Virtual bookkeeping means having a bookkeeper manage your company’s routine financial records remotely. Using cloud-based software and secure document-sharing tools, the bookkeeper can record transactions, reconcile accounts, and prepare basic reports without working from your office.
What is Different About Virtual Bookkeeping?
The bookkeeping itself does not change. The difference is where and how the work gets done. You may also hear the term “remote bookkeeper,” which generally refers to the same delivery model.
A virtual bookkeeper can access QuickBooks, NetSuite, Sage Intacct, or another accounting system remotely. Bank statements, invoices, receipts, and payroll reports can all be shared electronically. Still, someone needs to decide who is responsible for each task and who has approval authority.
The same bookkeeping principles apply. Transactions must be classified correctly, supported by documentation, and recorded using an appropriate method such as double-entry bookkeeping.
How Does Virtual Bookkeeping Work?
Most arrangements follow four basic steps.
1. Establish Secure Access and Responsibilities
Before anyone logs in, the company and provider should document who handles each task. That includes entering bills, issuing invoices, approving payments, recording payroll, reconciling accounts, and answering questions concerning unusual transactions.
Each user should have a unique login, multifactor authentication where available, and access limited to assigned responsibilities. Shared administrator credentials make changes harder to trace and should be avoided.
The provider should receive only the permissions needed to complete its assigned work. Good segregation of duties keeps transaction entry, payment approval, and cash disbursement authority with different people when staffing allows. For example, a virtual bookkeeper may enter bills and prepare payments without having authority to approve the payment or release a wire.
2. Collect and Record Financial Activity
The company sends invoices, receipts, expense reports, payroll information, and other records through its accounting system or a secure document portal.
Bank feeds are useful, but they do not complete the bookkeeping. Imported transactions can still be duplicated, assigned to the wrong account, or recorded incorrectly. A bank feed also cannot determine the correct accounting treatment for every accrual, loan payment, fixed asset purchase, or owner transaction.
A virtual bookkeeper can maintain:
- Accounts payable and accounts receivable
- Bank and credit card activity
- Payroll entries
- Loans and fixed assets
- General ledger classifications and supporting records
3. Reconcile Accounts and Resolve Differences
At the end of each reporting period, the balances in the accounting system should be compared with bank statements, credit card statements, loan records, receivables, payables, and other supporting schedules.
Proper account reconciliation can uncover missing transactions, duplicate entries, incorrect classifications, and balances that lack support.
Those questions should be resolved before the books are closed. Otherwise, errors carry into future periods and management may start losing confidence in the reports.
4. Prepare Routine Reports
Once the records are updated and reconciled, the virtual bookkeeper may prepare an income statement, balance sheet, cash flow statement, and receivables or payables aging reports.
Management should agree on a regular delivery schedule and know who to contact with questions concerning specific transactions or account balances.
What Virtual Bookkeeping Does Not Usually Include
This is where expectations can get mixed up. Virtual bookkeeping mainly records and organizes financial activity that has already occurred. Other financial roles serve different purposes:
- Bookkeeper: Records transactions and maintains the underlying financial records
- Controller: Oversees the close, reconciliations, controls, and accuracy of financial reporting
- CFO: Uses financial information for forecasting, planning, financing, and business decisions
This is the distinction between bookkeeping and accounting. A company may need one role or a combination of all three based on its size, reporting requirements, and operational complexity.
Some providers offer multiple functions, so ask exactly what is included. A monthly bookkeeping package and a managed accounting department are not the same engagement.
When Does a Business Need More than Virtual Bookkeeping?
Virtual bookkeeping may be enough when the transaction volume is manageable, the accounting process is already established, and management mainly needs consistent recordkeeping.
It may be time for broader support when…
- Financial statements arrive late or frequently change
- Balance sheet accounts remain unreconciled
- Inventory, work in process, or project costs are difficult to track
- Management cannot explain margins or cash flow
- Management relies on separate spreadsheets because the standard reports are not useful
- The books require a substantial QuickBooks cleanup
Adding more bookkeeping hours will not fix every reporting problem. The company may need better processes, stronger oversight, or an experienced accounting team.
Go Beyond Bookkeeping with Strategic CFO
Strategic CFO provides outsourced accounting for businesses that need reliable financial reporting, controller oversight, budgeting, forecasting, and analysis without staffing a complete internal department. We also provide accounting and finance consulting for companies addressing reporting or process problems, along with interim CFO support during leadership gaps and periods of change.
Contact Strategic CFO to discuss the right accounting structure for your company.
