Natasha Goldstein is Founder & Managing Director of The Accountkeepers.
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Hello wonderful colleagues, clients, and friends. Here at The Accountkeepers we love accounting and finance technology. We know from experience that if used correctly, it will save our clients thousands of dollars in back-office costs every year. I often getasked by prospective clients “what’s the most impactful thing I can do to streamline my back office?”. The answer always surprises and is almost never loved.
So, what is the most impactful thing a leader can do to streamline their back office and save money? Three things really, and they’re all related to how you get paid.
Why are these the most impactful things you can do? Simple, they will save you the most time - and therefore money - down the road.
Ever heard of an Accounts Receivable (AR) Clerk? Well, that’s an employee whose sole job is preparing, accepting payments for, and applying payments to, sales invoices. Most companies who send invoices by mail, accept check payments, and generally do not automate their invoicing process end up needing an AR Clerk. AR Clerks usually make about $15/hour, so a full-time AR Clerk will cost you, with benefits, roughly $37,500 per year. Following the three steps laid out above cuts out at least two-thirds of the work involved in the invoicing process, and often negates the need for an AR Clerk altogether!
When you enable these payment options in QBO, you allow QBO to do this work. Invoices are sent directly from the system, payments automatically come in via ACH or credit card (which eliminates the “accepting payments” part of the Clerk job), and Quickbooks applies that payment to the correct invoice (which eliminates the “applying payments to sales invoices” part of the Clerk job). All that's left is preparing sales invoices.
Some of you may note that QBO's credit card processing fees are not as competitive as other firms such as Stripe. This is true. If you are going to be doing a lot of credit card sales (high dollar volume), I would look into cheaper options as those fractions of a percent will matter in the long run. For those who only allow certain customers to pay by credit card, and the dollar volume will be low, I would recommend just using QBO. The ease will outweigh the small cost savings.
As for checks, well, if you receive a paper check, you can’t automate anything, even if you follow steps #1 and #2 above. Someone has to deposit that check, and someone else has to apply that payment to the correct invoice. I cannot stress enough how much I encourage a no check policy! You may only have "a few" clients now who pay by check, and "most" pay electronically, but the number of check payers will grow, and with it, so will your back-office costs.
Overall, I can't express how many companies I run into that would save tens of thousands of dollars per year if they moved to electronic invoicing and payment. Your company may only have a dozen invoices per month now, but that number will grow fast, and the time needed for invoice management will grow with it.
Most entrepreneurs and financial leaders I work with don’t like this advice. They don’t want to rock the boat with customers. They see revenue coming in the door, and the last thing they want to do is make it harder for that to happen! But here’s the thing: I’m not sure a customer has ever stopped working with a vendor because they didn’t accept paper checks, or because they required them to pay via Quickbooks ACH payment or a similar service. Sure, very large companies (think Microsoft) and government agencies may force you into it, but the bulk of customers will not.
So you're convinced! You will stop accepting checks, send invoices electronically, and accept payments exclusively through your invoicing system. How should you do this without annoying your customers too much? Here's an easy idea: give them $25 off their next order with you as a thank you for their understanding in implementing this change. That goes a long way! And now, you're paperless.
At The Accountkeepers, we help companies automate their accounting processes every day. We completely change the back-office of our clients, allowing them to grow without seeing an equal increase in back-office costs. Sometimes it takes a few months, some habit changes, and some education, but it always ends better than it started. If you think your firm could benefit from our work, give us a call today. And if you know a startup about to begin making sales, forward this Tip along, it will benefit them in the long run!
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Helpful, and brief, insights for financial leaders
by Natasha Goldstein
Hello wonderful colleagues, clients, and friends. First off, I’d like to highlight the amazing article InHerSight wrote about The Accountkeepers last week! Thank you to Ursula Mead and her amazing team. We are honored to be your partner in improving the workplace for women.
Now, onto the December Tip! This Tip has been at the top of my list for some time. It is the answer to a question I get asked all the time: “what’s the difference between a Bookkeeper, a Controller, and a CFO?" It's a great question.
For many leaders, the distinction between the Bookkeeper, Controller, and CFO is not so simple, and I can definitely relate. Not until I was responsible for running the day-to-day finances of a company did I fully understand the difference. As a recent graduate with a Business Degree in finance and accounting I didn't understand it; as an Investment Banker I didn't understand it; and probably not until I'd been a CFO for a good year did I really understand it.
The best description I’ve heard of this is that the Bookkeeper and Controller are historians, and the CFO looks to the future. Bookkeepers and Controllers ensure the bills are paid and the receivables are collected. They ensure all the historical financial information and transactions are accurately documented in the accounting system.
Bookkeepers can perform a wide range of tasks, from just managing Accounts Receivables and Accounts Payables (typically called a Clerk) to doing the work of a Full-Charge Bookkeeper. Full-Charge Bookkeepers can do all the work in the accounting file, including adjusting entries, closing the books, and financial statement preparation. The term "Bookkeeper" can describe many different positions. Two "Bookkeepers” can rarely be compared apples to apples.
Controllers traditionally will be employed by companies where there is also a Bookkeeper, and the Controller oversees all of their work. Controllers will often do the monthly close and financial statement preparation. They will typically keep an eye on near-term cash flow. They might also do the company's budgeting.
CFOs tend to be consumers of the “history” – the financial statements prepared by the Full-Charge Bookkeeper or Controller. CFOs will use this “history” to assess the financial health of the company, prepare budgets and financial projections, and manage long-term capital needs. CFOs usually lead fundraising for working capital needs (such as bank loans, lines of credit, and mortgages). They also tend to manage the relationship with lenders and bankers. Sometimes they manage all fundraising activities.
Of course, at smaller firms these roles are often blurred. Most firms with under $10 million of sales don't need all three of these roles. In many cases, Controllers will do the work of the Bookkeeper, or the CFO will do the work of the Controller. I personally wore the Controller hat in my two CFO roles because in both cases, I had a very strong Full-Charge Bookkeeper, and those firms weren't large enough to need both a CFO and Controller.
From The Accountkeepers' perspective, we can do everything a company needs that is "historical". We can manage all the bookkeeping work, including monthly close, adjusting entries, and financial statement preparation. We also manage operational tasks such as invoicing, bill pay, and payroll. Where we stop is the forward-looking work of the CFO. For that, I have a long list of fantastic Fractional CFO firms I can put our clients in touch with.
So, if you're not sure what your company needs, give us a call. We'd be happy to listen and advise you on the best way forward.
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by Natasha Goldstein
Hello wonderful colleagues, clients, and friends. I wanted to start our first official Tip with the answer to a question I get all the time: “should I outsource my bookkeeping”?
If you Google “Should I outsource my bookkeeping”, you’ll find a plethora of blog posts from our competitors trying to convince you that you should *always* outsource your bookkeeping. Along the same lines, most of our competitors have a long table on their website listing the attributes of a good Bookkeeper. Below their company name is an uninterrupted column of wonderful “√” marks, and below the "In-house Hire" is a solid column of the dreaded “x”. I don’t love those tables… There are certainly cases where an in-house Bookkeeper makes more sense, and I never want to lead a potential client down the wrong road.
First of all, let’s go over what you’re getting when you “outsource” your bookkeeping. There are many different types of outsourced bookkeeping services, and each fits a different type of company. You really can’t compare them apples to apples.
There are options that start at less than $100/ month, and options that start at $2,000+. For a hundred bucks you’ll often get one bank account reconciled on a cash basis (not accrual), you’ll get a virtual contact you can “chat” or email (no calls), and nothing beyond that is provided. Often, these services are good enough for individual consultants and sole proprietors with very simple, light accounting and no payroll.
The higher end services, such as those offered by The Accountkeepers, will manage all your accounting and financial statement preparation, no matter how complex, along with payroll, customer invoicing, and bill payment. They offer a face-to-face team that is highly skilled and available on-demand. Often, these services are just right for growing companies, firms with inventory, firms that manufacture products, firms receiving government grants, and non-profits, among others.
In all cases, outsourced bookkeeping services are usually off-site/ virtual.
So, when should you not outsource your bookkeeping? If your firm has these traits, I would strongly consider an in-house Bookkeeper:
Of course, many businesses and non-profits don’t have these needs, so hiring a Bookkeeper in-house is not required. For them, outsourcing offers many advantages. The biggest benefits I see for clients who are partnering with The Accountkeepers are:
So, as you can see, outsourcing the bookkeeping isn’t right for all businesses, but in many cases, it adds significant value and lowers costs. In either case, give us a call, and we can help you navigate the right decision for your company.