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Bookkeeping charges as client grows?

Bookkeeping charges as client grows?

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Hello everyone, here's one for the bookkeepers out there,

I wonder if I could ask how much their typical client charge is? I don't mean how much do you charge, flat rate or hourly as I think that has been talked about many times - what I mean is what is your average client invoice? after having recently returned to offering bookkeeping services I have noticed that although I thought my market was the one man band, I am finding some of these one man bands are taking on employees, expanding and growing to the point where I am deluged with huge stacks of paperwork to process every month. The result obviously has to be an increase in my flat rate monthly charge for the coming year for that client - but I worry a little as to how much a client will sustain before they make the choice to either employ a part time bookkeeper on site or search elsewhere for a cheaper solution?

I started with loads of little £60pm self employed bods, and now I have a number of Ltd. companies and partnerships with monthly bookkeeping fees up in the £150+pm area - so I just wondered how others fair with pricing and whether I am just worrying about nothing :0)

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By Moonbeam
06th Nov 2012 12:47

Depends on the client

Many companies, having grown to a certain size, want to do their book-keeping inhouse. I am as helpful as I can be to those former book-keeping clients, because I would want the same if I were them, and you can train up and supervise the new book-keeper and still earn some money out of the situation. Just expect it to happen and 9 times out of 10 it will. If you adopt the helpful attitude the client will be relieved and happy to have you on board.

I have another client who has grown from a 4 person company to a 20 person company. I do all his book-keeping. He has told me recently that he doesn't want an onsite book-keeper, for confidentiality reasons. I charge him around £500 a month. That's to do with the number of transactions and my expertise. Looking at the cost of a desk and computer for an extra person, Ers NI, extra supervision, etc I think £6,000 is good value for a year's work. So does the client, apparently.

I don't have an average charge for book-keeping. It depends on the quality of data and amount of it that I receive.

Stop worrying about cost to the client and think about the benefit to the client. If some skinflint doesn't care about the quality of your work and wants to grind your fees into the ground, there are lots of other companies who will value your work. Start targetting good quality clients and leave the small fry behind.

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Replying to i-accounts:
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By timiambeing
07th Nov 2012 08:40

Thanks Moonbeam...

It's nice to know that there are some larger invoice amounts going out to bookkeeping clients (I have had a couple of answers on Bookkeepers Org as well now).The thing about bookkeeping is it is very hands on, hours of work handling every scrap of paper - what ever happened to that paperless office dream in the 90's I wonder!? You have to understand accounting principles of course, but you also have to understand all types of business and how they work - plus you have to get to know your client's business better than they do in order to process the paperwork without calling them all the time. It's 90% of the accounting job as far as I am concerned, but your typical business person really doesn't understand how important putting everything in the right place actually is!

I have just taken on a client who works out his VAT every month by adding up the in's and out's on his bank statement, been doing it that way for two years! I explained that for a start his factoring account drawdown is not what he should use to calculate his output tax (he is Cash Accounting - argh!!) and that should be the 'collections' figure and that I will have to enter every single piece of paper into an accounting system, especially the hundreds of cash receipts for fuel (he is a delivery business) that he just enters from a couple of totals on the bank statement for cash withdrawn. All cash is fuel apparently, which according to my first month is inaccurate by £100's :0)

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By Philip Hoyle
07th Nov 2012 09:31

Clients surprise me by how much they pay

I, too, was a bit embarrassed about charging as much as £150 per month to do the book-keeping, payroll, VAT and accounts prep (i.e. the lot) of small one man band businesses but found myself with a few clients who used an unqualified book-keeper (doing Sage).  They felt they'd be stung by the year end accountant charging a few hundred to turn the book-keepers Sage reports into the year end accounts and tax return but apparently it didn't bother them to be paying £2k or £3k p.a. for the book-keeper.  One was a small fishing tackle shop, another was a one man consultancy and the third was an e-bayer.  When I did the year ends, there wasn't a great deal of paperwork - typically 1 or 2 bank statements per month and a single lever arch file of purchase invoices.  I really couldn't understand how they'd managed to accrue so much in book-keeping charges.  Then it dawned on me that the book-keeper was Sage born and bred and as such had entered everything on Sage, invoice by invoice and then spent hours trying to match payments to invoices, reconcile the petty cash, etc.  OK, they were doing a thorough job of it, but was it really necessary?  For those kind of small businesses, I'd just analyse the bank statements and make quick and simple year end adjustments for reversals.  If I'd taken the job to do wholly myself, they'd have fallen well within the £150 per month category and the clients would have saved a lot of money every year for no discernable reduction in book-keeping quality, especially as they never used the "perfect" Sage for monthly accounts or the like as a management tool.

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Replying to tom123:
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By timiambeing
07th Nov 2012 12:07

Thanks Philip

Philip Hoyle wrote:

…..Then it dawned on me that the book-keeper was Sage born and bred and as such had entered everything on Sage, invoice by invoice and then spent hours trying to match payments to invoices, reconcile the petty cash, etc.  OK, they were doing a thorough job of it, but was it really necessary?  For those kind of small businesses, I'd just analyse the bank statements and make quick and simple year end adjustments for reversals.  If I'd taken the job to do wholly myself, they'd have fallen well within the £150 per month category and the clients would have saved a lot of money every year for no discernable reduction in book-keeping quality, especially as they never used the "perfect" Sage for monthly accounts or the like as a management tool.

 

Philip you raise an important point there, and one I have thought about many times before. With my accountants hat on (say when a sole trader has arrived with a folder and a few bits and pieces for the year for what will be a simple SA return job) I make far more assumptions and spend much less time on the bookkeeping per se - but can a bookkeeper do that? With some of my busiest bookkeeping clients I already batch total and enter one transaction per monthly total instead of posting each individual invoice for huge wads of invoices form the same supplier - and even though I total VAT and Net separately that still really causes my bookkeepers head some grief. Where's the analysis, where's the daybook, where's the detail? In fact where are the guidelines from HMRC, there are none, what they say about 'keeping records' doesn't substantiate half of what a bookkeeper does for their client - except maybe bank reconciliation and the likelihood that the lack of which could invalidate a tax return if the record keeping is subsequently inspected and found lacking. Hmm. So how does one reconcile the bank without posting every damn transaction on that bank statement individually? And if the receipts relate to invoices on account, how do you get them into the system without posting the invoice first and then paying it off? I have tried doing a year end bookkeeping job just using VT Cashbook, really wanted it to work - but found trying to tie up every invoice in a pile of paperwork with the payment received against it totally time consuming. It took me half the time simply sorting everything into order and posting everything in it's proper place. I suppose as a bookkeeper of 25+ years I have come to accounting with that transactional based approach built in and hard wired. As a bookkeeper I cannot make assumptions if the paperwork actually exists - I must post it and let the system give me the results, surely, isn't that bookkeeping? And of course I do provide monthly management accounts, although I can't say anyone actually reads them! :0)

Very interesting reply - thanks! I think the difference in thinking between accountants and bookkeepers is legend and much fun can be had with them both - when you are one and the same simply putting a different hat on life can be challenging! And as to reconciling the petty cash - now that is [***]!! Don't we just post everything to petty cash there isn't a home for and journal the final figure to capital intro… surely that's how it works! :0)

 

 

 

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Man of Kent
By Kent accountant
07th Nov 2012 09:58

Expect fee increase

Don't get too hung up on it, I've found that client's whose businesses are growing accept fee increases as a natural part of that growth as you are having to do more work.

We work on a fixed fee basis, fees are fixed at the time of engagement but the terms of business include a caveat saying fees are based on the current size of the business and may increase if the business grows and additional work is required (more bookkeeping, extra person on the payroll etc).

I've been reluctant in the past to discuss fee increases but always found that provided its approached in the correct way they are accepted by the client.

Those that don't accept fee increases are tight arses and need to be binned at the appropriate point.

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