As businesses focus on revenue-generating tasks, they tend to forget one vital activity that can further scale a business:
Bookkeeping is often overlooked in businesses because it is mainly compliance. What most entrepreneurs don’t know is that this offers vital information that can scale a business. For accountants, bookkeeping plays a very important role in providing financial advice.
The data they can acquire from bookkeeping can provide helpful when:
- Evaluating business performance
- Budgeting and obtaining bank financing
- Pitching to potential investors
- Preparing financial statements
The Business Case For Bookkeeping
As important as bookkeeping is, many accountants prefer to do away with this because they feel it is “crappy work.” It’s time-consuming. With the huge workload they already have, accountants prefer not to do this anymore.
This strips them of time which they can use to provide more client-facing services. They no longer have time to check in with clients (personally or through phone calls), interpret and analyse data to formulate sound financial advice.
And since it hasn’t been traditionally a core accounting service, many accounting firms miss out on the immense opportunities bookkeeping can offer:
- Build a trusted relationship with the client. Because bookkeepers are always talking to clients, they are able to establish a solid relationship, which is vital in improving client experience and, in the long run, keep the business.
- Fence off clients so they stay with your firm and avail of the services you offer. Since you are in control of the relationship because you are doing both bookkeeping and accounting. This will translate to more revenue.
- Increase the number of referrals, which also means more profit for the firm.
- Extend business growth by adding more services, like marketing and other administrative services.
- Enhance efficiency. Through automation, firms can easily transfer compliance to an offshore team, leaving the onshore staff with enough time to focus on client-facing tasks.
- Generate as much as four times the fees you usually make. Businesses that offshore bookkeeping services stand to get more out of their investment because the wages in countries like the Philippines are significantly lower. Firms can have four offshore team members for the price of one onshore employee.
- Earn anywhere between 5,000 and 15,000 per annum per client.
- Most importantly, build a sustainable global workforce.
Many accountants have grown tired of chasing after bookkeepers for information because they cannot get work done. As daunting as it may be, bookkeeping is an essential and indispensable part of the accounting practice. It also has the potential to double profits.
Bookkeepers can help accounting firms get compliance done and increase revenue in the long run. They can also accomplish that by doing the following:
- Set up accounting systems
- Record transactions
- Perform checks and reconciliations
- Handle payroll and compliance
- Provide general administrative support
Building A Profitable Bookkeeping Division
Firms that are experiencing compliance issues can turn to offshoring to get things done. Bookkeeping can be transferred to a global offshore team, leaving onshore accountants with more time to concentrate on revenue-generating tasks.
“It’s not about replacing bookkeepers. It’s about how to partner with a bookkeeping business and how you drive additional revenue to your firm.”
By partnering with firms that specialise in bookkeeping or building their own bookkeeping division, firms can add an additional stream of income.
Having a bookkeeping division (or working with one) offers the following benefits:
- Enhance trust with clients
- Firms are able to take control of the relationship because they are handling both accounting and bookkeeping
- Firms have better chances of retaining clients
- Firms will improve capacity and enhance productivity
Increase Margins By Offshoring Bookkeeping
- Building a bookkeeping division can give you a 50% margin (or more)
- Most bookkeepers earn more than accountants ($5,000 – $10,000)
- As technology continues to evolve, firms need to evolve their services
Bookkeeping is a process that doesn’t need to be done onshore. Firms can find someone else, who can actually be better in accomplishing the task. There’s always someone better out there; they just need to be found.
Watch: How to find the perfect offshore global team member
And since it’s more cost-effective to hire an offshore team member for bookkeeping, the profits are bigger. Two people doing 80% of the work is still way better than someone doing it at 100%.
Impact Of Automation On Bookkeeping
Advancements in technology have drastically changed the world of accounting. Various software and applications have made compliance easy. Accountants are now able to free up time and provide real value to their clients.
But there might be one concern from these professionals: will automation take away jobs from accountants and bookkeepers?
Interestingly, it won’t. It’s just a matter of adapting with the changes.
Automation will enhance the workflow. If anything, it will improve the way accountants do their jobs. There’s no reason to be afraid of losing jobs to robots.
- Robots cannot replace accountants
- Productivity can be improved by automating small, repetitive tasks
- Automation can enhance efficiency, reduce partner hours, improve cash flow and revenue and offer additional services
Bookkeeping is a vital process in running an accounting practice. It is profitable when done right, which is why firms need to either run an in-house bookkeeping division or partner with one.
- Through bookkeeping, accountants can have the information needed to come up with financial strategies
- Bookkeepers have become the trusted advisor because they are in constant contact with clients
- Bookkeeping can improve compliance, enhance efficiency, and double profits
- Bookkeeping is essential in retaining clients
- Embrace automation to get the most out of bookkeeping
The Outsourced Accountant helps accounting firms from all over the world grow their capacity, margins and profits through global outsourcing. Contact us to find out more about how we can help your firm.