I used to do my own bookkeeping. I am the best bookkeeper for my clients’ books, but I am HORRIBLE on my own books! I would do payroll right before it was due. Invoicing was always late, and my clients would be billed for three months at a time. Cash flow was an issue because of late invoicing and not keeping up with who owes you money. Also, having conversations with clients about late payments was not an ideal role for me. I paid bills late and would get behind, and then I would have to work on my books at night or on weekends to catch up. I always put my clients' businesses before mine.
I absolutely hated doing my own bookkeeping.
I have spoken with so many bookkeepers and accountants that say the same thing. I do not understand it. Why won’t we let go of the control of it even though we are bad at it. I think it is because we feel it is a waste of money to have someone else do something we can do. The thing is, just because we can do it does not necessarily mean we should do it.
Giving up control of my own firm bookkeeping to someone else was one of the best things I could have done for my business.
I am fortunate to have a business partner, and I had my partner take over all our firm bookkeeping. Since letting go of that control, everything is done seamlessly. We have documented our processes, such as invoicing our clients, so our employees can take care of many of these things. Our bookkeeping is now current, so all I have to do is look at it to see where we are at. It has made planning and decision making so much easier since I am not the one doing the work. No more having to rush to catch my books up to date so I can make a crucial decision!
Here is another issue we had before I let go of the firm bookkeeping. Engagement letters were horrible, because - you guessed it - I was responsible for them! I am telling you; I really am the worst bookkeeper ever for my firm. I would forget to keep them up to date and did not have a system for documenting them. This is an area that I also turned over to my business partner who implemented Practice Ignition and oversees them now.
Scope creep was a huge issue when I managed engagement letters. Since nothing was documented or systematized, my team would just do whatever the client asked. Now we get notifications when engagement letters are expiring so my partner can assess if the price needs to be adjusted. She then sends out new engagement letters. Also, all of our clients pay ACH so we do not have to do invoicing for them and do not have to chase payment.
Now that I have let go of the bookkeeping, we do not have any engagements that are not under a current engagement letter. And we are also paid before we do the work; we never have to worry about arguing with a client about a bill.
I understand that confidentiality is a big issue in firm bookkeeping. Many accountants, like myself, do not want employees to see the financials of the firm, payroll, cash, etc. I do not blame them; I am the same way. My business partner takes care of this in our firm, but many firm owners I have talked to do not have someone they can give it to. Many of them have never even thought about outsourcing their bookkeeping. The reason has always been “Why should I? It does not take me that long to do it.”
There are so many reasons why you should, if you are in the trap that I was in. The biggest one is the one I just talked about. We are our firm’s worst bookkeeper just as I was for my firm. If you do not have someone in your firm who can take over your bookkeeping, then the solution is to find another bookkeeper or accountant that you trust and outsource to them. We are in a community of accountants and bookkeepers, so you have the resources to find a great one. There are also outsourcing companies that you can use as well.
I challenge you to stop and look at how much time it takes, even with technology, to do bank feeds, bank reconciliations, receipt capture, credit card reconciliations, engagement letters, payroll, etc. How much time will you get back? What can you do with that extra time? Would it allow you the time to actually work on your business? How much is doing your own bookkeeping costing you? How about your business? What could you be doing instead of your own books, maybe working on a client’s books and generating revenue? Not to mention what happens when you want to take time off and your firm bookkeeping just does not get done.
Is it easy? Definitely not!
Letting go of that control and trusting somebody else to do as good a job as you could do is hard. It can be done but you have to take that leap of faith. I know I have said this already, but it bears repeating, this was one of the best things I could have done for my company. Everything gets done without me and the time I have gotten back to be able to generate revenue has been tremendous!
I have one more challenge for you that I want to leave you with. Most business owners seldom stop and think about this question. “What is your plan for your business when you are ready to retire from it? Are you going to just shut the doors and walk away from your business you have dedicated so much of your life too? Or are you going to try and sell your business? A business that can run smoothly without relying upon the owner, is a much more valuable business when being sold.