When I evaluate accounting records for a business there are four things I always look for that give me insight into how effective their current financial team — or bookkeeper — is. You may have even experienced a few of these yourself. Knowing warning signs to look for will help you make a positive move financially for the growth of your business and help you determine if a new accountant is a better option for you.
Let’s break it down:
1. You’re Unable to Access Your Own Data
So your accounting professional “hosts” your data and you use their internal tool. They provide monthly reports and let you contact them when you need to. This may seem like a super cost effective way to outsource but you end up with reports that don’t really mean anything to you.
When reports are not timely, it’s difficult to use them to make actual changes to your business. In other words, it feels like they’re holding your data hostage. It’s time to request your data be moved to a browser-based solution like QuickBooks Online or Xero — something you can access and share with your financial team. A fundamental need of a growing business is having the access to it, now go get it.
2. You Simply Don’t Understand Your Bookkeeper
Feel like your financial team doesn’t speak the same language as you? Maybe they push the basics of the data, but you’re searching for a more clear connection that explains what those numbers mean.
When overwhelm kicks in, such as tax season, your team’s perfectionism can kickstart and communication can shut down. While a good financial team member is data-focused, this may not work best for your communication needs. There are so many choices out there, so find a bookkeeper who has taken that extra communication class and meets you somewhere in the middle of having numbers and explaining them.
3. You Want to Make Sure Your Revenue is Correct
PayPal activity can get double booked — first when it is received in PayPal and then when it is transferred to checking. The process to verify that is called, account reconciliation. They’re essential to making sure all the activity recorded by the accounting tool you’re using matches back to the financial institution. Sometimes this step can get overlooked because too much of the data is relied on the technology. Technology isn’t always accurate, so it never hurts to double check.
As the business owner, I would recommend you insist on this verification. How will you know it’s being done? Have the bookkeeper show you exactly where it can be seen in the tool, or request a PDF of the reconciliation report with your latest bank statement as proof.
4. Your Bookkeeper Has Sloppy Recordkeeping
The usual process of a bookkeeper includes a recording activity straight from the financial institutions. All they know is you paid XYZ on a specific date and a brief explanation of who and where.
If they aren’t familiar with your business, industry, or location, it might not mean a thing to them so they record the activity to a holding account until they are able to get more info from you. Sometimes that extra step gets overlooked, which may not impact you on a monthly basis, but if left unchecked overtime, it can cause problems at tax processing time. Take the time to review your financial reports and educate yourself on the accounts and your bookkeeper’s process.
I’ve outlined more tips and resources on outsourcing on my website, which also includes two free reports that will support you in your search for the ideal financial team.
Connie Vanderzanden is a member of the DailyWorth Connect program. Read more about the program here.