More 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.
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.
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.
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?