Bookkeeping: your new revenue driver

@ReceiptBank

Isobel Moulder, Content Executive, Receipt Bank

She lives and breathes the cloud accounting industry and is proud to be a flag bearer in the bookkeeping revolution.

Double-entry bookkeeping has existed since the dawn of time...

Ok, since circa 1400, but it

may as well be the dawn of time. And for the vast majority of its existence, it has been done the same way: with a calculator and a lot of patience. This may be a crazy opinion, but to me, spending hours tallying up figures or typing numbers into a spreadsheet – as of the advent of Microsoft Excel in the 80s – doesn’t exactly sound like fun.

Probably more importantly than fun, it doesn’t sound profitable. The hours spent slaving over a spreadsheet can really add up – particularly when that end-ofmonth shoebox gets dumped unceremoniously on your desk. Bookkeeping is however not traditionally a high-cost service, so the client fees may only just outweigh an employee’s wages.

So if it’s not profitable (and it’s not fun) then why do it at all?

Because with the new technologies available to us, the above experience is a thing of the past. As manual data entry is slowly eradicated, the time costs previously associated with bookkeeping are becoming irrelevant. In fact, bookkeeping is now the most profitable service your firm can have up its sleeve.

EMBRACE AUTOMATION According to the AICPA’s 2016 National Management of an Accounting Practice (MAP) Survey, the percentage of net client fees provided by bookkeeping services more than doubled for firms with revenue of at least $10 million, from 3.9% in 2014 to 9% in 2016. That’s no mean sum.

“But how?” I hear you ask. “Through automating manual processes” is the answer.

One of the main problems with traditional bookkeeping is the sheer amount of time it takes to go through a plastic bag full of receipts and enter all of that information into a spreadsheet. However, tools such as Receipt Bank replace that data entry with data extraction, meaning all that time is now freed up.

The implications of this are clearest seen in the bookkeeping ratio; that is, the average number of clients managed by one bookkeeper. If your firm is still on a spreadsheet system, then this ratio is probably no more than 1:10 or 1:15. Using an automated bookkeeping tool, that ratio can become 1:20, 1:30 and 1:40 as your staff learn how to maximise their efficiency with the app.

Not only can your staff increase the number of clients they manage, but you can also drastically reduce your overheads per client.

To put that into figures: let’s say you own a bookkeeping firm with 12 partners. Your bookkeepers take an average of 8 minutes to process an item and each client sends in 25 items a month. With a charge-out rate of $50/hour, that’s $166.67 in wages for the processing of a single client. Now let’s say each of your 12 bookkeepers has 10 clients each – your total wage overheads come to $20,000 per month.

Receipt Bank partners cut their processing times in half on average, so let’s apply that to this scenario. If your bookkeepers now take an average of 4 minutes to process an item rather than 8, that means it costs $83.33 to process one client. That brings your overheads down to just $10,000 per month.

Combine these two effects and you’ve halved your overheads and doubled your number of clients. That means you have more than doubled your bookkeeping revenue.

Value that gives back

Bookkeeping automation tools make life much easier for your clients too. A good tool will provide a plethora of submission methods, so that clients can send in items whenever, from wherever. This ease of submission means no more endof-month shoeboxes, but rather a steady stream of items throughout the month.

This in turn means you can show your clients a much more current view of their finances, which adds significant value. In fact, up-to-date financial data allows you to add value in so many different ways, such as budget forecasting or

weekly reporting. You could charge these value-added services at a fixed price, or perhaps bundle them together in different packages.

that the better service you provide, the happier your clients will be – and happy clients refer you to friends, family and peers. Referrals are an invaluable source of new clients, particularly as you look to scale your bookkeeping operations. Make sure that referrals are as easy as possible for your clients: perhaps have a Refer-A-Friend form on your

website, or encourage clients to ‘tag’ people that they’d like to refer on your social media pages.

Moving forward

Another key point to consider is

In an age where chatbots are giving financial advice and your phone can “read” a receipt, it might sound a little far-fetched to suggest that humble double-entry bookkeeping is your firm’s greatest asset. However, it is also vital to remember that as long as there are businesses and governments, there will be bookkeeping. Now that it is easier than ever to make great profit gains from this service, why not get started today?

Your next steps:

Research the bookkeeping automation add-ons for Xero Identify the clients who could most benefit from bookkeeping services Book in a free consultation with a member of the Receipt Bank team

Your Complete Payroll Solution

Premier Cloud Services Since 2001

• All sizes of businesses 1 –200+ • 50+ reports, helpdesk and phone support, feature rich • Employee kiosk with leave requests, projected balances, leave calendar and timelogs • Upload employee HR documents and profile photo • Partner programme for Accountants & Bookkeepers