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How accountants fix clients' DIY bookkeeping errors

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5th Mar 2018
Editor AccountingWEB
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As explored on Any Answers last week, clients doing their own bookkeeping can often lead to errors. So how can accountants avoid spending unpaid hours rectifying client mistakes?

“Pretty much the only reason that clients do their own bookkeeping is to avoid the cost of a competent person doing it for them,” began Philisophic1 on Any Answers.

The AccountingWEB member spends far too much time and effort fixing bookkeeping errors when clients are not paying for that service. Frustrated, Philisophic1 suggested a solution to this vexing problem.

“Perhaps this needs to be turned on its head and, when a client wants to do their own bookkeeping we should actually be charging the same, or more, as we would if we were doing it for them,” proposed Philsophic1. 

With the chances of bookkeeping errors only exacerbating once Making Tax Digital takes hold, the AccountingWEB member's popular proposition shows how firms are exploring different ways to ease any unexpected workload or to recoup losses if correcting the bookkeeping takes over an hour per quarter.

Managing and educating client expectations

The challenge the cloud team at Raffingers is facing at the moment is not a million miles away from what this Any Answers discussion touches on: what clients are prepared to pay and how can practices manage their expectations.

“It's educating clients on what they are getting for the price,” said Lee Manning from Raffingers. “That is a huge issue at the moment.”

Two years ago, as a full force MTD loomed, the 2016 Practice Excellence medium firm award winners assembled a cloud team. Starting with just one person, the team has now grown to eight people. The remit of the team is to sweep up all the cloud bookkeeping work and of course, any client training that may fall under that.

Manning told AccountingWEB that where in the past the firm was speaking with clients two to three times a year, they’re now talking with them weekly. But the cloud team are coming up against a range of client needs from those who want to do the bookkeeping themselves to those that want to be trained.

“It's that client expectation of what they want and what they are willing to pay for, which is the challenge I am facing at the moment,” said Manning. “They want everything done and they expect that because it is cloud and the software does everything for you, surely you'll price will be a lot lower.”

But as the Any Answers thread shows, that is often not the case.

“If anything the price has gone up because they are getting so much more value and information in real time than they ever have done before,” Manning said.  

Clients still push back, assuming that the software does everything – but this is where pricing and education come in. The Raffingers’ cloud team keeps track of their clients and feedback quarterly how they’re getting on. At the same time, the team quarterly reviews fees and the completed work to make sure they’re delivering the service expected. It’s an ongoing process.

Training for success

With firms still arm wrestling clients about price and value, nothing has yet been able to substitute client training as a useful deterrent to the DIY bookkeeping errors.

But often accountants overlook the importance of training. “Generally I think we are poor at teaching our clients how to do bookkeeping,” AccountingWEB regular Andy Partridge said on the Any Answers thread. “We concentrate on the mechanics of what to input and where. Instead, we should have the perspective of what the end result should demonstrate.”

AccountingWEB member DJKL agreed: "An effort regarding education pays dividends; if you tidy their books quarterly make a list of errors corrected as you work and discuss these with client each quarter, that can eradicate the repeat ones and lead to better firm profitability."

As part of the client cloud bookkeeping onboarding, the Raffingers's cloud team conducts face-to-face and Skype training – and then follows up with a session to make sure clients have clicked. It is through this minority report deduction that they can see which clients get it, and which will be a nightmare.

Can the cloud solve the error burden?

Half-hearted client bookkeeping has been the norm for decades, but what’s changed is the accessibility and ease accountants now have with training to steer clients in the right direction.

“The problem was always that, even if we made an effort to train them, or point out where they kept going wrong, we and they just did not have the time during the year to supervise their bookkeeping,” said AccountingWEB veteran and cloud pioneer Paul Scholes.

But that all changed for Scholes when these clients adopted cloud accounting, and as a result, the average time it now takes him to prepare the year end accounts is 20-30% of what it was six years ago. “Key to all of this is that you can train far easier in real time, watching what they are doing and if they get stuck or make a mistake, it's dealt with at the time and they are far less likely to repeat it.

“Compare that to the 30 mistakes you'd find with a set of books you hadn't seen for a year and having to feed that back to the client in the hope some of it would sink in, by which time they were into the new year and destined already to have made another 15.”

Replies (9)

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Teignmouth
By Paul Scholes
06th Mar 2018 12:21

Hi Richard - bit of a mis-quote, I said:

"Consequently the average time it now takes me to prepare the year end accounts is 20% - 30% of what it was 6 years ago"

Should've gone to Specsavers :)

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Replying to Paul Scholes:
Richard Hattersley
By Richard Hattersley
06th Mar 2018 13:21

Ah, sorry about that Paul. The old eyesight is not what it used to be :) I've tweaked the sentence.

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Teignmouth
By Paul Scholes
06th Mar 2018 12:40

One of the practical difficulties I, and most, face in year one of any client conversion is having to find the time to introduce, train and monitor the bookkeeping a year or more in advance of reaping the time saving benefit whilst preparing the next year's accounts.

So it's investment time but, as it's also an investment for the client, they should share the cost.

Whether through luck or judgment this first happened for me when I'd just reduced my client base by a third and so I had spare time to do it properly, but I still maintained or increased fees in that year, promising the clients that it would result in fee reductions from year two onwards and, for a couple who were sceptical, I said I'd refund the extra fees if this wasn't the case.

For small firms and sole practitioners, who can't build a "cloud team", if this all sounds daunting, there's no law that says you must convert all clients in one go. In my case I picked two spreadsheet clients, who had no preconceptions of computerised accounting, to use as guinea pigs and to train me in conversion and training, this paid dividends as I then started to migrate others.

Thanks (3)
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By ohgoodgodno
06th Mar 2018 14:30

whilst some clients are happy to learn and can be taught, there are clients who don't value the necessity of having good records or how accountants / bookkeepers can help

whats your approach here?

Thanks (1)
Replying to ohgoodgodno:
Teignmouth
By Paul Scholes
06th Mar 2018 17:13

I tell them that the poo bags in my jacket are for my dog, not them, and if they don't chuckle, they can go and bother accountants that don't mind clearing up other peoples' poo.

In other words, keeping decent records is part of running a business.

There are others who, whilst recognising the need for decent books and valuing what we do, are just not capable or willing to do the work themselves and so I help them find a bookkeeper.

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By Savita
07th Mar 2018 11:25

Hai...
I know the expert about this problem. Just visit this site and contact them.
http://www.bmsauditing.com/

You can contact them for professional advice.

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Mark Lee 2017
By Mark Lee
11th Mar 2018 15:13

One of the accountant members of my Inner Circle tells us that his solution is to adopt the same approach as his local garage.

If customers try to fix their engines before they get to the garage they end up paying more than if they had simply approached the garage in the first place. In effect, whatever they have tried to do needs first to be undone before the trained mechanic can fix the underlying problem.

The same goes for clients who insist on doing their own bookkeeping (without first being trained by the accountant) are told that this will increase the annual fee for accounting and tax compliance services.

The reason being that the fee for reviewing and correcting clients' bookkeeping is higher than when clients allow the accountant to do it for them.

The only alternative is when the client agrees to use the firm's preferred cloud bookkeeping system and to undergo initial training to ensure they use it properly!

Thanks (1)
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By AndrewV12
13th Mar 2018 11:26

Very good article, in my experience the clients who do there own bookkeeping keeping on Sage, Quickbooks .... normally do not have a clue and the end reports are poor.

It always makes me laugh when such clients use other systems for credit control, most of them do not trust the rubbish aged debtor reports they have prepared. Just one aged debtor report Debtors / creditors 90 days + underlines what rubbish they have prepared. They only use Sage ect for Vat returns and reports the rest of it..... Alternately we could run with their figures, though this approach would have to be recorded in the engagement letter.

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Replying to AndrewV12:
Teignmouth
By Paul Scholes
13th Mar 2018 12:37

Hi Andrew - That used to be my experience. Are you happy to put up with the inevitable mess each year?

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