Freelance Bookkeepers: Are Your Fees a Problem?

Whether you’re just starting out in your freelance bookkeeping business, or you’ve been doing it for years, the topic of fees is always a hot one.

That’s because fees are a work in progress and something we’re never quite “done” with forever. We all need to keep the balance between how much you charge for your bookkeeping services, and the fees clients are willing to pay.

Why you probably need to raise your rates

One of the biggest obstacles to overcome, especially for new or emerging freelance bookkeepers,  has to do with fees.

This is especially tough when trying to expand a meager client base. The complaint I often hear is:

“Prospective new clients say they want bookkeeping help, but don’t want to pay anything more than a slave’s wage ($15/hour or less)!”

It seems like a catch-22. You need to get clients to make money, yet the clients either don’t have the capacity to pay your fees or they don’t value your services enough to agree to your rates. How, then, can you even grow your business, much less consider charging more?

Quite frankly, the problem is not with these potential clients and what they expect. The problem is more likely a combination of how you are approaching new clients and your fees:

1. Who you offer your bookkeeping services to
2. Your fees are just too low

To address the first point, if you accept just anyone as a new client, likely you will end up taking on more than a few “undesirable” clients. While you may need the income and they may need the help, these should not be the only criteria for accepting a new client.

We all need to recognize when a potential client does not “qualify” to hire you!

Simply put, you need to come up with a list of specific qualifications for the clients you are willing to work with – and then stick to it. Think of it like a job description in reverse – if they don’t qualify, you move on, looking for a better fit. Otherwise, it just won’t turn out well for anyone.

Your Ideal Client checklist will protect you from accepting “unqualified” clients whose main focus is getting your services at the cheapest price possible.

This leads to our second point regarding fees…

Your Fees Are Too Low

How do you know if your fees are too low?

The short answer is when you are working too hard and just barely turning a profit (if you are making a profit at all), then you’re not charging enough.

As a business owner, you have many more costs than those of an employee. Therefore, you should NOT set your rates at the same level as a bookkeeping employee would get paid. You simply won’t be able to stay in business if you do.

Also, if you set your rates so that you are the “most affordable” bookkeeper in your area, you will also attract the worst type of clients – those who either can’t afford professional level services or who simply do not realize the value of accurate financial records to manage their business effectively.

To find out at least what average pricing for freelance bookkeepers is in your area for comparison, you can review the bi-annual Intuit Rates Survey as a starting point.

How to implement a fee increase

Once you’ve decided to raise your fees, then you face the question of how do you roll out your new rates, both to existing clients and to new clients.

Raising your rates is easiest when handling new client inquiries, since they don’t know what your previous rates were. You may be pleasantly surprised to learn that many of them will gladly accept your new rate.

For existing clients, you can decide on a case-by-case basis whether an increase is warranted. The easiest way to approach this is to target the bottom 20% of your clients. You know, those who are difficult to work with, always asking for more free help and are slow payers. By raising their rates you will likely cause them to decide to go elsewhere.

This is a no-lose situation for you. Either they leave and make room for higher paying clients, or you get paid better for the grief they cause you. Either way, you’re better off!

The hardest part is mustering the courage to just doing it! In fact, yesterday received a message from one of our fellow bookkeepers who took my advice on this route, and while she was prepared to lose these low-quality clients, not one of them even balked at her rate increase!

Bottom Line: Examine your fees and see whether by undercharging you are not only attracting the wrong clients, but actually preventing your business from reaching the success you deserve.

By the way, if you have been trying to find new, high-quality clients (who isn’t?), you’ll definitely want to join me this coming Wednesday for a free, LIVE webinar I’m hosting with my very special guest Allison Babb Phillips. She’s an amazing speaker and entrepreneur.

Join us for “4 Surefire Ways to Quickly Get New Clients”

Click Here for More Info

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The Impending QuickBooks 2010 Sunset: How this Helps Your Bookkeeping Business

If you have clients using QuickBooks 2010, have you notified them that as of May 31, 2013 it will be considered obsolete and have an impact on how they can use the program?

Whenever there is news that affects your clients, it is a great reason to reach out to them – especially when it is perceived as bad news. Why?

At least it gives you a good reason to check in with them and offer your help. At best, you get to be their hero and help them solve it, or get through it, becoming invaluable to their business.

In the case of the sunsetting of QuickBooks 2010, the “problem” for clients (and you, if you’re still using this version) is that the following functions will no longer work…

• Intuit will no longer provide technical support for QB 2010
• Payroll add-on services will stop
• Credit card transactions via Intuit Merchant Services won’t work
• Online Banking won’t be compatible anymore
• Emails sent from within QuickBooks won’t go through

You can help your clients who face this situation in many ways, all of which can bring you more billable work and even new clients. These include:

You can provide technical support, especially if you are a Certified QuickBooks ProAdvisor. This might include troubleshooting and training services, such as…

• You can provide payroll services for them (especially if they have been trying to do it themselves)

• You can help them find the best price to upgrade to 2013, or decide if switching to QuickBooks Online or even some other bookkeeping software that is better suited to their business needs. Essentially, stepping into the role of software consultant

• You may help them decide whether they should be doing their own bookkeeping (or as much of it as they are now doing) themselves. If it makes sense for them, it might be the right time for you to expand the services you are providing your clients and take over all their bookkeeping needs.

These are just a few of the additional opportunities here for how you can help your clients and those who may now need your services. If you have a list of newsletter subscribers or contacts you’ve met from your past networking activities, this is a great reason to remind them about what you have to offer, since they too may be facing the question of what to do once the change takes effect on May 31st.

They will be GLAD to hear from you, so no worries about being seen as a pushy sales person. Your approach is one of providing helpful news and possible solutions. It’s really a no-lose situation for you, since you will at least build awareness of your services and remind everyone of the valuable services you have to offer!

With the warm weather (finally) upon us, and the typical summer slowdown at the doors, the annual QuickBooks upgrade delemma for many clients and potential clients is a golden opportunity to keep your business growing and solidifying existing client relationships and attracting new clients, all at the same time!

Heck, even if you don’t support QuickBooks software, it might be a great excuse to snag some new clients who may be thinking about moving to some other way to get their bookkeeping done!

What ideas have you used to help your clients when they face software and/or technology changes that affect them?
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Tagged As: bookkeeping business, May 31, QuickBooks, QuickBooks 2010, QuickBooks 2013, QuickBooks sunset, software upgrade

Sales Tax: Bookkeeping Nightmare or Opportunity?

Sales tax can be a big headache for many small businesses. In some places (like Philadelphia and New York City) there is not only state sales tax, but also local sales tax to pay attention to. As a freelance bookkeeper, this becomes YOUR headache if your clients are required to collect and file sales tax returns.

While we usually think of sales tax as being something that primarily affects retail businesses, if you’ve had to untangling sales tax messes, you know that for many states, the sales tax laws are anything but simple. It’s not always logical to know what is taxable and what is tax exempt. Among other things, sales taxes can apply to services.

As a freelance bookkeeper, if you have clients who are currently collecting sales tax (or should be), your job may soon be getting even more complicated.

If you haven’t heard yet, earlier this week the Senate passed the Marketplace Fairness Act. This bill next goes to the House of Representatives and will likely become law. If your clients sell online and/or via catalogs, this could affect you and your clients’ sales tax tracking requirements as early as October 1st.

What is the Marketplace Fairness Act (MFA)?

In a nutshell, it’s potential new legislation that is supposed to be a way to help both cash-starved states and brick-and-mortar retail businesses by “leveling the playing field” with online retailers. Ever since Internet sales have started booming – with Amazon as a major player – local retail businesses have said they were at a disadvantage because buyers could buy the same products online from an out-of-state retailer “tax free.”

Of course, we’ve seen states getting more aggressive in collecting Use Tax, which is designed to capture these lost sales tax revenues. But even with Use Tax being a line item on many annual income tax returns, it is hard to collect from buyers.

If the Marketplace Fairness Act of 2013 passes, businesses that make sales online will be expected to collect and pay sales taxes on all sales, based on where the customer is located. Yes, that could mean registering for and filing sales taxes with up to 46 different states! OUCH!

The most disadvantaged businesses for implementing these changes will be small businesses (and the states themselves), since they are least likely to have the technology to handle this volume and intricacy of recordkeeping. So the bill specifies an exemption (at the moment) for businesses with less than $1 million in sales online.

How will this affect you?

Even if your clients are all very small businesses that would be exempt from this potential change, there are a couple lessons we, as bookkeepers, can learn here:

1. The state governments are dead serious about finding ways to collect the sales and use taxes due. They are targeting businesses to capture most of that revenue. We’ve seen this in recent years with many more sales tax audits. If your clients are not paying Use Taxes for out-of-state purchases, they may be flagged for a Sales & Use Tax audit, regardless of whether they are required to collect sales tax or not.

2. If your clients are required to collect sales taxes, you need to know what is and is not taxable to keep accurate books. A help in this area is the sales tax software company Avalara, who provides helpful resources for tracking the MFA developments and free sales tax rates and guidance.

The Silver Lining Opportunity

As freelance business owners, whenever there is a “problem” that our clients face, there is usually a golden opportunity for us! How so?

Wherever there is a painful problem, the person who provides easy or convenient solutions is well rewarded. So problems can mean more business and more profits!

If you position yourself to help your clients comply painlessly to sales tax requirements, they will see you as an invaluable member of their business team AND if they do need to implement new practices due to the new legislation, you can charge them for the additional work involved.

To be sure, sales tax can be a sticky topic depending on the types of clients you serve and where you are geographically located. But if you see this as an opportunity to specialize in sales tax issues, the Marketplace Fairness Act could be a great boom to your business for 2013!

By the way, adding sales tax services to your business is just one type of profitable add-on service you can offer your existing clients and even use to attract new clients. In fact, that’s this month’s topic in The Freelance Bookkeeper Premium Membership, “How to Increase Profits with Add-On Services”. Join Now and get immediate access to this new training AND plan to join us LIVE on Wednesday, May 29th for our bookkeeper Q&A discussion.

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Tagged As: add-on services, bookkeeping opportunity, marketplace fairness act, multiple state tax, online sales tax, sales tax

Getting Clients to Come to You

Do new clients seek you out for your bookkeeping services, or do you have to chase after every new client you get?

When you decided to strike out as a freelance bookkeeper, you probably envisioned spending nearly all your time doing what you love – bookkeeping. But the reality is, as a BUSINESS owner you must do more than just the billable work.

You have to actually engage the clients who are willing to pay for your services. In order to make a connection with potential clients, you must get the word out that you are open for business. That type of communication is your marketing.

Marketing is actually MORE important to your success than your ability to do bookkeeping itself! That’s because you won’t make any money if you can’t get clients. Therefore, your #1 priority as a freelance bookkeeper is marketing your services.

There are two ways to do it – go out and find the clients…. or use attraction methods so that the clients will come to you!

For most of us, especially introverts, it is much more desirable to have the clients come to us. That’s why so many bookkeepers I talk to want to use paid advertising. They simply want to pay for an ad and hope the phone starts ringing with eager new clients.

They want to do the bookkeeping, not the marketing.

Truth is, that’s an expensive (and risky) way to do it. Direct advertising of bookkeeping services only attracts business owners who are desperate and haven’t yet found a bookkeeper any other way, or are price shopping. And of course, you also need to figured out where to advertise so they even find your ad.

On the other hand, most business owners who hire freelance bookkeepers do so based on recommendations from friends, colleagues and acquaintances, as well as online and offline networking. This is what generates word-of-mouth referrals, which is a result of indirect marketing.

Therefore, building relationships through networking is a cost-effective and powerful way to connect with potential new clients, as well as stoke the flames for getting referrals. The downside to indirect marketing is that it takes time. It’s a process. Trust is built over time, with repeated conversations and interaction.

Many bookkeepers do not take the time to build relationships because they want clients NOW! And when they start networking out of desperation, they fall back into the chasing-after-clients method. It’s a Catch 22 cycle. For the would-be clients, it’s a natural reaction is to run away when chased.

So the lesson here is that effective marketing for freelance bookkeepers is not an event, but a process. Building relationships is the key to regularly attracting new, high quality clients.

Farming, Not Hunting

Marketing your services is much like planting a garden. In order to reap the fruitage, you need to get started on the process of planting the seeds and then watering and caring for what grows. In due time, you will have abundant results – more high-quality clients.

As with a garden, some marketing methods produce results quicker than others. While I can’t suggest a single way of marketing that will give you a guaranteed bumper crop of relationships, referrals and clients, there is a combination of effective marketing methods that will attract new clients reasonably fast and regularly.

Proven ways to attract bookkeeping clients

• Social media

It’s a powerful way to get a “pulse” on what your Ideal Client is struggling with and answer questions that spark relationships. This can be done through discussion groups on LinkedIn and the Intuit Community forums. You can make powerful connections with potential clients, colleagues and referral partners.

• Attending live events

Nothing can replace the connections made when meeting people in person with whom we have a common interest. Some of the most powerful relationships I’ve made have come from attending live events. These can be within our industry, meeting with colleagues for two-way referral relationships, as well as industry events surrounding the type of clients you specialize in. (Example: if your Ideal Clients are authors, then you would attend writer’s conferences)

• Running an online training class

It has never been easier to present helpful information that will attract your Ideal Clients online. Webinars are effective and low cost.  Promote your 30-minute training class through social media and forums and you will reach at least a few, and possibly many new potential clients and strategic alliances all at once. While this does take some significant preparation, I’ve personally had fantastic success using this method. It’s especially effective for virtual bookkeepers.

• Blogs and Email newsletters

While this is not a quick-results method, sharing tips, newsworthy information, or short educational tidbits using a blog or email newsletter is an extremely effective way to attract new clients on an ongoing basis. It’s a soft-sell way to demonstrate your expertise and invite potential clients to get to know you. Because it is online, you also have a much farther reach to many more potential clients with a single effort. Coupled with social media, this is probably the easiest, low-cost marketing method available to us!

So if you’re tired of chasing after new clients and struggling to grow your freelance bookkeeping practice, switch to using client attraction marketing methods like these, and as your relationships grow, so will your business.

You can use any combination of the above methods, but the most effective one to start with is an email newsletter. Even if you don’t have any clients or a website yet, you can start marketing your services in a very scalable way with minimal cost and effort. That’s why this month’s TFB Premium training is on how to “Boost Business with Your Own Simple Email Newsletter”

What ways have you found effective for attracting new clients?

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Help Clients with Cash Flow to Increase Your Own

Our roles as bookkeepers are changing. Much of what we do is now  being automated. This opens new doors for us and for our clients.

One way you can provide more value to clients (and increase your billings in the process) while moving away from pure data entry and reconciliation, is to focus on your clients’ cash flow. Clients often view what we do as a necessary evil – and an expense that drains their profits.

But what if you could change that view by turning your fees into an investment that actually increases their cash flow? Do you think your clients would be interested?

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What You Can Do For Your Client to Increase Their Cash Flow

When cash is tight (or just not as abundant as desired), the first thing most everyone does is look for ways to cut expenses. If you have clients that are struggling in their business, why not help them to cut any fat and at the same time let them see how valuable your services are?

An easy way to do this is to schedule a meeting each month and review the Profit & Loss statement. Discuss each expense and how it contributes to the business. Is it a need or a want? By helping your client trim off some of the expenses that may really be unnecessary, you will free up cash to help generate more income in the business.

Cutting expenses is a great first step to showing your clients that you care about their success. Here are some additional areas you may want to include in a monthly meeting where you demonstrate the value of what you do by helping you clients use their financial reports to more profitably manage their businesses:

• Help them set up a budget to control cash strategically
• Help clients set a minimum balance “cushion” for each bank account as an early warning method to never get caught without enough cash
• Review sales reports over the last 6-12 months and identify the most profitable products / services for planning future sales promotions
• Create customized yearly and monthly comparative reports to identify trends and keep operations efficient

The basics of maximizing cash flow are to…

1. Raise consciousness of where the cash is coming from and where it is going
2. Minimizing expenses and maximizing the efficiency of necessary spending
3. Maximizing sales of the most profitable products / services

There are many ways that you can apply these principles to help your clients mange their business by the numbers. In the process they’ll learn that their financial records are not for simply complying with tax requirements, but indispensible management tools.

When you do, likely they will come to appreciate the power of what you do for them and you will come to be viewed as a trusted and valuable adviser.

How Consulting Can Increase Your Cash Flow

This is not to say that you should provide the above services for free! These are add-on services to what you are already doing as a bookkeeper. You can give your clients a taste of how you can help them by simply suggesting that you review the results of the financial reports each month (or each quarter).

When doing so for the first time, give them a basic overview (in layman’s terms) of their business condition, based on the information in the reports. Then point out just one or two areas where if they made an adjustment (such as cutting specific expenses that don’t seem to be necessary), they will get an immediate positive result.

By doing so, they will see the value of spending a few minutes on a regular basis discussing their business with you. At this point, you could offer to prepare more specific reports that would provide a deeper dive into analyzing any areas of the business they want to examine more closely – as an additional service.

This sets you up for building a more consultative relationship and you can expand it as much or as little as you want. It will also help you identify the high quality clients that value this type of service, and mention these services to new prospective clients.

Your First Client Should Be YOU!

If you are feeling as though you are not confident enough to play the role of consultant with your clients just yet, a great way to start building your confidence is to make your own business your first consulting gig.

Review the areas mentioned above for your own business. Work up a plan on how you can manage YOUR business more efficiently by taking a closer look at what your own bookkeeping records are telling you about the health of your business.

You may also want to educate yourself in business management practices from a financial standpoint. A couple books that may be helpful in this area are:

Small Business Cash Flow: Strategies for Making Your Business a Financial Success

Includes helpful methods to set priorities and help clients take steps to get rid of anxiety about cash flow.

Red to Black in 30 Days

Written specifically for accounting professionals who want to step more into a business consultant role with their clients.

I’ve also come across a new online resource that may be especially helpful if you want to move in the direction of being a Small Business Consultant. I’m currently in the process of evaluating it thoroughly, and will report more fully on this in a future blog post.

In the meantime, tell me… Have you been providing any type of consultative services to your clients yet? Do you see opportunities to do so with your clients? I’d love hear about it in the comments below.

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Tagged As: bookkeeper consulting, bookkeepers as consultants, cash flow consulting, small business cash flow