Monday, October 27, 2008

Bookkeeper’s Cost vs. Bookkeeping Quality

It’s kind of preposterous how people get stuck on the factor of price when availing a service. It applies more to the subject of bookkeeping; service buyers ritually overlook the quality of work, which they compromise in return of a lower price. The result is an erroneous bookkeeping service that costs double or triple than the fixed budget.

However, the reverse also holds true; there are a handful, to whom, quality of a service comes first. Many bookkeeping service providers take advantage of this perfectionist’s attitude; while they submit a flawless job, the wallet of the service buyer runs dry. So where to strike a fine balance that shall provide a quality service for a reasonable price, measure for measure?

Factors to judge a bookkeeper

To answer the above question, we need to understand first the definition of the word quality and how it applies to an outsourced bookkeeping assignment. Quality here can be defined as a work that’s done in a concise manner, is complete and delivered on or before the scheduled time. All these factors define a good Bookkeeper.

Now, with all these factors taken together, there must be a minimum definite price for which, it can be bought. Bookkeeping cost thus really depends on a bookkeeper; if it’s an organization, then the management should set the cost. Since bookkeeping is a service-related business; therefore, time equals to money. A quality job thus demands more money since it takes more time to get the records spic-n-span.

But the good news is, bookkeeping cost is negotiable. The rates change according to the market; if the rates fit your budget and the quality your mindset, your service provider may well receive a continuous business from you in the future. This is a strong point you may use while negotiating.

How to choose the right bookkeeper

So analyze the bookkeeper before you choose him. You may have a different need (a different concept as well) for your business; therefore, try at least three to five different bookkeepers. The one, who gives the least rate, has a satisfactory track record and is a patient listener who also asks when in doubt should be the bookkeeper for you!


Dean said...

I thought this blog was very well put together except the last comment where you have suggested to try several bookkeepers before choosing one. The problem I see here is that you can waste valuable time (and money) trying out bookkeepers until you get the "right" one for you. Remember that a bookkeeper's job is to accurately input your financial data which then allows you to take this data to qualified Accountants or Financial Advisors with a view to working out the best way to run your business. That's it - they don't need to do anything else. Too often I find they may be giving out financial advice and have no real experience or qualifications to be doing so. With that in mind, wouldn't a much more cost effective way to source a bookkeeper be simply looking for one locally online - perhaps viewing their Web site, reading testimonials and even ringing up their current customers with a view to working out the quality of their services? This eliminates a heap of "interviews" and "show me what you can do" scenarios that detracts owners from their core business. Worse still, if it all gets too hard for the business owner, they may decide to continue doing the financials themselves and are left with a huge Accountant's bill at the end of the financial year. If all the boxes are ticked when sourcing a potential bookkeeper online, it is then simply a matter of arranging an interview, seeing if you like one another personally (which is very important when anyone is dealing with another's financials)and if all seems good the bookkeeper is employed, or sub-contracted. I have been doing this for some time and I often find business owners waste valuable time trying to source the "right" person and this detracts them from their core purpose - the efficient running of their business. I look forward to your comments on my view of this matter. Regards Dean Allan MYbookkeeping Services, Gawler, South Australia

Firebug4u said...

Thanks Dean for your comments.

Yes I would tend to agree with you that ideally the bookkeeper's job is to accurately input the financial data while the qualified Accountants or Financial Advisors are best placed to offer expert advice. And I would also agree with you when you say that very often the bookkeepers tend to offer financial advice themselves, while they do not have much experience or qualification.

But Dean the fact is that, as you have rightly pointed out, many bookkeepers tend to do this. And many small businesses tend to ask them for such advice. Perhaps this is because of the reason that a qualified Accountant or Financial Advisor often costs too much money and a small business simply cannot afford this and so they opt for the second best option - that is approaching the bookkeepers.

But this might be dangerous because after all, they might not be qualified. But on the other hand, many bookkeepers do have the knowledge, even though they might not have the professional certification and these guys can be very useful for small businesses. Because on the one hand, they can offer good advice, and on the other, they cost less too.

This is exactly what the article was trying to elaborate upon and thus the title - "Bookkeeper's Cost vs. Bookkeeping Quality". Should you compromise, or shouldn't you? It was because of this that it was advised to try out several bookkeepers before finalizing on one. Yes while in the short term it might cost some money and time too, but once the small business finds the one that it needs, the cost saving would be substantial and the advice also good.

Do please keep commenting because I am sure that your comments would be most useful to all the readers.

SBL - Accounting services said...

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SBL - Accounting services

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accounts payable clerk said...

Make Sure Your Accountant or bookkeeper that is certified and accredited Accounting technicians.