How Do Invoices Work?

If you’re just starting out with your small business, you’ll probably be satisfied with the services of a regular bookkeeper. They’ll be in charge of getting your finances organized, keeping track of sales, income and expenses, and executing payrolls. However, as your business appetites grow and your company scales, you might ask yourself whether this role should be taken to a higher level as well. In this article, we’ll answer the “What is full charge bookkeeping?” question and explain the job’s duties, responsibilities, educational requirements, and more. Who Are Full Charge Bookkeepers? FC bookkeeping is a term that refers to professionals who are fully responsible for a small or medium-sized business's full-cycle accounting and bookkeeping needs. They usually have more responsibilities than regular bookkeepers and are often in touch with the company’s CEO and upper management.  Larger companies sometimes have the assistance of an outside certified public accountant to review and audit more complicated financial statements and tax returns. If the company grows to the size of a corporation, the full charge bookkeepers’ duties are shifted to a controller. The full-charge bookkeeper job description goes beyond the usual responsibilities that typical bookkeepers have. Like regular bookkeepers, they keep records of finances, bank transactions, income and expenses, create monthly or weekly statements, and run payroll and timesheets. However, on top of all that, they have certain accounting duties: gathering insights from all the tracked financial data and preparing financial records and budget forecasts. They also ensure that business practices comply with laws, compute taxes, and prepare tax returns.  No matter how much bookkeeping and accounting duties might differ, a full service bookkeeping job combines some features of both. Full Charge Bookkeepers vs. Accountants  Even though we’ve gone through the main full charge bookkeeping responsibilities, let’s delve deeper into how an FC bookkeeper’s career differs from that of an accountant. Full charge bookkeeper duties include many accountant duties, also adding bookkeeping to the bundle. While a regular bookkeeper mostly deals with maintaining the ledger, an accountant is engaged with managing day-to-day financial activities, such as: Financial accounting Preparing financial statements Auditing Tax preparation Consulting services on financial matters When we compare a full charge bookkeeper vs. an accountant, we can clearly see that the main difference between the two jobs is that an accountant deals with financial analysis and has to be familiar with tax laws. They usually have a bachelor’s degree in accounting or a related field and often pass an exam to get a certification and become certified public accountants. Certified public accountants, on the other hand, have greater powers, and are entitled to prepare audited financial statements, represent taxpayers and companies before the Internal Revenue Service, and conduct external company audits.  What is the full charge bookkeeper’s role in comparison to an accountant’s, then? Although FC bookkeepers do provide accounting services, they usually don’t act as financial advisors or deal with auditing and tax reports. Full charge bookkeepers usually seek external assistance from a certified public accountant or a controller.  Full Charge Bookkeepers vs. In-House Bookkeepers As we’ve seen earlier, the duties of an in-house bookkeeper frequently overlap with those of an FC bookkeeper. However, a regular bookkeeper often works in a company where there is a fully staffed accounting team that deals with business accounting tasks. The role of a bookkeeper is to perform basic tasks such as: Tracking bank transactions Recording cash receipts Creating financial statements Data entry Limited accounts payable Accounts receivable work Now, let’s take a look at full charge bookkeeper vs. bookkeeper job descriptions and compare them.  While regular in-house bookkeepers deal exclusively with bookkeeping services and should possess basic data-entry and math skills and be familiar with the use of online bookkeeping and accounting software, the duties and responsibilities of full charge bookkeepers are much broader. They should also prepare financial statements, maintain the ledger, and perform all the other bookkeeping services.  However, they are also in charge of some accounting services, too. They will perform tax-related and payroll tasks, coordinate tasks with certified public accountants, and prepare information for auditing purposes. Full Charge Bookkeeping Educational Requirements We’ve already mentioned some of the skills that full charge bookkeepers should possess, but we’d like to focus more on their educational background.  First of all, bookkeeping doesn’t require obtaining a college diploma, unlike accounting. To become a bookkeeper, a high school diploma or equivalent and some basic bookkeeping knowledge are enough. However, knowing that there are various types of bookkeeping methods and lots of math and calculation involved, a bookkeeper should have math, data entry, and computer skills. If you wish to work your way up and earn a full charge bookkeeper salary, you’ll need to get formal qualifications and obtain an associate’s or bachelor’s degree in accounting, business administration, or a related field. Some of the courses you might enroll in are tax procedures, business law, payroll accounting, economics, and business math. Some professionals who’d like to work in larger companies with more complicated accounting-related tasks would often go the extra mile and acquire the Certified Bookkeeper (CB) designation from the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers. To get one, you’ll have to have at least two years of professional experience in the field and pass the exam. Knowing what is included in full charge bookkeeping services makes you aware that a degree, skills, and certifications sometimes aren’t enough. Due to the higher level of responsibilities that FC bookkeepers have, some employers insist that candidates have prior bookkeeping and accounting experience. Those who decide to hire applicants without prior experience would require them to undergo at least six months of on-the-job training to learn about handling payroll, using accounting and bookkeeping software, and the bookkeeping practices the company prefers.  Salary Prospects Even though they are not as well-paid as accountants, full charge bookkeepers definitely earn more than regular bookkeepers. Depending on the level of education, years of experience, certifications, and additional skills, the full charge bookkeeping salary in the United States ranges from $37,770 to $47,250. The average base salary per hour is $24.11 as of December 2022. Final Thoughts Depending on your company’s size, the way it’s structured, and the level of expertise required, you might decide whether you need to hire a regular or full charge bookkeeper. Your business would benefit from a full charge bookkeeper if it’s scaling and you can’t handle managing the books and performing full-cycle accounting tasks.  A full charge bookkeeper with certification can help you with recording transactions, processing accounts payable, managing payroll, and doing taxes. When needed, you can hire a certified public accountant to coordinate with an FC bookkeeper and help with audits and tax returns.

With invoices and bills, being on the giving end is undoubtedly the better of the two options. However, issuing invoices means being responsible for ensuring they are professional, contain all the necessary information, and have proper invoice payment terms included.Everybody knows that providing the service or selling the goods isn’t the trickiest part of running a business - it’s getting paid for it, especially for companies that have just started with their operations. No business can thrive on a bunch of “I owe you one,” so it’s vital to get those unpaid invoices paid on time and be liquid enough to at least keep the company afloat.  The first step in that direction would be to send invoices with payment terms. These terms are an essential part of every invoice, as it is crucial to establish upfront when the payment would be due and even to incorporate late fees. There are several terms for you to consider and adopt when issuing invoices. Considering that these terms should be set up together with a contract, let’s discuss them in more detail so that you know what they are, how to use them, and how to pick the right ones for your business.What Are Payment Terms?Just like the name suggests, payment terms clearly define the terms under which you wish to get paid. The terms include the means and the time of payment, and they should be specified during the negotiations with potential customers, included in the contract, and clearly outlined in each invoice you send. Here is what you should include in every invoice to ensure your payment terms are coming through to your customers.Payment Timeframe When do you expect to be paid? Here are some common types of payments terms to use for defining the payment timeframe:PIA Payment - expected in advance for a full amountUpon Receipt Payment - expected immediately upon invoice receiptNet 7/21/30 Payment - expected in installments seven, 21, and 30 days from the invoice dateEOM Payment - expected at the end of the same monthEOMPayment expected at the end of the same month2/10 Net 30 Payment - expected in 30 days, with 2% discount if paid within 10 days15 MFI Payment - expected on 15th of the month following invoiceNet 30 is among the most common standard invoice payment terms you can specify. However, you can also use other types if they suit your business better. Sometimes, immediate payment is the best solution. PIA (Payment in Advance) is better for companies with upfront payments to make even before they start working on a project, and 2/10 Net 30 is handy as an incentive for companies to pay up in a short timeframe. Adding invoice due date to ensure that the accounts payable clerk from the invoiced company knows when to make the payment is also good practice.Preferred CurrencyIf your company is working internationally, it must include the section defining preferred currency. Payment MethodPayment method is one of the essential terms on an invoice, as you need to let your clients know how they can pay you. It could be a bank transfer, debit or credit card, or mobile payment. Including account details necessary to perform a transaction and the money landing in your checking account is a must. Additional ConditionsIf you have any additional conditions that you have agreed on with your customers, such as discounts for early payment or late fees, these should also be included in the terms, contract, and invoices.Why Are Invoice Payment Terms Important?Setting invoice terms upfront and including them in your invoices is crucial for your business’s optimal performance. If you have provided goods or services, you should know when you can expect to get paid to plan how to go forward with your business and your budget. According to Atradius’s 2020 report, 43% of invoices issued in the US, Canada, and Mexico, were unpaid by their due date, while the digital advertising industry report for 2013, conducted by FastPay, showed that only 6% of invoices were paid in under 30 days. Now, for small businesses, that’s a lot of money that can’t be put to further use. Any late invoice payment can hinder your company’s growth and profitability. Clearly defining when you want your customers to pay you during negotiations, including the terms in the contract and each consequent invoice, is the first step to ensure that you’ll be paid on time. You can also give discounts for prompt payments or use late fees to emphasize the importance of timely payments to your customers.What Are the Best Practices?For those starting their business or experiencing problems with late payments from their customers, there are some practices you can adopt to help solve these issues by implementing the right invoice terms and conditions. New businesses often underestimate the time and effort it takes to create quality invoices and chase payments. This can be a time-consuming and error-prone process. Ensuring that you dedicate enough time or assign the right person to the task of establishing a foolproof invoicing system is fundamental. Ultimately, you can also outsource these and other bookkeeping tasks to an online bookkeeping service. From there on, establishing your terms early on is crucial. You know the dynamics of your business and how fast the payments should be. Approximately 75% of invoices ask for payment within two weeks, so don’t hesitate to set short payment terms and conditions for an invoice.Send your invoices as early as possible, though, so that you can expect prompt payments. Have reminders set in place, even before the due date, as not everyone will be quick with their payments without being reminded about it first. Late fees are not uncommon either or picking up the phone to ask for late payments. It’s a dull and tedious process, but you can’t live on promises. Unfortunately, in extreme circumstances, you might also need to take legal action to get those invoices paid in time. It is an excellent idea to have an online legal counsel to contact for legal advice. There are always some incentives you could offer, too. Setting up discounts for prompt payment within the terms of payment is always a good idea, and while you might receive less, the money will be in your account faster so you can put it to good use. Could Invoicing Software Help?An impressive amount of invoicing software is available on the internet. It can effectively automate a significant part of handling invoices and payment terms as it enables you to create invoices with a click, set automatic reminders, and much more.Overall, some of the best software you could use to help you handle your books and invoices are Quickbooks, Safebooks, Zoho Books, among others. Each of these will save you a ton of time and, on some occasions, money, too. What Are Payment Terms on an Invoice?If you haven’t handled invoices before, you’ll likely struggle to find or add a particular piece of  information in one. While there is software that can generate invoices for you, assistant services if you prefer it handled by an experienced personnel, and plenty of readily available templates, it can be stressful if you don’t know what you are looking for in the first place.The safe bet is usually to check for the due date. This is always included in all the templates under invoice details, together with an invoice number and invoice date. Here, you will usually find payment terms on an invoice.

Whether you’re the owner of a local shop or you’re doing your business online, accounting and bookkeeping are equally important for your business. Both have the same goal: to manage your financial help and make your business stronger. Still, while the boundaries may be blurred, there’s a significant difference between bookkeeping and accounting. Bookkeeping is the process of gathering data associated with your business activities, while accounting analyzes that data, helping you make better decisions for your business. If you’re not a financial expert, there are good chances that you didn’t understand a word from that definition, which means you need to be better informed about bookkeeping and accounting responsibilities. Luckily, our guide will help you figure out the similarities and discrepancies between these two positions, as well as when and why you should hire someone to fill either role. What Is the Difference Between Bookkeeping and Accounting? Bookkeeping is where it all starts: It’s the first step in taking care of your business’s financial health. It involves recording and collecting your business’s daily financial transactions, including bank transactions and receipts for sales or purchases. Bookkeeping refers to the technical process of organizing and preparing your profits and expenses for further analysis. Once that’s done, the financial data you get is subjected to the accounting process. Accounting formulates the big picture of your business by dissecting and interpreting financial information. Accurate accounting is crucial for business owners, as it provides insight into their business’s financial condition. Basically, you shouldn’t pit bookkeeping vs. accounting. Bookkeeping is more about record keeping and classification, while accounting requires more knowledge to “read” the financial information. Both are essential for a successful venture. Many people do some sort of bookkeeping, i.e., they record receipts and categorize their expenses every month to make budgeting decisions. However, business bookkeeping is more stressful, as reconstructing your business’s financial history is no small feat. The accounting process goes a step further, helping business owners run their business better and, more importantly, in accordance with the law. Accountants are responsible for payrolls and taxes, too, so they need to stay up to date with the state laws. The Bookkeeper vs. the Accountant What Does a Bookkeeper Do? A bookkeeper is responsible for taking care of your daily finances. They track your bank transactions, record your sales and purchases, and maintain your general ledger and payroll. The bookkeeper must record your financial transactions regularly and organize them in a way that’s understandable to you. Depending on your needs, bookkeepers can create monthly or weekly financial statements displaying your company’s income and all its expenses. A bookkeeper’s job doesn’t require any formal education, but they need to know how to use bookkeeping software, like QuickBooks or FreshBooks. A bookkeeper has to be a responsible person, since one of the most important bookkeeper duties is to take care of a general ledger - a book that contains records of all your sales and purchases. Although there’s no bookkeeping school, they can get licenses from the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB) to prove that they passed the necessary tests and have the required experience. It’s always good to know that your bookkeeper is certifiably ready to handle your daily finances. Moreover, both agencies require yearly educational courses for license holders to learn new skills. Now when you know what the role of a bookkeeper is, you can think about how much money you’re ready to pay for this service. A bookkeeper’s salary depends on several factors: Your business needs, the state your business operates in, and the level of expertise you’re looking for. Before looking for a professional bookkeeping service, figure out what bookkeeping skills you need and how often you’ll need them. Some business owners learn to use bookkeeping software and only pay for accounting services. However, if your business documentation is too complicated to manage, an experienced bookkeeper is what you need. Once you know the tasks you need one for, you’ll know whether to hire a part-time or a full-time bookkeeper and whether they need to be certified. What Is the Role of an Accountant? An accountant interprets financial data recorded by a bookkeeper and gives business owners detailed insights into their business to help them make financial decisions. Accounting is a practice that has strict requirements and standards each accountant must follow. During financial accounting, an accountant first verifies and analyzes the data provided by a bookkeeper. Then, the accountant creates financial statements and reports that showcase your business performance. These documents include balance sheets, and income and cash flow statements. One of the most important accountant responsibilities is tax preparation and filing tax returns. Unlike bookkeepers, accountants must be familiar with tax laws, know how to calculate deductions, and prepare your returns for the IRS. An accountant also reviews your general ledger to see whether all transactions are correctly recorded. The other part of accounting is advisory: Providing financial advice to business owners based on their financial reports. An accountant with knowledge about your business’s financial health and market opportunities can greatly help your business growth. Although there is a significant difference between bookkeeping and accounting, a bookkeeper and accountant work in tandem. We can think about an accountant as someone who gives directions to a bookkeeper when needed. For example, an accountant keeps track of law changes related to tax returns and helps bookkeepers manage payrolls. Unlike a bookkeeper managing daily transactions, an accountant uses this data to offer an all-encompassing overview of financial health, and helps you plan for the future. Even if you can do bookkeeping on your own, you must hire a professional to do your accounting. After all, the primary difference between an accountant and a bookkeeper is schooling. To be an accountant, you have to get at least a bachelor’s degree from an accredited university, and further your expertise with additional certificates and licenses. The distinction between a regular accountant and a certificated public accountant is also essential. A CPA has at least 150 hours of specialized education and a four-part exam under their belt, and meets the American Institute of CPA’s experience requirements. CPAs win every time in a CPA vs. an accountant comparison, especially if your business has complex tax returns. CPAs specialize in doing taxes, and they can communicate with the IRS on your behalf. However, CPAs are also more expensive to hire. Bookkeeping Versus Accounting – An Overview  If bookkeeping and accounting looked like the same job to you, now you know that these are two different roles with different responsibilities and education. They are both parts of the same process - taking care of a business’s financial health - but a bookkeeper and an accountant have different responsibilities. By now, you probably have a clear vision of what services you need for your business, but just in case, we’ll outline the critical tasks professionals from both branches perform. That way, you’ll always know what the difference between accounting and bookkeeping is: Bookkeepers Perform day-to-day financial tasks Record bank transactions, purchases, sales, receipts Take care of all your income Manage your general ledger Organize and categorize business expenses Manage the payroll Use bookkeeping and accounting software to produce weekly or monthly statements for business owners Work closely with accountants and send them statements quarterly for the purpose of tax payments Accountants Analyze and interpret financial data Advise bookkeepers on how to manage transactions and prepare the payroll Prepare financial statements for business owners (balance sheets, income statements, and cash flow statement) Review the general ledger and other documents Prepare taxes, calculate deductions, and work with the IRS Advise managers and business owners Further Reading Understanding the Types of Accounts in Accounting What Does an Accounts Payable Clerk Do? What is Petty Cash in Accounting? Conclusion Our guide answers the question: is bookkeeping and accounting the same? Financial bookkeeping is more of a technical position, while accounting requires detailed knowledge about finances and taxes. Bookkeepers and accountants work closely to create a clear financial picture for business owners, but they provide completely different services. While it’s possible to do your own bookkeeping with the right software, an accountant’s job can only be done by a professional with a degree. All businesses need both accounting and bookkeeping services to manage their financial records and successfully grow their business; it’s just a matter of who you can afford to hire.