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quoting for bookeeping

Does anyone quote on a per transaction basis? 

A fairly simple question. I dont, but have trouble making bookeeping pay and thought that this might be one way of doing it.

What do people think the pros and cons are.

If you were a client would you see a purchase invoice and corresponding payment as one transaction, or two !

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Yes, we do charge this way

Where clients ask us to also do book-keeping we now charge per entry (not per double entry) :-) It's fair and transparent and very easy to work out (in VT we just print the transactions report to screen and count the entries).  We send the same report to the client (before the invoice) and I'm quite sure most do the same thing.  

The way we calculated the rate was to use our (desired) charge out rate, time a typical VAT period for a couple of clients and divided the number of transactions into the "total" time charge.

Not one client has queried this method of charge (the same clients used to grumble about time charges).

Finally we've slightly enhanced it - we now (for VAT) have a "VAT return charge" which includes the first 20 entries (at least we get something for a zero return!) and of course deduct 20 from the total transaction list.

I have to say we have doubled our fees compared to time charging! - we changed about 18 months ago.  ... Go for it!

PS The average client has no concept of "double entry" but can understand Cr Sales followed by Dr J. Bloggs (Debtors ledger) as being 2 separate entries.  We thought some clients might object to paying more for the book-keeping entry than the underlying transaction (eg Interest received) but in fact NO-ONE has queried this basis of charge

 

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Missing information

Do you just ignore the time spent chasing missing information?

This can take a lot of time and some clients are better than others.

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Bank rec can take forever and doesn't generate transactions

Just finding out which bank account/credit card they used can take ages! We ask them to note on the invoices how and when they were paid ... but some can't be bothered ... or forget!

I don't like taking bookkeeping, but sometimes it is the lesser of the two evils.

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Two rates

You can't beat a stamp - it reminds them ... sometimes.

Maybe you should have two rates - one for information recorded and one for information not recorded.

Some people can't be bothered to complete cheque book stubs.

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Interesting

It is interesting that charges are made on a per transaction basis, and being new to VT it is another option to look at, but what about time spent on say reconciling banks and preparing VAT returns?. 

Do any VT users set clients up with VT Cash Book?  If so how successful has it been for them/you? 

I tend to charge fixed fees based on the average of the first three or four months bookkeeping work carried out (charged on a time basis) and reviewed annually. VAT returns are charged on the time spent. It is far from perfect and we tend to lose out a bit when clients get busier and the transactional work increases before the next review date. 

Do you have a minimum charge for clients with very few transactions? There surely must be a pivotal point where transactional basis is not profitable?

 

 

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Per transaction and fixed fees

"It is interesting that charges are made on a per transaction basis, and being new to VT it is another option to look at, but what about time spent on say reconciling banks and preparing VAT returns?."

The reconciliation and VAT returns can be taken into account on the charge per transaction rate - obviously lower for the clients who are not VAT registered.

"I tend to charge fixed fees based on the average of the first three or four months bookkeeping work carried out (charged on a time basis) and reviewed annually. VAT returns are charged on the time spent. It is far from perfect and we tend to lose out a bit when clients get busier and the transactional work increases before the next review date. "

Can't you look at trends and work out your fees based on half way through the year?

"Do you have a minimum charge for clients with very few transactions? There surely must be a pivotal point where transactional basis is not profitable?"

I don't think that would go down well with clients however sensible it is. The fixed time shouldn't take too long so maybe you should include that in your year end accounts fee?

 

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Consolidated reply

Interesting to see the spread of responses to the OP (and other posts).

First, I should say that my clients (tend to) have relatively few but high value transactions (rarely do we see petty cash items for example).  Having said that, in my initial post, I said that transaction rates are ultimately based on time spent.

I've tried VTcashbook on several clients but most have a phobia of accounting packages (and don't want to delegate this to a minion).  Most therefore are sent an excel extended cash book template.  Where this doesn't reconcile and they can't/won't find the error I simply tell them that we'll reconcile it for them but that this is "accounting work & subject to a time based charge"

PeterSaxton asked if we ignore time spent chasing.  No, because we rarely have to chase (the threat of our hefty time charges tends to bring them into line).  To be clear, we start work when we have ALL the required information so an email saying "you forgot to attach the Bank Statements" is hardly a problem and is built into the transaction charge. 

Jimess asked whether a minimum charge applies - yes, as mentioned in my original post we have a "VAT return fee" which includes the first 20 transactions per month.  This seems fair to all

For the many of our clients whose companies are not subject to VAT (Hong Kong, Singapore etc), the above is an annual task (for the y/e accounts) although we ask for information to be sent quarterly.  In such cases we charge a straight transaction fee (no minimum) but all additional work beyond mechanical book-keeping is time based.  

Finally we have one troublesome client who needs constant attention - they pay an additional €5,000 per annum "retainer" to cover all (reasonable) demands on our time (plus the usual transaction & standard accounting fees). 

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Omissions and deadlines

"PeterSaxton asked if we ignore time spent chasing.  No, because we rarely have to chase (the threat of our hefty time charges tends to bring them into line).  To be clear, we start work when we have ALL the required information so an email saying "you forgot to attach the Bank Statements" is hardly a problem and is built into the transaction charge. "

I understand the logic of having a checklist before starting work which would highlight any fundamental omissions but what about more difficult to spot things like cheque stubs not completed or individual vouchers missing?

On a more deadline based comment: What about VAT returns? Do you insist on having all documents before a certain date? What if you subsequently find odd items of information missing? How do you ensure you get the information in plenty of time? I usually think you have to approach clients individually. Some are hopeless and you have to be tough and explain the rules whereas others are pretty good and may only make the odd error and I feel that it would be unfair to set out the rules in the same way. Obviously you have to explain the deadlines and penalties to every client.

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Deadlines etc

Most of our VAT returns are for Cyprus (and a couple of Malta) companies where one has 40 days to file.  I therefore fix a deadline of 25th of the month (giving us 15 days to prepare & file - manually still in Cyprus ... no on-line revolution there!).  In fact clients from mainland Europe are used to much shorter periods (15 - 20 days is not uncommon) and by the 20th we have most in our hands already - An semi-automated email goes out to clients on the 20th reminding them that penalties (€51 in Cyprus) automatically apply to late submissions.  Rarely does anyone miss this deadline of 25th but if they did (say illness) we could still do it in 2/3 days. 

With regard to missed documents (usually delivery notes instead of Invoices, or missing stock purchase invoices), we try and process work as soon as possible after receipt and notify the client of all omissions in one email (often with a suspense account listing) and again with the reminder about late filing penalty  ( and more importantly the enhanced risk of inspection).   So far not one of our client companies has suffered a penalty.  

Fortunately although Cyprus (and other English speaking countries) have cheque books still, our central European clients don't at home, and therefore are no longer used to them.  Almost all transactions are online and the statements are reasonably good so our suspense account listing is easy for the client to match to the missing voucher. Likewise card payments - these are generally debit cards linked to the account so the missing vouchers can easily be seen.

I have made this a fairly detailed response as our circumstances are doubtless very different to most AW members.  Distance from the client is not a problem but equally we don't have the very small "petty cash" type transactions to deal with.

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@Peter Saxton

Yes we can and do look at trends, but life is not always predictable, and clients like to know where they are so I tend to stick to the annual review unless the transactional work grows massively within say a three month period and then we would have to revisit the fees again.  I am finding in the current market place clients want certainty as much as possible so I do try and work with them on that.  If we lose out in small ways on the bookkeeping we can often recoup that on the accounts prep so as long as we do not lose out overall we can work with it. 

I do agree with a lot of the postings here though, clients often make things more difficult than they need to be.  As Shirley M mentioned bank recs can take forever if the client has not identified transactions sufficiently. 

 

 

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I agree with Peter

It's only when you are in the thick of the work does it become apparent that there are omissions in a client's paperwork.

The number of transactions gives a very good clue as to how long the work should take, assuming a good client who has attention to detail.

The poorer (in terms of good record-keeping) clients soon reveal themselves which is why any initial fixed fee should be reviewed after one or two quarters and the (internal or exernal) rate per transaction amended accordingly.

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Its the messy bits

Hansa comments are logical, however from his comments it appears he misses out on all the messy bits involving cash etc. this really adds to the time involved.

 

I think I have mentioned on here before the main difficulty in doing bookeeping for clients as I see it is determining method of payment by client. Its all too easy to end up with a creditors ledger which has loads of old invoices which appear to be unpaid, as well as negative balances where invoices are missing. It often takes a few months to spot that these are errors

 

 

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