When we think about the most successful accounting firms and businesses, we think of those that have it all together. They operate effortlessly and have everything in order...or so it seems.
The reality is that they’re successful because they’ve figured out how to overcome numerous obstacles, including money leaks in their back office.
Now, we want to say this with as much good intent as possible: regardless of where you’re at in the growth process, you're probably overlooking some things (and getting other things wrong) when it comes to the bookkeeping and accounting decisions in your firm.
For example, firms usually handle bookkeeping duties internally, but such an arrangement doesn’t create a great career path for ambitious workers who want to grow professionally. That means turnover, and suddenly you’re back to square one.
Other firms choose to outsource their bookkeeping to another human team. This can help ease the pressure of daily bookkeeping and accounting work, but it still leaves room for human error.
It might seem grim at the onset, but all hope isn’t lost. Math teaches us that every problem has a solution, and accounting is no different!
The Top Four Bookkeeping Mistakes Costing You Money
1. Hiring and Losing Bookkeepers Regularly
Our take is simple: bookkeeping should be automated. It's easier to trust one consistent system than it is to search for a reliable candidate, train them, and eventually need to plan for their replacement(s). Plus, it burns a hole in your bottom line.
If you hire and lose bookkeepers regularly, you have to consider that their knowledge is lost on exit. And that's not just an expensive pain for you and your team—it's also a huge source of client disruptions. Your clients want to feel safe and familiar with the people who are managing their money. Why would you cycle through team members?
2. Using Senior Staff Members For Bookkeeping Housework
Your senior staff members should never be used for bookkeeping housework. It's costing you money...probably more than you think.
Using senior staff members for bookkeeping is like using the pilot of a plane to serve coffee to passengers. The pilot wants to provide great service to the crew and passengers, but who would fly the plane? Is beverage service really the best use of the pilot’s time and expertise?
3. Relying on Manual Data Entry
Some accounting firms lock up entirely too much time on the data entry that’s required for bookkeeping processes. The inconsistency related to manual data entry can almost become a source of panic at the firm—the less reliable and consistent your bookkeeping and accounting is, the crazier things start to feel...and your clients will notice.
The biggest money leak related to manual data entry comes with the introduction of human error. Any accounting professional knows that when the numbers don’t add up—even a tiny little misplaced decimal—big problems arise.
One leading belief on the cost of correcting data entry mistakes says that errors multiply costs exponentially, depending on the stage where they occur. An error caught and corrected at an early stage—say at the initial data entry point—might cost $1 to fix. Later on, that error might lead to another error, which could cost $10 to fix, and so on until your data entry error correction costs your accounting firm thousands of dollars to correct. No bueno!
You might also like: 5 Ways to Avoid Bookkeeping Mistakes
4. Spending Your Own Time to Get the Books Done
You should see your daily time as valuable, and that means you shouldn't need to worry about repetitive tasks like bookkeeping. A lot of the job consists of monotonous data input and number crunching. But let’s be real—it's 2020, and you're free to stop relying on your calculator and start forming real, valuable connections with your clients.
Your time is better spent focusing on strategies to grow your firm. It's just not feasible to do that if you have your nose stuck in the books all day.
How Can Accounting Firms Stop Money Leaks in Their Bookkeeping and Accounting Processes?
We could write a book about how automation contributes to streamlined bookkeeping (correction: we did write a book), solving for each of the aforementioned accounting firm money leaks. But to save time, here are some highlights related to the top four bookkeeping mistakes:
Staff turnover: You're guaranteed to run into bookkeeper turnover no matter which bookkeeping method you choose—even if you outsource to another team, you might need to find a new team in the future. But you can automate your bookkeeping to solve this issue. We promise that bots don’t ever get bored or burnt out!
Misuse of senior staff: Automation frees up your senior staff members to work on more critical projects. They should be client-facing or building ideas for the firm in the back of the house, not doing tedious bookkeeping tasks like categorizing transactions or running reports.
Relying on manual data entry: Humans are imperfect and will make mistakes—even on easy tasks. Automation takes on data entry with greater speed and accuracy, preventing costly data entry errors that stand in the way of rapid client scaling.
Doing the work yourself: It can be tempting for firm leaders to insert themselves into every project, but that’s a bad strategy for growth. Just like delegating tasks to junior staff, automated bookkeeping can help remove the daily load of bookkeeping and accounting tasks on your plate. Then, it's easier for you to channel your time toward what matters.
Moreover, automation powers your firm farther by helping tackle:
Categorization: Automation software can easily handle transaction categorization. A machine is capable of considering hundreds of variables at the same time, while a human must review each transaction individually (which could lead to errors). Automated bookkeeping translates to improved efficiency and accuracy via categorization.
Transaction enrichment: Automation can seek and use contextual information to provide insight into new and old transactions. These insights can then be used to help improve client check-ins and strengthen client relationships, setting the stage for upselling to more value-based services in the future.
Investigation: You can use automation to validate and verify transactions. Some firms use it to produce confidence levels and access suggestions about uncategorized transactions.
Applications for Automated Bookkeeping in CPA Firms
Similarly, automation can help CPA firms take on other essential tasks.
Payroll: Running payroll is a job in and of itself, but automated bookkeeping software makes it less of a stress.
Billing: It's easier to get on-time payments from clients with automated bookkeeping software, collecting recurring payments and freeing up your team's time.
Practice management: Automation helps take some of the legwork out of practice management like assigning tasks to staff, tracking the time they spend working on said tasks, sharing and filing documents, and more.
Expenses: Keeping track of expenses is extremely tedious; it's much easier to use an automated service to track and record them.
Automated Bookkeeping Is Your Fast, Accurate, and Secure Solution
The key takeaway is that automating bookkeeping can solve a huge range of the problems accounting firms face. Common money leaks like improperly utilized staff aren't a problem when your repetitive work is handled by AI. And you can rest assured that your most senior accountants are focusing their attention on pushing the firm forward with their expertise and skill sets.
One of the biggest benefits of automated bookkeeping is the ability to scale—many accounting firms see huge kickbacks in time and spend after they start Botkeeping℠ (automated bookkeeping by Botkeeper), providing them with an avenue toward offering more value-based services for their clients.
If you’re interested in learning more about how automated bookkeeping can usher in a new era of success for your accounting firm, join us for our next presentation drafted by and for accounting professionals!