As an accounting firm coach I speak with a lot of accounting firm owners and managers. I’ve noticed that a very common topic of discussion is bookkeeping. Why? I think the answer is that many firms now understand the value of good bookkeeping and are grappling with the best way to ensure their clients are well looked after in this regard.
The value of good bookkeeping is for both your client and you as their accountant:
- For the client they have peace of mind that someone who actually knows what they are doing is looking after the books. It’s not the spouse or friend who has half an idea and regularly gets it wrong. It should mean decisions are made on the basis of accurate information.
- For the accountant it means much smoother compliance jobs. No more stuffing around trying to reconcile accounts and recode transactions which often seem to have been randomly distributed amongst GL Accounts.
The challenge here is that the accounting software providers are telling SMEs how good their products are and how easy it makes all this. Of course there is some truth in what they say and the use of bank feeds, automation of coding and other features goes a long way to making this a reality. I hold the view however that it still needs a knowledgeable person to set this up and oversee it, deal with the exceptions and keep everything ticking along. I think the accountant more easily sees the value of good bookkeeping than the client but if you work on your articulation of the value to the client (just as you would with any service you provide) they should get there.
I see four models typically for making sure clients are the recipients of good bookkeeping:
- Inhouse at client
If the client is large enough to warrant this and they find the right person, this can work well.
- Third party bookkeeper (independent of both client and accountant)
This is typically when the client is not big enough to have a resource inhouse (or just doesn’t want to) and where the accountant does not want to provide the service for the client. It is essential that you as the accountant have a strong relationship with this person. I have seen instances where the bookkeeper has had a stronger relationship with the client (and other accountants) and ultimately pointed them to a different accountant. If you are involved in getting third party bookkeepers for your clients ensure this (“you don’t steal or refer way the client”) is agreed with the bookkeeper.
- Accountant provided local bookkeeper
I am aware of some firms who believe this is the best model as the local team can do things faster and more effectively than an offshore team or a third party provider. They are also directly under your control, in your office and able to assist with queries at year end, quarter end or whenever needed. The tricky bit is often managing capacity. There can be peaks and troughs so having team members who are happy to be flexible with their hours is an advantage.
- Accountant provided offshore bookkeeper
There are many, many providers now in the Australian market offering offshore team. The Outsourced Accountant and Frontline are probably the two I hear mentioned most often. The detail of this is a topic for another day. The advantage is that it is a low cost and with the right training and support the offshore team should be very effective. The downside that I see in some instances is the offshore team really don’t have the same level of understanding of the client, are poorly managed or trained and are really not nearly as effective as a local team.
All these models can work well and I remain firmly of the belief that getting quality bookkeeping in place for your SME clients is a win/win/ but whatever model you choose you need to manage it well.
Can you make money on bookkeeping? My answer is yes you can. Even with local people I see firms doing just that. I know a few firms who are happy to take a low rate (higher write off) on bookkeeping but then make it up twofold or threefold in savings on the compliance work at year end or quarterly.
If you are not helping your clients with bookkeeping using one of the four models I’d encourage you to think about the value it will bring to your SME clients and you.