Signs you need a bookkeeping service in the first place:
A good bookkeeper does a lot more than just record numbers into a spreadsheet or bookkeeping software, like QuickBooks or Xero.
In addition to recording daily transactions in your general ledger and providing your monthly financial reports, a good bookkeeper, whether on staff or outsourced, can do a host of other duties. Tasks around invoicing and accounts receivable, bill-pay/accounts payable, revenue management, expense tracking, bank statement reconciliation, sales tax remittance, debt payments, payroll, and so much more.
And if you are a business owner doing this yourself, you know all too well how time consuming this can be, especially in addition to all the other back-office and customer-facing business functions you do.
There are the obvious signs that you need a [new] bookkeeper or bookkeeping service: your books are not up-to-date or accurate, your P&L doesn’t make sense, your invoices are not being paid on time, expenses and receipts are not all accounted for, etc.
However, there are three critical competencies that indicate it is time to start looking for a [new] bookkeeper or bookkeeping service: communication, transparency, and reliability.
Quality communication is a critical component to any successful relationship. It’s how you build trust; it’s how you build your team. It doesn’t matter if your current bookkeeper is on staff or outsourced; communication is “king.” The following are questions to ask yourself about how well your bookkeeper or bookkeeping service is at communicating:
- Does your current bookkeeper or bookkeeping service respond promptly to your questions about your books? Do they respond but give incomplete answers to your questions? Do they not respond?
- Does your current bookkeeper or bookkeeping service maintain your annual budget and report on issues and variances by project? by client? category? some other variable you want to be tracked?
- Does your current bookkeeper or bookkeeping service communicate important compliance dates, industry best practices, process improvement suggestions or the like? Or does your current bookkeeper just stay within the scope of processing daily transactions?
It is important to have a bookkeeper or bookkeeping service that communicates with you on a regular basis, providing you with any information that can impact your business. It is even better when your bookkeeper spotlights areas for increased efficiency, effectiveness, and profit.
If you are doing your books yourself, what do you do to get your bookkeeping questions answered? Google? Peers? CPA? How do you stay up to date on industry and compliance information that could affect the way you do your books? If it is your CPA at tax time, this could impact your books—and your cash flow—and require more “clean up” of your books.
Transparency is about being an “open book” – pun intended. This too is a critical component to building trust and forming a strong team. It implies not only regular communication and openness but also accountability. The following are questions to ask yourself about how transparent your bookkeeper is, and how well they hold themselves accountable:
- Are you able to view your books at any time? And are they always up-to-date and accurate? Do the numbers tell you something different when you analyze the monthly financial reports?
- Are you able to hold them accountable for the numbers they are reporting? Do they take ownership without blaming others when a mistake is made?
- Does your current bookkeeper or bookkeeping service help you to understand the story that your numbers are telling you about your business?
Your bookkeeper should quickly be able to pull a variety of bookkeeping and financial reports for you and be 100% willing to show you how to do so for yourself should you want. You should quickly be able to assess your business’s financial bench strength and uncover areas you can work on. If not, it might be time to look for a [new] bookkeeper or bookkeeping service.
The third sign, or measure, in the trifecta of value-added qualities you look for in a bookkeeper or a bookkeeping service is reliability; the quality of being trustworthy, dependable and consistent over time. It takes a lot of trust to turn over your books to a [new] bookkeeper or bookkeeping service. You want to be sure that someone is reliable and performs the intended function(s) consistently over time. Here are questions to ask yourself concerning reliability:
- If your bookkeeper goes on a week’s vacation, is there reliable backup? Will your finance questions go a week unanswered? That is a long time to wait if you have a pressing financial priority that demands a prompt answer.
- Given the assigned duties, whether it is strictly record keeping or an expansive list of related financial tasks, is the probability of success high? Is work on time? Does your bookkeeper or bookkeeping service consistently perform well over time?
- Does your bookkeeper or bookkeeping service integrate all your financial data points from your technology stack (e.g., invoice technology, payroll technology, point of sale system, inventory system, vendor/CRM system, customer payment technologies, etc.) to reduce the likelihood of error? We are all human, and we all make mistakes, especially with data entry and repetitive tasks. However, bookkeeping automation can help reduce errors and produce consistent results.
Hesitation About a New Bookkeeping Service?
Did any of these questions cause you to hesitate before answering? All three of these — communication, transparency, and reliability — are critical qualities to look for in a [new] bookkeeper or bookkeeping service, or any outsourced services for that matter. They are also critical to growing your business.
Here’s a bonus question: Does your current bookkeeper or bookkeeping service demonstrate the value they bring to the table? How or in what ways?
At HireEffect, we promise you value-added services – and not just for bookkeeping services. We also can handle your payroll, HR & talent management, recruiting and talent acquisition, and Controller and CFO services. We even offer specialized franchise bookkeeping services. Contact us today to see how we can help.