The Virtual CFO

Flat $100 a Month Bookkeeping Services, You Get What You Pay For, Part 2

In my last post, I stated that you get what you pay for when you use flat $100 a month bookkeeping services. I’d like to give you an example of how using such a service can keep you from knowing that your company is experiencing a loss, which may prevent you from making changes in time that could mitigate your losses.

(Caveat: whenever I tell a story about a client or prospect, I change the facts in the story to protect the confidentiality of the client.)

In December 2006, I met with a prospect who had recently discovered that his construction company was going to lose money for the year.

This person opened his company in March 2006. His firm built custom enclosed decks with accessories such as hot tubs, grills, and entertainment centers. Between July and October of 2006, he built eleven custom decks. In September, the owner became very uncomfortable with the financial performance of his company. He was particularly concerned with the material and subcontractor costs that were running over budget. (As a construction company CFO, I learned to listen to the gut feelings of project manager/owners. Most of the time, their intuition is the first sign that a job has started to go bad or lose money.)

Each month, he was presented with a profit and loss from the accounting system the bookkeeping service used. In September and October, the financials showed that the firm was showing a profit. Several times during September and October, the owner asked the bookkeeping service to verify that the profit was accurate. He was repeatedly assured him that profit being reported was correct. Through October, the company was showing approximately a $3,000 profit.

In mid-December, the bookkeeping service presented him with the November P&L. The owner was shocked to see that for the year he had lost $7,000.

This is when the owner called to me to schedule a meeting. In our meeting, he requested that I prepare a set of financial statements so he could see what the actual financial performance if his company was.

I’ll finish this story in my next post.

$100 a Month Bookkeeping Services, You Get What You Pay For

Over the last month or so, several people have called CPA for Small Business to ask if we would be able to perform all of their bookkeeping activities for $100 a month. They wanted to know if we could perform the data entry, close the month out, prepare a profit and loss statement, as well as prepare all necessary tax returns (sales tax, payroll tax, state unemployment tax, etc.) for this price.

My answer was that I do offer clients flat rates for monthly bookkeeping services, but that the flat rates are based on the time involved in providing the services. In each conversation, I said that I couldn’t commit to $100 a month charge without understanding the volume of work that would be involved. If they had approximately $100 worth of work a month, I would be glad to commit to a flat $100 a month charge.

Each of these callers said:

1. They were currently using a $100 a month bookkeeping service,
2. They were dissatisfied with the service they were receiving from the $100 a month bookkeeping service, and
3. They were looking for someone who could provide them with better and more responsive service for the same price.

I believe that this is a classic case of getting what you pay for.

I really don’t see how a $100/month bookkeeping service can provide all small business owners with the information they need to run their companies. Granted, I have clients who have $100 or less a month of work. But my experience is that this is the exception instead of the rule.

I was originally going to rant about this subject, but I realized that I had used one of the bookkeeping services that is offering $100 a month bookkeeping in Nashville. Several years ago, I was the financial manager of a company that used one of these services for a subsidiary. I was very satisfied with the service they provided. At the time, they charged per hour for the work they performed and the monthly charge was usually greater than $100 each month.

I believe they are offering the $100 a month in order to compete for and retain clients in Middle Tennessee. I don’t believe that bookkeeping services are a commodity, but the $100 a month offerings may indicate that some think it is.

Fortunately, CPA for Small Business offers a greater and different level of service than bookkeeping services can. My clients appreciate the level of service and financial management guidance they receive from CPA for Small Business.

CPA for Small Business eBay Store: Accounting System Setup Services

One of the most popular services we offer at CPA for Small Business is Accounting System Setup Services. This is where I set up an accounting system for small business clients to use. We also provide the client with written procedures for the task that the client will need to perform on a regular basis.

We also offer Business Accounting System Setup Consultation, which is for those who are unsure of what small business accounting system is best for their business. With this service, I evaluate your needs and then recommend the accounting software I believe is best for your company. You will also receive an estimate of the costs for developing the accounting system up for you.

Currently, there are two excellent products on the market for small businesses, Microsoft Office Accounting and QuickBooks. With the Accounting System Setup Services, we can help you with either of these products.

I am the one who provides these services. During my career, I have been responsible for the design and implementation of numerous accounting systems. These systems range in size from a stand-alone small business accounting systems for sole proprietors to a Microsoft Dynamics Navision based Enterprise Resource Planning (ERP) system for a manufacturing/retail company with multiple locations.

OK, It’s Been a Week

I know, it’s been a week since I wrote that I was going to get back to posting regularly. The next time I make such a statement, I’ll look at the calendar to make sure that a tax due date is looming.

Corporate tax returns were due today and I was rather busy last week helping clients with their corporate returns and financial statements. As I’ve written before, servicing my clients is my number one priority. Blogging is secondary to helping clients.

Now I’m ready to start posting again regularly. And I did check with my tax calendar before writing this post.

Under the Weather and Playing Catch Up

I haven’t blogged in a few days. Last week I was under the weather and didn’t get productive until last Thursday afternoon. Since then, I have been playing catch up with the work I am doing for CPA for Small Business clients.

I am almost caught up and will be back to blogging regularly next week.

Thanks for reading The Virtual CFO Blog!