How Are Some People Not Embarrassed to Send This Out?
Bookkeeper Blunders Unmasked
As I stepped in to handle a new Bookkeeping file, I uncovered the unfortunate reality that the former bookkeeper was not just behind schedule but also lacking in competence.
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Mismatch in Deposits: How is it possible that none of your recorded deposits align with the actual amounts deposited? At the very least, had you consistently logged amounts exceeding those in the bank, I might blame unaccounted merchant fees. But even this is erratic.
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Cash Box Confusion: How does one end up using a cash box account for tips paid through debit without ever disbursing them to the staff?
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Mysterious Undeposited Funds: Accumulating $40,000 in undeposited funds with arbitrary “outstanding at the end of the day” entries? These aren’t even applied to cash deposits the client made at the bank. Instead, they’re offset against the tips in the cash box account. And when that’s insufficient, you casually make a $3,300 adjustment to a suspense account to cover the shortage.
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Merchant Processor Oversight: How do you have a merchant processor yet fail to log any associated fees?
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A Professional Disgrace: How on earth can you justify taking money from clients to deliver such disorganized work?
If you’re in the Vancouver area and any of this resonates with practices you’ve done, it’s time to rethink your approach. Recommend your clients seek out a capable bookkeeper and reflect on your methods.
Why Experience Matters
For those advocating support for novice bookkeepers launching their careers, this situation highlights the risks involved. Simple Bookkeeping tasks, especially in a service business context, can become inexplicably complicated when handled poorly. Let’s ensure aspiring bookkeepers gain the necessary experience before going solo.
One response
I’m sorry to hear about the frustrating situation you’re dealing with. Mismanagement of Bookkeeping is not only challenging but can also have significant implications for a business’s financial health. Let’s break down the issues step-by-step and outline a rational approach to address them.
Common Bookkeeping Mistakes and Solutions
Mismatch Between Recorded and Actual Deposits
The inconsistency between the recorded deposits and actual bank deposits indicates a lack of reconciliation. Here’s how to address it:
Reconciliation: Regularly reconcile bank statements with your ledger. This helps catch errors promptly and ensures accurate recording.
Revenue Recognition: Implement a method to recognize revenues that accounts for various income streams, including merchant fees.
Improper Handling of Tips
Recording tips incorrectly can result in discrepancies and legal issues related to employee payments.
Tip Allocation: Ensure tips recorded through debit transactions are cleared systematically to employees.
Separate Accounts: Maintain distinct accounts for tracking tips and their disbursement.
Undeposited Funds and Random Entries
Accumulating undeposited funds and creating arbitrary ledger entries without a clear purpose can obscure financial clarity.
Clear Procedures: Establish a process for regular depositing of funds to minimize undeposited money.
Record Keeping: Use consistent and clear records. Avoid creating ‘suspense’ entries without documented reasons and plans for resolution.
Unrecorded Merchant Fees
Merchant fees should be accounted for to ensure accurate net income reporting.
Expense Tracking: Ensure that all merchant fees are captured and categorized correctly in your financial statements.
Professional Conduct
It’s unacceptable for a professional to deliver poorly managed financial records. If you find yourself in a similar situation:
Seek Professional Help: Hire a competent bookkeeper or CPA to assess and correct the situation.
Supporting New Professionals
While it’s important to support newcomers to any field, standards must be maintained to ensure that businesses are not negatively impacted: