorised we will include the date submitted to our signatory for approval and add the payment reference and date once the transfer has been made.
When the authorised bank signatory receives the paperwork he will be able to see that the invoices have been correctly authorised and he will sign or initial the invoice as authority to pay which also ensures that no invoice can be paid twice. Once payment has been made the invoice(s) will be filed alphabetically in a Paid Purchase Invoices file.
If your business still makes some of its payments by cheque, then you will enter the following information on the cheque book stub:
- The date you entered on the cheque
- The payee – the person or company being paid
- An invoice number and/or brief description of what the payment is for
- The value of the cheque with a note of any settlement discount or other deductions from the invoice being paid.
A standing order is an amount you have instructed your bank to pay at regular intervals – monthly, quarterly or annually. You should keep a list of all standing orders that have been authorised showing who the payment is going to, what the payment is for, the amount of the payment and what dates these payments are to be made. Be sure to review your standing orders regularly to confirm they are still relevant.
A direct debit is an authority given to your bank to accept charges of unspecified amounts from your supplier. You should keep a list of all suppliers you have given direct debit authority and details of what the payments will be for.
Paying into the Bank
You will record the daily bankings on the paying in book stubs or on a separate deposit summary sheet showing:
- The name of the cheque drawer
- The customer name if different from that on the cheque
- Reference to the invoices being paid
- Details of any discounts or deductions made
Your invoices might be computer generated, produced on a till roll or maybe hand written in a duplicate book. They may be sent to your customer by post or possibly e-mail. You will run a separate set of invoice numbers for cash transactions and credit transactions. With cash transactions (where the invoice is paid on the day) write on your retained copy of the invoice how the payment was made – cash, cheque, credit/debit card etc. File these invoices in numerical order with no numbers missing (include any invoices that have been cancelled).
The copies of invoices we have issued for payment at a future date will initially be filed in our Unpaid Sales Invoices file. When payment of an invoice is received we will write on the filed copy invoice the date the payment was received and banked (or received directly into the bank account), and transfer the copy invoice into our Paid Sales Invoices file. All copy invoices including cancelled invoices will be filed with no numbers missing.
We will regularly check through our Unpaid Sales Invoices file and list any invoices that are overdue. We will “chase” the customers for payment of overdue invoices and possibly place a “stop” on any further goods being supplied to them.
Maintaining the Accounting Records
All payments, receipts, invoices received and invoices sent out will be recorded in the books of accounts. Whether it be a computerised system or hand written books the bookkeeper needs to know how to correctly maintain the accounting records.
All the books in use – the cash books, journals and ledgers are covered in our free seven-part bookkeeping course. Click here to access.
As a business owner you will want to have systems in place so that you can be confident that your administration system functions without the fear of errors or malpractice. To an extent you will rely upon your bookkeeper to ensure the requirements are complied with but you will also insist on seeing fully authorised paperwork accompanying all requests for payments.
As the business bookkeeper you must maintain the business owner’s full faith in you as the person he can rely upon to ensure the efficient running of his business.
For many years there has been a shortage of skilled bookkeepers. If you have followed our bookkeeping course and would be interested in part-time or full-time office work then we would recommend the AAT Bookkeeping Certificate and qualification. Courses for the foundation level are held in most locations or can be studied on-line. Details of the AAT qualification are available from their website. Click here to access.
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