Do you sometimes wonder why your accounting fees are still high even though you’re using great accounting software?
Any output from accounting software is only as good as the information entered. We frequently find users of computer software use the wrong codes when entering transactions (e.g. GST coded on personal expenses, hire purchase payments coded to fixed assets, general expenses full of unknown entries, suspense accounts with transactions that need to be recoded …). When data has been coded to the wrong place, time must be spent correcting that data entry. Generally speaking, the use of a computer system doesn’t lead to accounting fees reducing until the software is being used properly.
Good accountants will offer to review your accounting software and provide you with recommendations so transactions are coded properly. As you use your accounting software better, the services offered by your accountant normally shift from that of compiling the data to providing advice on how to do better based on the data which means your accounting fees won’t necessarily decrease.
What can you do to help keep your accounting fees under control?
In most cases, accountants charge on a per unit basis and their units can be minutes, six minute blocks, 15 minute blocks, or hours. Therefore the longer your accountant spends with you, or on your work, the more it will cost you. If you want to keep your accounting fees down, here’s eight ways we know can help:
1. Negotiate a fixed price – You may be able to set a price with your accountant for the type of work you need which is cheaper than if you allowed them to charge on a time basis. Setting a price also means it is in your accountant’s best interest to get your work done quicker so they do not lose money. Time based jobs tend to result in an accountant’s inefficiencies being passed on to you so there is no incentive for your accountant to improve their services.
2. Outsource basic accounting tasks – Outsourcing some of the more basic accounting work to a student or bookkeeper rather than your accountant can help reduce your overall accounting costs. Students or bookkeepers are normally cheaper on an hourly rate than that of accounting juniors in an accounting firm. This tends to work well for the more routine and process type work like data entry, scheduling or summarising information, and reconciling bank statements.
3. Provide all the information in the first instance – In most cases, high accounting fees are a result of your accountant not being given the information they need and they then have to continually chase you or third parties for that missing data. If you can provide your accountant with all the information they need at the beginning of your work then:
- Your work is done that much faster.
- The chances of your work being picked up and put down by your accountant again are reduced. Every time they pick up your work there is some time spent ‘re-familiarising’.
- There is less of a chance your work will be passed to another staff member due to the current staff member no longer being available.
- The overall time is reduced (and so is your final cost).
- If your accountant does need additional information, you may want to consider doing most of the running around yourself (e.g. calling banks/solicitors, collecting statements …) as opposed to your accountant doing it. And provide it quickly and in that way your work will still be fresh in your accountant’s mind.
4. Summarise and reconcile as much as possible – In the case of financial statements, providing a fully reconciled cashbook or balanced accounting software data will be much cheaper than walking in with a shoebox of bank statements, invoices, and cheque books. The same rule applies to anything you give your accountant. You will end up paying your accountant if they have to spend time reconciling or summarising information you give them.
5. Understand the computer packages you buy – If you use a computerised accounting package to manage your accounting then you need to make sure the information that is processed is accurate. It is no myth “garbage in, garbage out”. We have seen our fair share of accounting systems used poorly resulting in greater accounting fees for clients than in prior years. One way to ensure your computerised accounting information is not ‘garbage’ is to have your accountant review that information prior to the tax year end.
6. Prevention is much cheaper than cure – Before undertaking any major transaction, you should talk with your accountant first. Most major transactions have tax consequences, and those consequences can generally be fixed quicker and cheaper before you complete the transaction. If you ask for advice regarding a transaction afterwards, it is usually a lot more expensive to fix any negative tax consequences if you got it wrong (if indeed they can be fixed or reduced at all). It may cost you a little getting confirmation beforehand, but knowing you are doing it right can save you a lot of time, money and stress later.
You can also forewarn your accountant of any unusual events so they know what to expect and can ask you for any relevant documentation beforehand.
7. Your time versus your accountant’s time – Ask yourself the question “can I attend to this without contacting my accountant”? There are times when we have been asked to provide copies of financial statements or tax returns which you may already have in your possession.
Of course, it is possible that it will cost you less by having your accountant do something for you than you doing it yourself (once you take into account the time you spend finding what you need versus the time you could have spent selling your product or service in your business), in which case we would be remiss if we advised you to do it yourself. Just be aware your accountant is likely to charge you for their time to source what you want.
8. Improve your accounting function – If your accountant is not advising you on where you can make improvements, then ask them… or find an accountant who does offer suggestions for improvement. By making improvements each year (they do not have to be large ones as small changes made consistently over a number of years can lead to large results), you can improve your business results (so you can afford to pay higher accounting fees), or alternatively reduce your current accounting fees.