One of the first considerations, when a business manager decides to engage a bookkeeper, is the cost burden the business will have to bear. Cost in most cases is the primary determining factor which determines the calibre of bookkeeper that a business will engage. The cost will always be connected to the workload variable which is influenced by the size of the business, the number of transactions the business engages in and the information that a business manager desires.
Where a large workload exists a bookkeeper may be required to manage the workload and provide input on a daily basis to ensure the business operates at the level dictated by management. Where the workload is at a smaller level a bookkeeper’s input may only be required on a weekly, fortnightly, or monthly basis and in some cases even quarterly. Generally, bookkeeping services are charged out on an hourly basis however, bookkeepers are starting to move towards a fixed fee scenario because this is more appealing for a business manager as it provides certainty and can easily be budgeted for. There are a number of elements which need to be considered which could affect the cost of bookkeeping service for a business, these may or may not be relevant to each business but will have a bearing on cost, these are as follows:
Find the Base Rate
Business managers now within the current economic climate are often looking for a quality and cost-effective accounting service. The downward pressure this has on bookkeeping service providers ensures that a business will easily be able to locate a bookkeeper at a cost which reflects the bookkeeper’s rates that had been budgeted for by management. But the cheapest is not always the best so a business must be careful which bookkeeping firm they engage to fulfill their service requirements as this can have dire financial implications for a business if the bookkeeping is not done properly.
Get to Know the Business
In order for a business manager to understand the amount of time which would is likely be involved in managing and executing the bookkeeping tasks they must look at a few general aspects of the business and consider the following:
Does the business currently use accounting software to manage the bookkeeping functions?
- If so, how effective is the current software at executing tasks in a time-efficient manner and which also produces the features that a business requires?
- How many invoices does the business send out per day/week/month?
- How do customers pay for their goods/services? Is this a very manual process and can it be streamlined?
- How are the suppliers managed and paid? Is there a better way to manage this?
- What other time-consuming tasks exist which require a high level of manual input in order to execute?
The Three Month Review Policy
A business manager should take the time to review with the bookkeeper the time it takes to execute the tasks required to fulfil the expectations of the manager. This approach will enable the bookkeeper and the business manager to discuss a new price equilibrium which is fair for both parties after the bookkeeper has experienced the role and what is required of the role. There may be a large + or – time variance compared to what was initially thought which may provoke a discussion regarding internal process improvement. A process improvement discussion may result in the form of new software being implemented which may be able to automate processes currently done manually or the removal/addition of processes which could add value to the business.
Further Notes To Consider
Bookkeeping is no longer what it used to be due to the introduction of new legislation which governs the provision of bookkeeping or Business Activity Statement Services (BAS) and is enforced by the Tax Practitioners Board. This in turn has led to the standard of bookkeepers greatly increased over the past 3 years as a number of rogue operators have been removed from the industry. This has been a catalyst for a number of positive and negative aspects for a business manager wanting to outsource the business’s bookkeeping requirements. A positive aspect is there is now a minimum standard of learning and qualification which is required for a bookkeeper to be eligible for registration with the Tax Practitioners Board so to provide BAS services. This ensures a business managers that if they engage the services of a BAS agent then they are generally assured of quality service. However, with this has come an increased cost to bookkeepers attaining this level of qualification and certification which will manifest in slightly higher fees for businesses than prior to the new legislation being introduced. Ensure when you engage a bookkeeper that they are a registered BAS agent to protect the financial health of your business as a bookkeeper’s work will generally have powerful tax implications for a business.