What are the bookkeeping skills you will need to stay competitive in
today’s market? Among those skills you will need is the ability to work well with numbers, keep
things organized, stay motivated and communicate well. These skills are discussed later on this page, but first let's discuss some of the skills you need that are specifically related to bookkeeping.
A bookkeeper must be able to know the difference between:
Costs and Expenses
Assets and Laibilities
Payables and Receivables
The different kinds of Journals and Ledgers
You need to know how to work with Debits and Credits, and the Chart of Accounts. It is also necessary for you to be able to create different kinds of financial reports from your data, such as the Balance Sheet, Income Statement, Statement of Cashflows and other reports as the needs of a business may require. Being able to create aging statements is also good as they help a business see how far behind their clients might be in paying them.
It is important for you to understand the different kinds of business entities such as Sole Proprietor, Partnership, LLC and Corporations and how they differ from one another. The type of business entity has a direct impact on how the bookkeeping is done. This is most notably seen in the way money is invested in and distributed from a company.
You don't need to be overwhelmed by these different subjects. My site is dedicated to helping you begin your education as a bookkeeper. I have divided the different parts of the subject into different pages to help you learn a little at a time. So please take the time review the basic bookkeeping topics in the upper right corner of this page. I think they will be of help to you in understanding the bookkeeping skills you are looking to possess.
Bookkeeping means paperwork and lots of it. Knowing what has been done and what hasn’t is important. You will need to keep things organized in the books and in your head. It is a good idea to take notes while you are doing the books. In this way you can make notes of things that come to your mind while continuing with the task at hand.
Most of the information you will enter in the books comes in the form of receipts, invoices and statements. It is good to keep an organizational flow going in your work. A simple way to achieve this is to keep folders for new items you receive that have not yet been entered and/or paid and folders for things that have been entered and/or paid.
Obviously the main skill in bookkeeping is the ability to work with numbers. This does not mean that you need to be able to do advanced calculations in your head. We have calculators for that and want to use them to make our jobs as easy as possible. But, you need to be able to look at the numbers on statements and reports and understand what they mean.
For example, you may be reconciling a vendor account and see that according to the statement they sent, you still owe them money. But in your books it looks as if you have paid them in full. This could be a result of a missing invoice that hasn’t been entered, or quite possibly that the vendor has made a mistake on their end. Being able to discover what caused differences like this is crucial to avoid overpayments or late fees due to underpayments of accounts.
The ability to communicate what the numbers mean is one of the bookkeeping skills that some bookkeepers fall short in. Many people, including the business owners who have hired you, do not fully understand what they are seeing when you show them financial statements. I have found it best not to confuse them with details that won’t make any difference to them, such as how the bookkeeping works. Instead I concentrate on explaining why something has happened or could happen.
For example, a business owner may get a call from a customer that he/she has been overcharged. The owner comes to you and wants to know what happened. You as a bookkeeper can do your research, discover the problem and fully understand what happened in bookkeeping terms, but it is not necessary to explain the situation in those terms to the business owner. You instead should keep it simple and let them know that there was an error due to a mistake in data entry or incorrect paperwork and that you will fix the problem immediately.
With financial statements such as a profit and loss statement you may not be able to get the owner to understand how the numbers got onto the statement, but you can help them understand the bottom line and what it means to their business. For example, you may see spending habits in the business for unnecessary expenses that can be eliminated, or notice rising costs that may mean the business needs to raise its prices.
Not always will a business owner settle for a simple explanation. Never underestimate who you are working for. There are still many people who will get it and want to know more detail. In cases like this, feel free to discuss more details of the bookkeeping process as it will be a tremendous help to owners like this in understanding the financial position of their business.
Staying on task is another one of the bookkeeping skills not directly associated with numbers. Paperwork can seem to be never ending. Once you think you have things under control, a new batch of invoices or statements arrives and you get to start all over again. Or a problem presents itself that will require a few hours of your time outside of normal tasks.
For many people data entry can be very boring, but not for most bookkeepers. We don’t mind getting our heads in the numbers and inputting them into a system. As such, we are often left alone and need to be able to keep going and not get behind. Therefore self motivation is a very necessary bookkeeping skill.
Another of the bookkeeping skills needed is the ability to be interested in the industry you are bookkeeping for. If you display a genuine interest in the business it will show and be appreciated by those you work for. They are depending on you to value what they do and help them be successful.
Two different businesses may have similar financial statements, but because they are in different industries, the meaning of the numbers can have a completely different impact on each business. So be sure to understand what each business needs to be successful.
Many times a bookkeeper can find that he/she will gain a more solid understanding of the business than most of its employees and even some of its managers. This is because they can see the business from a 5,000 foot view to the details of one receipt for the purchase of office supplies. The more you develop these bookkeeping skills the more valuable you can become to any business.