3 Considerations to Make When Choosing Online Bookkeeping Services
Whether you’re looking to offload your bookkeeping or modernize your back-office, online bookkeeping services are a sure-fire way, to gain greater efficiencies, have access to more real-time data and to tame what has traditionally been a frustrating, disorganized part of your business.
But before you go ahead and sign up with a provider, there are a few considerations that need to be made.
Let’s take a look:
Consideration #1 – Selecting the right tools
Most businesses that are moving their books to the cloud are needing to make the switch from a desktop oriented accounting system to a cloud-based accounting platform. Online bookkeeping is simply not possible without cloud-accounting software (unless you go the hosted desktop route, but we won’t get into this here as I don’t think that there is any reason to go down that route nowadays).
By having your books in the cloud you and your bookkeeper can work remotely together, share the same information no matter where you are and have a much cleaner dialogue for any questions that may arise as the books are getting updated. There’s no need to send files back and forth through email anymore. With a bit of screen-sharing, you and your bookkeeper can collaborate in a way that’s simply not possible with desktop accounting systems. With improved collaboration comes improved efficiencies.
There are loads of options for cloud accounting software, but if you really want to have your setup handled as remotely and as streamlined as possible, you’re going to want to choose a cloud accounting system that can integrate with a variety of 3rd party apps as well as one that can ease the workflow between both parties. Xero and QuickBooks Online are the leaders when it comes to this (more info on picking the right cloud accounting software for your business here).
Without going into too much detail, 3rd party integrations are important to smooth workflows and to streamline processes that are unique to your particular business.
One app integration that we always leverage for online bookkeeping is an app that can handle expense management, such as Receipt Bank. Currently, you might have a workflow that involved collecting all your paper receipts in a shoebox or organizing all of your electronic receipts in your inbox. But how is this then sent off to your bookkeeper? It usually involves sending a bunch of emails back and forth or meeting your bookkeeper in person to hand everything off.
An app like Receipt Bank will streamline this process by allowing you to snap pictures of your receipts with your smartphone or forward electronic receipts from your inbox directly to the app. From there, your bookkeeper will not only be able to access this data, but can also push it directly into Xero or QuickBooks Online. In my opinion, an app like this is mandatory for online bookkeeping and it is only made possible thanks to the 3rd party connectivity that these cloud accounting systems allow for.
In order to receive the full effect from your online bookkeeping services, choosing the right tools and technology is essential as this forms the basis for the service offering.
Consideration #2 – Implementing & communicating the correct processes
When you take advantage of an online bookkeeping service, it’s important to clearly define workflows and processes at the beginning on both ends. You need to know what you need to do and your online bookkeeper needs to know what they need to do. If not, it all falls apart
When moving the books towards a totally virtual experience, no doubt your workflows will change. For instance, instead of collecting your receipts and organizing them in a shoebox to hand off to your bookkeeper every so often, you should be getting into the habit of immediately snapping pictures of your receipts or forwarding them to an app like Receipt Bank if it’s being used. The workflow thus changes from compiling these receipts every so often to immediately sending them off to Receipt Bank as they occur. It’s simply a change in habit that one must get used to.
To give you a real life example, usually our customers have 2 responsibilities when it comes to us providing online bookkeeping:
First, they need to send expense items to Receipt Bank on a timely basis. This process has already been outlined above, however it must be communicated to the business owners that we’re working with. If not, they have no idea that we want to get this data as quickly as possible in order to update the books in a more real-time fashion.
Second, we use the note taking feature in Xero to communicate back and forth with the business owner on any items that require their assistance. For instance, if there is a charge on the bank statement for $189 and we cannot reconcile or identify it, we leave a little note next to it in Xero to ask for some clarification. We not only need to implement the process, but also communicate to the business owner that any questions of this nature should be left in Xero, outside of email.
When you’re physically in the same room as someone, you can sometimes get away with processes that are a little sloppier since you can just sort through things together face to face. But when you work remotely, processes have to be crystal clear in order to prevent everything from falling apart.
Implementing the correct processes are just as important as communicating these processes to everyone involved. If everyone is not on the same page, then it doesn’t matter how good the process is, it all falls apart. Once you move away from a traditional bookkeeping setup to something a bit more modern, keep in mind that workflows will change and that the processes will need to be clearly defined and communicated at the get-go, otherwise the transition will surely backfire.
Consideration #3 – Deciding what needs to be outsourced
Whenever you change bookkeeping providers, it’s a good idea to define what “bookkeeping” actually means in order to make sure that nothing slips through the cracks. For most people, bookkeeping refers to entering and reconciling financial data in an accounting system. For others, it can also mean processing payroll & paying suppliers. Either way, it’s a good idea to define what will be taken over so that there are no surprises when switching to an online bookkeeping service.
Online bookkeeping is spectacular but…
… you need to follow the 3 considerations above closely. If not, the efficiencies that you’re trying to create will surely backfire. I personally love the fact that with online bookkeeping everyone can work way more efficiently which in turn translates into having your data in a more real-time fashion. But all this is not possible if you don’t take the correct precautions.
