On 1st July 2000, Australia introduced the GST. One of the initial impacts was that most businesses had to start maintaining proper records to account for GST paid and charged. Computer stores had bulk displays of bookkeeping software such as QuickBooks and MYOB, which many SMEs saw as the magic bullet to their problem.
Accountants and bookkeepers spend a lot of time honing their skills to deliver services, whether manual or software based. Understanding the principles of accounting is essential for anyone using a software package. Some business owners undertake training in basic bookkeeping principles to use in conjunction with software, but many don’t.
There are many unintended consequences of making poor decisions about bookkeeping requirements. One of the visible costs is the extra fees to accountants, who must charge more for fixing errors in bookkeeping software packages.
Another is the strain on family and personal relationships. Often, in a family or partnership business, one of the parties takes on the bookkeeping role without proper training or experience. Nobody asks the question, “If I was hiring from the outside, would I hire somebody with no skills or experience?” In many cases, this is when the blame game starts. The business owner gives their partner the books “to look after” and abdicates responsibility for their accuracy and usefulness. They then get frustrated with their partner and the constant queries from accountants.
Then there are the invisible costs, which include bad debts, cash-flow disruption as people do not allocate money for GST & PAYG liabilities correctly, payments to suppliers not being made and stopping credit.
It’s critical that business owners understand their finances. They are better off getting their significant other to read and action accurate financial reports, which may cover things like profitability, cash flow, accounts receivable and debt collection, and planning cash flow for the future.
Bookkeepers charge varying amounts depending on their skills, experience and overheads. The issue is not how much they charge per hour, but what value they bring to the business.
I encourage any business owner who has a family member or life partner performing the bookkeeping function to ask these questions:
- Do they really want to do it?
- Are they competent to do it?
- What is the cost of inefficient bookkeeping to the business?
- What is the cost to the relationship?
We can always get more money, but we cannot get more time. There will always only be 168 hours in the week, so you must decide which is a more efficient use of your time – a DIY approach to bookkeeping or hiring a bookkeeper.
I help small business owners find clarity and a way forward. Contact me at email@example.com.