As promised, here is the first post in a series “Things I Didn’t Know About My Bookkeeper”.
A bookkeeper can be a huge asset. If you use that resource properly, a bookkeeper can really help your business succeed. The problem is that the position isn’t the same as a customer service rep, a mechanic, or a receptionist. Many times the bookkeeper is off-site, and rarely deals with any of your products or customer directly.
Tip #1 – Don’t assume the bookkeeper knows anything about your industry.
Depending on the size of your business, you may have a bookkeeper sub-contracted off-site, or full time in the office. I have worked in both of these scenarios throughout my career. For example, I worked in an auto repair shop for a couple years in house. When I started, I didn’t know a thing about fixing a car. I have to admit, by the time I left, I didn’t know much more than when I started. Unlike the mechanic or cashier, I wasn’t being trained on the business. My job did not require me to learn the products. At no point did an employee come to me for advice on how to switch out the transmission on an ‘82 Camaro.
Why does this matter?
Especially in the case of an off-site bookkeeper, you can’t assume that they understand the details of your industry. If you give them a bill from a vendor, don’t assume that they’ll know what the items on this bill are for. Are they parts? Were they for a specific job? Are they shop supplies? At some point, I would eventually pick up that Vendor A is where you buy your shop supplies, and Vendor B is where you get your office supplies. However, if Vendor B happened to have a deal on shop supplies, I wouldn’t necessarily notice the difference, especially if the bill has MSG1034 as the line item instead of “ballpoint pens”. Once in a while, this isn’t a big deal. If this happens regularly, you no longer have an accurate picture of where you money is going.
What can I do?
If your vendors match up to a specific expense item perfectly, then maybe write up a quick note in the beginning. A simple spreadsheet that has 2 columns “Vendor Name”, and “Expense Type” would save both parties a lot of time and frustration. That small gesture alone could save hours of billable time every month. If you buy all sorts of items from the same vendor, write a quick note on each bill. Do it as you get them, since going through a stack of 50 receipts in one sitting would be frustrating. If the entire bill is for shop supplies, a quick “SS” written on the bill is perfect. If you want to attribute it to a specific customer, write down their name, or have the vendor make that name be the PO#. If it’s all over the map, a similar note next to each item is better. Of course, we don’t need to insult each other’s intelligence. If the receipt clearly says things like pens and file folders, no need to indicate office supplies. Just make a note next to something that an outsider would find ambiguous. You may know that you bought $200 worth of misc lumber, screws and nails to fix your shop. If you run a construction company, how does the bookkeeper know if it’s for a job (cost of goods) or for the shop (repairs & maintenance). If a few of these happen every month, your financial statements will tell you the wrong story. Suddenly, your profit margins look small, but your repairs are under budget. You end up deciding to increase your prices, instead of realizing that your building is falling apart.
Often getting a bookkeeper is an afterthought. You used to do them yourself, but you just don’t have the time anymore. You find the first name in the phonebook, drop off a box of crumpled up receipts, and hope for the best. Find someone you can trust, and who is easy to reach when you need them. Sit down with them and really describe your business, your goals, and what you expect from them as your bookkeeper. It may take up a full morning, but that time spent in the beginning will save you a lot of frustration in the long run.