Hiring The Wrong Type of Bookkeeper Can Be Costly to You Part 3

In today’s marketplace, the role of the bookkeeper has been broken into multiple parts and is being sold separately. We have people that are money managers, there are financial planners, business marketing consultants, and economic advisors. These different pieces come together to support businesses. The problem most people encounter with this model is that when you’re a smaller business you generally cannot afford to hire each of these different positions and have them actually produce the kind of results that you need them to produce for you.Plus the time it takes to get them going is too much for most busy people.

This is again why you need a good bookkeeper. You are in business to do the thing that you do. You didn’t get into the business to be the bookkeeper, and even if you did, and your company is still going strong, imagine how much more useful you would be if you focused your efforts on growing the company! Since you’re not trying to make a career out of being a bookkeeper, then you must already know that at some point your company will get big enough that you’ll be able to hire somebody to manage the finances of the business.

You’ll know when it’s time to do that because you won’t be caught up with your bookkeeping.  You’ll have bank statements that aren’t reconciled, and a profit and loss statement that’s not up to date.  You’ll be getting letters saying you didn’t file your taxes or renew your license. These are good indicators that you’re falling behind in your bookkeeping.

Did you know that one of the reasons accountants are so stressed during tax season is due to the fact that many small business clients do not have their books managed well? If you get your financial statements to your account early enough, they can prepare the return quickly after the New Year. However, if you wait until April 10th they will likely file an extension, or worse, they’ll have to hurry up and get it done, possibly missing important details. In my opinion, few bookkeepers understand taxation well enough to do their jobs effectively. A good bookkeeper needs to talk to your accountant to understand his/her strategy for getting you the biggest tax break, while still protecting you from the repercussions of a surprise audit. This ultimately leads to an understanding of what needs to happen in your QuickBooks file and your recordkeeping to make sure that happens.

If you have a bookkeeper, do you expect to be able to say to your bookkeeper at any moment “How much money did we make last month?” or “How much are we on track to make this month or next month?” In fact, is there anything as it relates to the financial health of your company that you can’t ask your bookkeeper because they just won’t know? There’s a real challenge in the world of business finance because neither of the two things we rely on most are capable of giving us all the answers.

Most businesses are using QuickBooks, or some kind of accounting software tool to keep track of income and expenses. It could be Microsoft Money, SAP, Yardi, Peachtree, or it could be an Excel spreadsheet. When you’re keeping track of the money that’s coming into your business, you generally are going to be doing that in some type of accounting software or tracker. In addition to this, there are also whatever tools we use to manage the business. For example, attorneys use law firm practice management software. I know some attorneys are still keeping client files in a Word Document and others are using top-of-the-line practice management software, but I don’t know anyone still using 100% paper files. Acupuncturists, doctors, dentists, chiropractors, etc. are generally using some kind of case management, client management, or office visit software as well.

There are industry-specific software applications in use worldwide. Chiropractors have their own kind of software, auto shops have their own kind of software, and retail stores have their point-of-sale and inventory purchasing software. The uniting factor is that everybody has some software tool these days that they use to keep track of their business. If you’re somebody who is not using any kind of computerized program to keep track of your business and your business has gotten to the point where you’re considering hiring a bookkeeper the first thing your bookkeeper should do is have you get a piece of software. Why? Because nearly everybody who is successful in business is going to need to use software. 

Here’s the rub, between your accounting tool which keeps track of the money and your business tool which keeps track of your business there’s trouble. I do realize there are all-in-one tools that supposedly manage every aspect of your business, including the finances and dashboard reporting, but it’s unlikely that you have one of these and if you do, you definitely didn’t take the time to truly learn how it works. The sheer expense involved in buying and setting up an all-in-one tool is more than most businesses can afford. In fact, SAP software is more than $3,000 per user, 600/year in maintenance, and 185/hr. for setup and configuration. To add to that, at the end of the day, for the same reason you don’t have your finances 100% under precise control, you’ll never spend enough time learning how to use it effectively enough to get your money’s worth out of it either.

So where do you look when you have a question about your business? Do you have an excel spreadsheet? QuickBooks? How about a piece of paper where you scribble things down? Do any of these act as an actual dashboard? The best way to make your business run right is to have a gauge on everything, specific target ranges, and then to concentrate on tuning it to keep all the gauges in the right range. It works with cars, planes, boats, trains, breweries, and pump stations, why isn’t it used more frequently for running small businesses? 

Small businesses are affected much more by this because they generally don’t have enough capital or time to custom design an all-in-one software solution. As such, small businesses are generally in the position of using a bunch of different tools to get a gauge on a small number of measures. Even when we do have the ability to look at some of our business statistics, we rarely have enough time to thoroughly investigate each of them, and if you have time for that, then you likely don’t have time to dream up and implement solutions to help things run better. As a result, you generally look at the basics, and then you get back to doing the work as you’ve done a thousand times before.

If you want to know how much money you’re going to make, you can look in your accounting tool. You’re looking in QuickBooks to see how you did the last three months and that’ll hopefully give you some idea of how you’re going to do this month, this takes about 30 minutes for someone who knows how to use excel. However, if you want to know how many new prospects you got this month and how they heard about you, you can’t do that in QuickBooks. That really needs a different tool. Commonly this is a CRM (customer relationship manager) like Zoho, or Salesforce. So you have at least two different places where you’re looking for information about your business. One of the problems is even if the software is designed really well, it still can’t answer all the questions you have, because we’re all unique and we all have our own ideas of what’s important to us in our business.