4 Practice Management Tips for Bookkeepers

The pace of bookkeeping can be demanding. Every month you juggle multiple client projects with different scopes and deliverables. With a full workload, it may be difficult to step back and look at the big picture. How can you tell if your operation is running efficiently and profitably? How many hours have you spent on projects, and how many more are available? Are you performing more services than you’re billing the client for? 

The practice management tips below will help answer these and other questions, getting your practice set up for success. Accounting practice management software can be helpful in all the tips below. 

Tip #1: Track Time Closely

Whether you bill your clients hourly or by the project (or both), the amount of time you spend on client work will determine the success of your firm. Time tracking data will give you insight into how efficiently your firm is utilizing one of its precious resources: employee time. Therefore, tracking time is one of the most important things you can do for your practice.

There are multiple ways to track time:

• Project Time:  How many hours are spent working on a particular project?
• Billable Hours:  How many hours are you working that can be billed to your clients? Conversely, how much time are you spending on unbillable administrative tasks such as obtaining continuing education credits, acquiring new clients, and holding team meetings?
• Time To Complete Milestones:  You can track time taken to complete certain bookkeeping milestones like bank reconciliations, reporting package generation, and so on.  
• Time Spent/Available:  How much time is set aside for specific projects and how much is available for new opportunities?

Once time is tracked, there will be useful data available to compare to clients to each other. You can also compare data to internal benchmarks, such as project budget, last year, last month, and so on. Tracking and aggregating time data will also help in the calculation of useful key performance indicators (KPIs) such as realization, utilization and work in progress.

Tip #2: Define Each Client Engagement

Bookkeeping is a term that can mean different things to different people. For example, one client may expect a bookkeeper to only close the books each month. Another client may expect additional services such as tax return preparation, paying bills, handling payroll, and preparing and sending invoices. 

Since the definition of bookkeeping is so fluid, it is important for you to define the services you will perform upfront, at the beginning of client engagements. If you offer different service levels, make sure both you and the client understand the scope of the services being provided. Not doing this can lead to conflicts and wasted effort.

Keep an internal services catalog that defines each project with average fees for each. This will help you plan out your workload by making sure you have the appropriate mix of services to be profitable. It may make sense to move on from certain clients or offer them a higher service level.

Tip #3: Create a Simple Ongoing System for File Sharing

As a bookkeeper, you’ll have lots of files going back and forth between you and your clients. You may ask your client to provide electronic documents like bank statements, sales reports, and tax return inputs. You may send them files like financial statements and questionnaires to fill out. Most of these files contain private information that should be kept confidential. 

Due to the sensitive nature of these files, sending them back and forth via email is not ideal. Instead, make sure you have a secure file sharing system in place to manage file transactions. A good example of this is a secure portal where files can be uploaded. 

Another important goal of creating a file-sharing system is to make it easy for your client to provide the information you need to complete their project efficiently. Large amounts of time can be wasted communicating back and forth with clients trying to obtain files. Since most of your projects are repetitive, your client should know what to provide each month and how to provide it. If you can start a monthly bookkeeping job and already have all the files you need in one place, it will save a ton of time.

Tip #4: Intentionally Review Your Data and Processes

For a bookkeeping practice, small changes can make big differences since many processes and procedures are repeated every month and across multiple clients. Periodically, you should ask yourself what has been working and what needs tweaking. Even though your schedule is demanding, set aside time monthly or quarterly to review trends in time, billing, client retention and other metrics that indicate the health of your practice. Feedback from clients and your team members will also be invaluable as they are most familiar with the processes and systems you have set up.

Final Thoughts for Application

Operating a bookkeeping practice can be hectic. Impending due dates, heavy workload and demanding clients all require your limited attention and energy. With all these distractions, it may be difficult to see how you are doing from a big picture perspective. Carefully evaluating project data with digital tools including practice management software for bookkeepers can help take the pain out of measuring, reviewing and improving your practice.