Saving bookkeeping costs. Tip #2: Identify your proper level of involvement

By Patrick Bonnaure, ProLedge founder.

If you want to outsource your bookkeeping function, don’t fall into the temptation of delegating the whole thing to your bookkeeper and turn it into a black box. That’s the best way to let bookkeeping services costs creep up. It has nothing to do with your bookkeeper taking advantage of you. It’s just that bookkeeping services can’t be performed efficiently without some form of proactive involvement form the business owner.

Small business owners decide to outsource their bookkeeping for many different reasons ranging from “I’m too busy to manage the books” to “I need QuickBooks help”, from “I won’t scale if I keep doing the books” to “I really don’t know enough about accounting”.

All these reasons are very valid, but whatever your motivation to outsource bookkeeping services is, keep in mind that you shouldn’t wash your hand of bookkeeping completely. To operate efficiently, the bookkeeper needs directions and feedback from you.

Let me describe the profile of a business owner who gets the best out of her bookkeeper:

  • She knows QuickBooks very well and used to manage QuickBooks by herself before she decided to outsource.
  • She has a good foundation in accounting (e.g. knows how and when to use a P&L vs a balance sheet, understands capitalization, amortization, etc.)
  • She sees QuickBooks not only as a tracking tool, but also a management tool, to monitor and improve her business.
  • She reviews the work of the bookkeeper frequently, asks questions and makes suggestions.

This client is a bookkeeper’s dream. Not all business owners can fit this profile , nor need to, but it is important to understand that the closer you are to this profile, the more valuable insight you’ll have into your books and the more efficient your relationship with your bookkeeper will be.

Let’s take the other extreme. Let’s assume that you are a bookkeeper and that your client has never opened QuickBooks before, doesn’t care about QuickBooks and doesn’t know much if anything about accounting. The only reason your client hired you is to have something ready to hand off to the CPA at the end of the year. Here is what is likely to happen:

  • You (the bookkeeper) will have dozen of questions on how to structure the chart of account, what to capitalize, how to treat certain sales tax items, etc. Since your client can’t help you, you have two options: i. call the client’s CPA (which will add cost to the client) or ii. make assumptions and let the CPA fix things at the end of the year (which will add even more cost to the client).
  • Your client doesn’t have a good sense of the amount of work that is required. What he thinks should take 30 minutes of your time takes actually 2 hours. The result is that the client feels that he is paying you too much and it is creating tension, which leads to further inefficiencies.

Outsourcing bookkeeping often makes a lot of sense, but there is a right way to do it and a wrong way. Always stay in control and identify your proper level of involvement. Don’t micro-manage your bookkeeper, but stay closely in tune with what he/she’s doing. It’s all a question of balance.

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