4 Big Virtual Bookkeeping Roadblocks… and How to Get Past Them

virtual_bookkeeping_roadblocksWithout a doubt, the hottest thing in the freelance bookkeeping world is taking your services online and working on a virtual basis with your clients. Nearly all of us recognize immediately the advantages to working from your home office instead of traveling to meet or service your clients’ bookkeeping needs on-site.

Just a few of the delicious advantages are…

* Geographical boundaries are expanded. You can work with clients no matter where they are located, as long as they have a high-speed Internet connection, which the vast majority of clients now have.

* More efficient and profitable. You can work more efficiently and rack up more billable hours because you’re not wasting time traveling and can batch your work for streamlined workflow from one client to the next.

* More flexible schedule. You are not confined to “normal working hours” to get your client work done. That means you can be more available to your family, as well as work during the time of day when you are at your best.

But these advantages and freedoms also creates some new challenges that can be easily overlooked until you’re already in the thick of it. Working through the Internet can be tricky. Let’s explore the top 4 virtual bookkeeping challenges we face so you can get past them in your  own business and set yourself up for true online success.

#1 – Clients

Without clients you don’t have a business. Yet there will definitely be clients you wish you didn’t have. The good news is, you don’t have to work with clients you don’t like! Talk to your boss (you!) about the problem and get permission to work only with the clients you WANT to work with. If you find that you’ve gained a client or two that isn’t a good fit, decide on a cut-off date for the relationship to end. Do what you said you’d do for each of them, and then refer them to to a fellow bookkeeper who would be happy to have the as a new client(s).

In fact, this is the very reason that I recommend using a “win-win or no deal” clause in your engagement letters for ALL clients. (You ARE using engagement letters with all your clients, right?) It works as your insurance policy from ever getting stuck with a client that is, or over time becomes, a PITA client.

Other steps that protect you from getting stuck with undesirable clients in the first place include…

* Defining an “Ideal Client” profile and keeping that handy whenever a new prospective client calls
* Defining one or two specialty services (so you’re not doing work you don’t want to do)
* Create internal systems to support good client relationships

#2 – Cash flow

As a service provider you only make money when you perform the bookkeeping work you’ve been hired to do, whether month-to-month work or projects. This can make cash flow a real challenge. If your cash flow starts to dry up, you can get yourself into trouble fast.

Here are a couple strategies that can help…

  • Treat yourself as one of your clients and set up a business budget that allows for business savings. This will give you a cushion to work with if / when you hit a slow patch. You’ll also want to allow some funds to support consistent marketing so you can keep your pipeline of new client prospects full.
  • Make it easy for clients to pay you quickly and regularly. If you aren’t already accepting e-check and credit card payments online, set up a PayPal account for your business and switch monthly clients to a flat fee. That way you can use the “subscription” function for automatic payments. This is a win-win situation for both you and your clients.

#3 – Proactive Communication

When I hear from virtual bookkeepers who complain constantly about their clients, I listen for what they see the problems are. Often it boils down to the bookkeeper waiting for the client to lead the relationship, especially when it comes to getting the information needed to complete the monthly payroll or bookkeeping. What doesn’t seem to occur to them is that WE are the ones who should be taking the initiative to foster frequent and productive communication with our clients!

Here are a few simple ways to immediately shift from reactive bookkeeping clerk to proactive bookkeeping professional…

  • Pay attention to each client’s preferred mode of communication and use that primarily (you should also note it on your internal client files as well for future reference when you delegate the client work to your staff)
  • Set a specific schedule for regularly communicating with each client to assure that work gets done on time without unnecessary log jams due to lack of communication. That is part of what the clients is paying you for – to help keep them on track!
  • Pick up the phone when necessary to handle urgent matters quickly and professionally. Remember your clients are busy people and have many other demands pulling at them too.

#4 – Time Management

When you run your business from home, you get to set your own working hours. But if you’re not good at managing your time, you could end up working around the clock. In addition to client work, you have a business to run! That means administrative tasks like invoicing, paying your own bills and email are added to your daily to do list. Add to that family responsibilities and you have a schedule bursting at the seams!

Here are a couple tips for staying focused and productive…

  • First thing in the morning (before reading email) identify the most important 3-4 tasks you’ll focus on for the day (no matter what) – then get the first task done immediately!
  • Before approaching a task, estimate how long it will take you to get it done, and then use a countdown timer to help you stay focused. (This can even be fun!)

Personally I use a cool tool called “Action Enforcer” to do both of these at the same time.

There’s no question about it! The benefits of working virtually far outweigh the challenges. By taking just a few simple actions, you can almost completely remove these success roadblocks and build your own highly profitable virtual bookkeeping business.

By the way, if the idea of setting up a virtual freelance bookkeeping business is something you’d like to take a deeper dive into, then you’ll want to join hundreds of other freelance bookkeepers who have taken their business online and check out my full-blown training course.

The Insider’s Guide to Your Own Virtual Bookkeeping Business

If you’re already working virtually, but feel like you need to crack the code to success, you find The Freelance Bookkeeper Success Formula a short-cut to getting what you want from your business.


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Virtual Bookkeeping: Is Data Entry a Thing of the Past?

bookkeeper_data_entryMore and more freelance bookkeepers are using online tools and automation to provide virtual bookkeeping services. The fast advances in technology is having a big impact on how we get the bookkeeping done for our clients. In fact, the goal of some virtual bookkeeping practices is zero data entry.

Is that really possible, and what impact does that have on your business?

Since I’ve run my own business 100% virtually since 2003, I get lots of questions about making the switch to online tools to get the books done more efficiently. In fact recently, one of my students asked if there is a way to scan client’s receipts directly into QuickBooks.

While I don’t know of a tool (yet) that is quite that streamlined, at least not “out of the box,” here’s what you’ll find available to save on data entry time (some of these may be built into software you’re already using!)

There are three basic categories of tools: Scanning solutions, bank download solutions, and what I call bridging solutions. Let’s take a brief look at each of these.

Scanning Solutions

Running with this idea of scanning receipts, there are tools that can scan your receipts and using OCR (optical character recognition) technology, they extract the needed information and summarize it for your review and manipulation. Some of them do integrate directly with QuickBooks.

A couple examples of these are ScanWriter and Shoeboxed.

ScanWriter is a very powerful tool and works with all kinds of paper-based data that you want converted to transactions and imported into QuickBooks. The downsides to this solution for solo freelancers is the cost, the set up and the learning curve. If you have a client who has a large volume of transactions on a month-to-month basis (or a big catch-up bookkeeping project), this is a great solution and worth the investment of time and expense. But if you serve small clients and documents are not used consistently, this probably won’t fit your needs (or budget).

Shoeboxed has come a long way since its humble beginnings and is worth taking a look at if you have clients who are still paper-based for the majority of their transactions and are resistant to participating in the conversion to digital information. Shoeboxed even makes the scanning easy because they will do it for you! Simply send them your paper source documents and they will scan them (in a secure environment), use OCR technology to extract the information and now they will even send it to QuickBooks. Again, I recommend this service if you have regular month-to-month clients, since it is a subscription based service. The cost can easily be built into your fees.

Bank Download Solutions

QuickBooks, (and I would guess other) desktop software, makes it possible for you to pull your client’s bank transactions into the bookkeeping records to eliminate the initial data entry. Most online bookkeeping software programs do the same (many of them much more elegantly than the desktop programs, in my opinion). A few examples of online bookkeeping that works well with bank downloads are QuickBooks Online, Xero, Wave and FreshBooks.

With more and more clients doing the vast majority of their transactions without paper, this is a great way to get the initial transactions recorded. You may, of course, still need additional documentation. This is especially so when clients use bank debit cards, since the banks often provide precious little information about these type of expenses / withdrawals.

If you are not using bank downloads yet, this would be your best first step toward reducing much of your month-to-month bookkeeping data entry.

Bridging Solutions

Some transactions are not as easily linked to the bookkeeping records. Especially when you are dealing with desktop software. An immediate example that comes to mind is PayPal. Many businesses use it, but it’s not always an easy thing to get the many transactions (especially if your clients use it for online purchases and/or sales) into the desktop software. PayPal themselves provide a “simple” method to pull the data into QuickBooks, though honestly, I would NOT recommend it. It over-simplifies the income and expense reporting and would need a good deal of massaging for meaningful use of that information.

A tool that is invaluable as a bridge into QuickBooks is the Transaction Pro Importer. While there is a bit of a learning curve and set up, this tool (available for both for QuickBooks desktop and Online versions) will help you to pull in electronic data in exactly the manner you want it to appear in your QuickBooks file. This is a QuickBooks-exclusive tool and will not work for other software programs.

If you are using other software for which you’d like to find a more automated way to pull in transactions without data entry, you may need to do some searching to find tools that will serve as the gateway to your bookkeeping program and the transaction data source. With so many apps available, though, it’s worth the search!

What Technology Cannot Do (not yet anyway)

With data entry going away, does that mean that the need for bookkeepers will also disappear?

The answer is a resounding NO! While technology is removing the need for mindlessly typing in data, even with it getting “smarter” at an astounding rate, human oversight and management is still needed! There will continue to be adjustments and corrections needed. As humans, we also are the only ones who can put meaning into the financial information and understand the actions that need to be taken because of what the numbers are telling us.

That, of course, requires us to step up our game as bookkeepers and use the time we save with automation to provide higher level services to our clients. And we are in the perfect position to do so! In fact, I predict that the most successful freelance bookkeepers will be those who provide management and consulting add-on services to their clients.

That’s the direction I’m headed in with my own business, and it’s also the topic of this month’s training lesson in The Freelance Bookkeeper Premium trainings: Client Budgeting, Forecasts & Value-Added Services

What about you? Have you found ways to eliminate data entry in your business (or at least streamline it)? What have you found most helpful with the modern technology in your freelance bookkeeping practice?


Virtual Bookkeeping: Working With Clients Remotely

virtual-bookkeepingI often get the question from traditional freelance bookkeepers and those considering starting a freelance bookkeeping business regarding virtual bookkeeping…

“How do you provide bookkeeping services when you are not at the client’s location?”

In fact, just this past weekend I got an inquiry about whether it is viable to work with clients using cloud-based bookkeeping software while living abroad. And my answer to that question was, Absolutely!

Why You Want to Work Remotely With Clients

Most freelance bookkeepers need little convincing that working from their own offices instead of traveling to the client’s location (whether across the street or across the state or beyond) has lots of benefits. But here are just a few of them…

  • Convenience to work on the client’s books on your own schedule
  • Save time and expenses associated with travel
  • Maximize your billable capacity, since the time savings allows you to serve more clients

What are the Challenges?

As with any situation, working on a virtual basis does have challenges, but these are beginning to pale due to improvements in technology and client trust of online productivity methods.

For you, as with anything new, there will be at least some learning curve and adjustment of your workflow procedures. But the rewards are well worth it and staying up to date on new ways to work with clients via the Internet also positions you as a true professional and may even allow you to raise your fees.

How to Do It

There are three basic ways to work virtually with your clients that leverages cloud technology (with a fourth way, that is really a return to days of old, which I’ll mention briefly)

  1. Remotely connect to your client’s computer to perform the bookkeeping, nearly in the same way as you do now if you work on site.
  2. Work via cloud-based bookkeeping software through a web browser with your own unique and secure log in.
  3. Work using the same desktop software you’re used to, but accessing it via the web using a hosted virtual desktop.

The possible 4th alternative is to simply provide complete bookkeeping for your clients where you produce the monthly reports and consulting. They won’t have access to the books. To do this you could use either cloud-based or desktop software.

This last method is a return to the “olden days” of when the accountant (or bookkeeper) took care of everything and the client had no access to their bookkeeping records at all. In some cases, clients have decided that they’d rather not be doing the bookkeeping, but would rather leave that to the professional (you). All they need are the financial reports to keep tabs on their business.

In my own business, I’ve been working with clients 100% virtually since 2003. Several years ago, that usually meant we used the remote connection option (since most of my clients are very small businesses). More recently, my clients are working more and more with online bookkeeping programs (I support QuickBooks Online, Wave and FreshBooks). I have only one client that uses a hosted desktop, but this is also a very popular option for those who need the power of desktop software and the convenience of anytime, anywhere access.

Which virtual bookkeeping options are right for you? Much of that depends on the type of clients you serve and the functionality that will work best for both you and your clients. If you’d like to learn how to move your bookkeeping services to the cloud, or start your new virtual bookkeeping business for 2014, now is the perfect time!

To help more bookkeepers move to working virtually with their client… and even help find NEW clients who want to work via the Internet, join me in my popular Insider’s Guide to Your Own Virtual Bookkeeping Business

Are you already working virtually? What methods have worked best for you and your clients?

Your Bookkeeping Specialty: How to Stop Working So Hard

general bookkeeperDo you feel like you’re struggling in your bookkeeping business?

If you’re running a general bookkeeping service business, you might be working much too hard to turn a profit.

When you try to be the bookkeeper for any client that happens to come your way, it means that you…

  • Do not stand out as any better or different than any other bookkeeper (commodity)
  • Do not have any particular expertise or skill, so cannot charge premium rates
  • Cannot easily identify where or how to market your services
  • Are prone to make more bookkeeping errors due to lack of knowledge of the client’s type of business
  • Cannot work efficiently because every client is different and has a learning curve and at least some unique service needs

Is it any wonder that you may be facing a BIG challenge to…

  1. Attract and retain new clients
  2. Work efficiently and profitably
  3. Grow your business

Yet most bookkeepers I talk to resist the idea of having a specialty, even though…

Specialists can charge more while working less

You’ve probably heard me say this before, but I highly recommend that if you have not already started specializing in your bookkeeping business, you need to do it. While many bookkeepers are afraid to narrow down who they accept as clients, the truth is when you specialize and become an expert in a particular type of service or in a specific industry, you will attract more clients.

If you are a struggling generalist, it probably feels like clients are hard to find. That makes you afraid to turn anyone away, even when they don’t fit your specialty. That’s why I hear admissions like this that are self-defeating (though I do understand the feeling behind the choice)

“I recently agreed to take on a client who desires [something I don't offer] …He is not an ideal client, but I need the client at the moment.”

This is an excerpt from an email from an established bookkeeper asking for my advice on how to work with a new client who wanted what she didn’t offer as standard, and wanted it at a lower rate than she typically charges. Note WHY she was willing to take on a client that was not a good fit (and she felt she needed help to learn how to work with him).

Without knowing much more about the situation, I will predict that this working relationship won’t work out well, especially for the bookkeeper, but ultimately for the client too.

In reality, many small businesses that would be a good fit are in need of your help, but can’t find you because there is nothing about the positioning of your bookkeeping services that attracts them.

In a recent survey by Intuit, the makers of QuickBooks software, most small businesses said that what they want from their accountant and bookkeeper is to understand the uniqueness of their business to help them with their financial needs.

That means if you specialize, you can go deep on the specific needs of your clients.  That is, expert bookkeeping services that will be a valuable solution to their recordkeeping challenges. Value they will be glad to pay you for!

Especially in this economy, your clients are going to be looking for ways to maximize cash flow, maximize profit, and minimize expenses. Who is in a better position to help them than you?

So if you want to become more valuable to your existing and future clients, and attractive to “good fit” clients, then you want to specialize in a specific type of service or industry (or both).

An example might be QuickBooks training services for non-profit organizations.

How to specialize

Many bookkeepers also hesitate to specialize because they have no idea how to do it. There are several ways to go from general to specialty, but the quickest way is to look at your existing skills and experience.

What type of businesses do you already have as clients?

What types of bookkeeping jobs have you had in the past?

What have you done as a bookkeeper that you noticed either your boss or your clients especially appreciated or praised you for?

The answers to any of these questions can provide a clue as to where your special skills lie and also where you may have knowledge that is especially valuable to specific types of businesses.

HINT: If you still feel like you can’t find a specialty, ask business owners that you happen to meet in your everyday life what their biggest challenge is in their business right now. Then, just LISTEN. Can you provide solutions to these issues?

You can also visit small business discussion groups on LinkedIn and “listen in” to see what they are discussing. Participate in those conversations as appropriate, and you might naturally find your specialty.

Bottom line, if you can make your services more valuable and become an expert, you can definitely raise your rates and attract higher quality clients.

So what’s your specialty going to be?

By the way, if you have figured out your specialty, but still feel intimidated at taking the next step and marketing your services to your Ideal Clients, you should join us this month in the TFB Premium training, “Effective Bookkeeper Marketing for Introverts


Freelance Bookkeeping: How Much Should You Charge?

freelance-bookkeeping-ratesHow much you should charge for your freelance bookkeeping services is always a hot question. But I had a question come in from one of the members of TFB Premium that shows how important it is to have the right mindset first, whether you decide to charge by the hour or package your services using a flat rate method.

I want to respond to some ads in the local paper looking for bookkeepers, I want to respond as a freelance bookkeeper not an employee. What is your suggestion on the best way to do that?

Here’s my response to this question:

While this could be a way to get new clients, you need to be VERY clear on what you want and the type of clients you will accept (and at what rate).

The downside to approaching potential clients this way is that they have already decided that they want to hire an employee. That means someone on-site that they control and that they decide when they will work and how much they’ll pay the bookkeeper.

If you’ve hired employees yourself, you know that hiring is very expensive and time consuming (and employees aren’t easy to let go either).  There’s a commitment on the potential client’s part when they come to that hiring decision.

As a freelancer, you are a fellow business owner. You provide leadership as a professional and get paid at a professional level, not at the rate an employee gets paid. The potential client is thinking about employee hourly rates, not professional freelancer rates. So they may have some sticker shock when you mention your rates, and you run the risk of accepting a rate that they dictate that will be too low for running your business.

When approaching this type of potential client, you do not want to have the mindset of filling the role of the employee position. Instead, you want to be offering them an alternative solution to their need and focus on all the benefits to them (such as no payroll costs, don’t need to provide office space / equipment, no management or training required by them). They will (and should) pay a higher rate, but will get a far superior result over hiring an employee that will save them time and long-term costs.

So it comes down to your own mindset and confidence. You need to be rock-solid clear on…

  •  Who your Ideal Clients are and whether this business owner fits that profile
  • What your rates are for the services they need
  • How you plan to fulfill those needs (working on-site is not recommended)

I recommend that if you cannot find a win-win working arrangement with these types of potential clients, that you walk away. DO NOT accommodate anything they want just because you need new clients. In the long run it will not turn out well for either of you.

Many freelancers starting out are tempted to go this route. It can turn out well, but most often it does not because the freelance bookkeeper is not focusing on what is most important in her business. But if you know what you are looking for in a client and are clear on your rates, the potential is there to snag a few new clients that you’ll have for years to come.

Of course, this begs the question, if you haven’t figured it out yet…

How Much Should You Charge Compared to an Employee

Often new freelance bookkeepers reason that they can charge the going rate for a bookkeeping employee and do quite well. This is faulty thinking!

What they don’t realize is working for yourself is much more expensive than working as an employee. When you work for yourself you need to cover your own employment and business expenses, such as…

  • Taxes an employer usually pays (the other half of FICA / medicare)
  • Business taxes and license(s)
  • 100% of your health insurance
  • All your own equipment, software and Internet services
  • Time spent on administrative non-billable tasks
  • Billable time lost to vacations, holidays, sick time, etc.

In short, your fees should be based on a rate that is at least twice as much as a bookkeeping employee’s salary, so that you can cover all the additional costs, with enough left over to pay yourself.

If potential clients expect to pay less than that, they have disqualified themselves as viable clients because they don’t recognize the value of your professional level services. Quality clients realize that skilled professionals deserve to be paid more than the hourly rate they might expect to pay an employee.

One way to get out of the employee mindset AND not have to argue over hourly rates with potential clients is to use a flat rate fee structure. If that’s what you’d like to do with your business, then you may want to join us in TFB Premium this month, since since you’ll learn…How to Create Proposals & Package Your Services

So, have you found answering want ads to be an effective way to get new clients at a profitable fee level?


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