Bookkeeping isn’t profitable

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Don’t believe what they say!

Well it certainly isn’t for sole (accountancy) practitioners. The key is in the name we’re accountants not bookkeepers.

I’m certainly not prepared to work for a ‘bookkeepers’ wage.

I don’t buy into the marketing blurb being peddled by certain providers of bookkeeping software.

I’m probably not alone in reading articles on AWeb and receiving literature by post and email which tells me that I can increase my bookkeeping revenue and profits by being more efficient – yes that’s true of every aspect of work. What I don’t buy is the average monthly fee of bookkeeping clients being £400!!! £400! I don’t have any clients where I charge anywhere near that much for bookkeeping.

£400 a month would equate to say 13 hours of chargeable time (£30 an hour) or say its being charge at £1 per item – 400 bookkeeping transactions a month – and £1 an item is pushing it if you’re using cloud software.

Oh and £30 an hour is really pushing it in my opinion especially when most freelance bookkeepers will do the work for £12 - £20 per hour.

No don’t buy it.

Where it is of value is in freeing up more of my time so I can concentrate on higher value work – accounts prep, tax returns,  management accounts, forecast, budgets etc.

It’s also a necessary evil (as is payroll). There’s not a great deal of (if any) profit in it but by offering it as part of a complete package to prospective clients it can lead to far higher value work – such as R&D tax credits – now don’t get me started on that subject…

…all smoke and mirrors…

 

About Kent accountant

Man of Kent

Chartered Accountant based in Kent.

After leaving practice very soon after qualifying, swearing never to return, in 2011 I did exactly that.

Now a sole practitioner and loving it, business growing rapidly and looking forward to the future as my own boss.

Replies

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22nd Mar 2017 18:58

Not sure I agree with this KA. You assume that the bookkeeper who charges £15-£20 p/h is fully utilising the functionality of cloud accounting packages. Quite often this isn't the case.

We've just taken on a client where the outgoing bookkeeper charges £200 per month. We're matching that. However by utilising bank feeds, auto depreciation, recurring journals, Receipt Bank, etc if this job takes more than 4 hours per month I'll be disappointed.

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23rd Mar 2017 10:11

Chris - sounds like a bit more than basic bookkeeping that you're doing and is it just the bookkeeping that you're doing?

And who is doing that work you or an assistant?

Its a necessary evil, its needed as clients want it and its the hook that leads to more profitable work.

Far better to train the client to do more and take advantage of cloud software and receipt scanning/coding software.

You can then concentrate on the more profitable (more value - to the client) work.

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24th Mar 2017 11:28

To be fair we do a bit more than basic bookkeeping as we account for accruals, prepayments, depreciation, deferred/accrued income, etc every month.

However the post transactional bookkeeping adjustments are usually pretty straightforward.

I do have a junior doing most of the work as you rightly guess.

In my experience I have yet to find a client who can do their own bookkeeping properly. Whilst software vendors make a big thing of how easy their software is to use and anyone can do their own bookkeeping, in my opinion that's just a load of bull.

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to ChrisScullard
24th Mar 2017 18:23

Yes they never do bookkeeping perfectly - that's why they need us ;o).

So, you do management accounts, in which case you should be charging a premium for it.

How many clients see the value in, let alone understand accruals, prepayments, depreciation, deferred/accrued income being accounted for correctly every month?

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24th Mar 2017 13:36

Hang on Kent, you mean you cant grow your firm/work from your holiday home/insert other complete BS sales pitch here when preparing bookkeeping with Receipt Bank?

But, but, but, Ive just signed up and was expecting to be winning the practice excellence awards and everything?!?!

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24th Mar 2017 18:17

@Miss A - pah!

If your post had been written by anyone else I might have believed they'd been hooked and reeled in...

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By JD
24th Mar 2017 18:39

I am with you KA, the amount of time that can be wasted on carefully considering your cloud options/offering and which overprice app your clients should be paying for next, in addition to their accounts package, none of which quite works in the way that the little video says it should. And all of that before you even start to do any book keeping work with your chosen package. A. Web I am afraid we need a lot less of waxing lyrical cloud gurus and a lot more practical solutions.

My apologies of course, I admit I am having a bad day, but that is because I made the mistake of listening to a cloud guru, tried using the new efficient QBO company template function to set up a new client only to find after umpteen attempts, telephone calls and far too much non chargeable time, that while this function appears to be accessible, it is not working because QBO are in the process of withdrawing it - bring back desktop sage line 50, I would have set up the newbie client in a fraction of the time.

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25th Mar 2017 10:39

Ha ha Kent who has [***] on your chips.

I totally agree though payroll and bookkeeping just have to be done as quickly and efficiently as possible. As clients don't really appreciate the value of it, the thought of paying £30 per hour for someone to sort papers will seem a fortune to a small trader.

Technology helps you box it off quickly and easily to provide a value for money service, I would question anyone that claiming using RB allows you'd to increase your billing. Getting the numbers rights allows you push services beyond basic compliance.

No one on my manor would pay £400 per month for bookkeeping alone. The only people who I get that sort of fee for get a fairly full all inclusive service beyond the compliance element.

My best RB client I had was costing about £100 per month, the time it saved, just meant the clients girl in the office could do other things for him.

It's like me deciding to send off my work to India to be processed, the first thing my clients would say was it must be saving me money so want a fee reduction. They wouldn't say oh great you have cut your costs by 20% I will happily pay you more.

It's a good job we know our clients.

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27th Mar 2017 11:26

Told you! I enjoyed that.

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to Red Leader
27th Mar 2017 11:47

Yes you did...lesson learnt.

My bookkeepers do all the bookkeeping now :o)

I do the work where I can earn a decent return...

...and before you ask yes I am going to start monitoring time spent on clients again!

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to Kent accountant
27th Mar 2017 14:46

My day just gets better and better.

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to Red Leader
27th Mar 2017 15:56

You must have seen the India/Australia cricket score then.

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