How to Prevent Bookkeeping Service Scope Creep

Scope creep can turn what started out as a lucrative flat fee into slaving for chump change!

Here’s a valuable tip I just learned this past week that can help assure that we don’t fall victim to this insidious trap that so many bookkeepers struggle with (self included).

Scope creep can especially be a problem if you are using a fixed price agreement (FPA) for monthly services, or you work on a project basis.

It’s when you and the clients agree to a mutually acceptable flat fee, but gradually over the course of the contract, additional work creeps into the services you provide for your clients… yet you’re not charging them for it!

At first it starts as just something small that’s not worth mentioning, but over time accumulates…. or it could be that after you get into actually doing the work, there’s more than you expected, but you feel like you can’t say anything, since you’ve already quoted a fee that the client accepted.

Not a good situation to be in.

Until now, my best solution was to track the time I spent on all client work, even when billing at a flat rate. Then on an annual basis I’d review the services actually being provided, compare them to the agreed services in the contract, and then when it was time to renew the contract, we’d discuss adjustments to the flat fee amount.

That works okay, but if there’s a lot of scope creep, it means I’ve been making significantly less than I should throughout the year, and the client feels like they suddenly have to pay more for the same services.

Both of us may feel at least a little uncomfortable as a result, and it can strain the relationship a bit.

But last week I heard about a much better way to handle the situation, and have the client feel happy to pay more! It’s brilliant really… and you don’t have to eat the scope creep costs for anywhere near as long!

You see, I asked a question about this problem of my business mentor, and he surprised me with a method I’d never heard of before (he’s not a bookkeeper).

He said that I should keep a log of all the work I’ve been doing for my clients and the specific benefits / results they get from what I’m doing.

Then on a quarterly basis, sit down for a scheduled meeting with my client to review the financial health of their business and the progress made (with my help) over the past 3 months.

For any clients where we use the Profit First process, (I have several) these meetings can also be where I let the client know what their quarterly profit distribution will be. That puts the client in a good mood, since it’s their reward for using the system that’s built into the way we do the bookkeeping. It’s always good news.

At that point, when the client is feeling rewarded, I then mention the additional services provided and the value the client has received as a result (from the accomplishments log). I then mention the adjustment needed to the fee. But because it’s done on a quarterly basis, the change is almost always going to be small and reasonable.

The client is very clear on how he / she is benefiting by working with me to watch over the financial health of the business, and the reward they are getting as a result.

It’s such a positive way to do it, with the focus on value, not cost!

I LOVE this idea, and plan to start using it right away with my flat rate clients. And I thought you’d find the concept helpful too, if you’ve been moving toward using flat fees in your practice, or haven’t been charging properly for all the work you’re doing for your clients.

By the way, I learned this tip from Mike Michalowicz, the author of Profit First on the bonus webinar we did together last Friday as part of the new TFB Premium self-paced class on Packaging & Pricing. He shared a ton of great tips I’d never heard before!

So how do you deal with scope creep in your bookkeeping business? Have you found a way that works well?


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Bookkeeping Fees: 5 Ways to Charge for Bookkeeping Services

bookkeeper-feesBookkeeping fees are a hot topic. And why not? The #1 reason (usually) for running a freelance bookkeeping business is to make money. A big benefit of being in business for yourself is, unlike an employer-employee situation, we get to decide how much we should get paid… in theory, anyway.

But with that decision comes a stumbling block. Many of us have no idea how much we can, or even SHOULD, charge for our services. Often the only reference we have is what we were getting paid as an employee. But that’s not a good comparison for the value we provide our clients as independent professionals.

A better starting point is to see what other professionals — those who’ve been in business for years — are charging, and getting, for their services. Very helpful in this regard is the Intuit® Rate Survey that comes out every few years. From it you can get at least a “ball park” range of what professional fees typically look like.

Next comes the question of whether you should simply charge by the hour, or use fixed fees. The survey shows that others in our profession use both. What about you?

There’s no “right” answer to that question. As a business owner, you signed up to be the boss and make those kinds of decisions for yourself. But here’s a quick rundown of 5 of the most popular methods for coming up with your fees…

1. By the hour – by far, this is the most common way to charge for bookkeeping services

Pros: Simplest way to quote, and possibly what most clients expect to hear.

Cons: Can have you and your clients falling into the employer-employee mindset, and turn your services into a commodity. Hourly rates give the impression that one hour of your time is of equal value to one hour of any other bookkeeper’s time, which can turn on the “shopping” response for the client. The client doesn’t know how many hours are needed to get the results they’re after. Additionally, working hourly, the more efficient you get, the less you make, since you’re selling time, rather than results.

2. Prepaid time blocks – an hourly / flat rate hybrid

Pros: The simplicity of hourly, with the benefit of working off of a retainer, which also allows clients to budget your fees more easily. You also have no A/R issues with this method.

Cons: Can be hard to estimate how many hours are needed to get the results a client wants, and you may need to refund some of the amounts paid if you get the work done more quickly. It’s still the problem of selling time rather than results.

3. Value Pricing – setting your rates based on how the client values the result you provide

Pros: Can be much more profitable than other forms of pricing. It can also help you screen for high quality clients.

Cons: Can be difficult to acquire the mindset needed to use it effectively. It slows down the sales cycle drastically, since you need to quantify the value of services from your client’s standpoint in order to arrive at a price offering.

4. Customized flat fees – coming up with a flat fee that fits your client’s specific needs

Pros: Simpler to use than Value Pricing, since YOU set the value of your services required to meet the client’s needs; can be more profitable than charging by the hour.

Cons: Easy to underestimate how much work is involved to get the desired result, and effectively lose money due to misquoting.

5. Packaged Pricing – productizing of services so they’re sold in bundled packages at a fixed fee

Pros: Generally more profitable than hourly and easy to adjust. Easy for clients to accept and budget. Clients choose a level of services based on parameters you set and know exactly what they are buying; focuses on results rather than hours. Helps you forecast your own revenue more easily.

Cons: After engagement, clients may ask for additional services not included in the chosen package, and the tendency is to provide those services at no additional cost – known as scope creep – which erodes your profits.

We have many choices when it comes to setting fees, each with their own advantages and disadvantages. How you set your fees should be well thought out, instead of just choosing the default, hourly method.


Because pricing is one of the biggest reasons the majority of freelance bookkeepers struggle and work far harder than necessary. Don’t be one of them. Choose how you will set your fees. Watch how it affects your cash flow and profit margin. Then make adjustments until you find your pricing sweet spot.

If you’d like a deeper dive into how to go about switching to flat fees or packaging your services, join me for the new training program I’ve just released, The Freelance Bookkeeper Packaging & Pricing program. We cover the mindset, action steps and tools needed to set your fees using my signature win-win methods.

How about you? Have you experimented with different fee setting methods? What are the advantages… or pitfalls… you’ve discovered?


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Bookkeeping Specialty: TFB Spotlight on Barry Vaters

tfb-star-spotlightHave you chosen a bookkeeping specialty in your freelance business yet?

If not, don’t despair. Most bookkeeping service businesses are generalists. But this latest TFB Spotlight interview really shows how having a specialty can literally give you more clients than you could ever want… without even doing ANY marketing! But that’s not the end of the story by any means.

In fact, it’s not all good news. You’ll hear what pitfalls are involved with a behind-the-scenes look at a highly specialized bookkeeping practice, as Barry Vaters of Food & Beverage Bookkeeping steps into the TFB Spotlight!

You’ll also hear how Barry has been transitioning his local, non-virtual bookkeeping business into a lean, efficient and highly profitable virtual bookkeeping service.

Watch or listen to this interview now! Total running time is 35 minutes.

Would you rather listen to the interview?  Download Audio Here (right-click and “Save As…”)

Interview Highlights:

Barry has been in the food and beverage business all of his working life, having owned several restaurants and bars. He recognized a gap in the industry where owners needed help.

He learned the financial side of things from his training as a chef and manager!

Barry is currently running his second freelance bookkeeping business.

The biggest challenge in the beginning was pricing his work and that’s where he made the biggest mistakes. He also had to learn how to choose the right clients.

All his clients came by word of mouth and established relationships within the industry community.

When “unsuitable” clients (or just those he can’t handle) come to him, he refers them to the IPBC (Institute of Professional Bookkeepers of Canada). Great tip for where to refer clients you don’t want – your country’s bookkeeper association. (In the US that’s AIPB – American Institute of Professional Bookkeepers)

Barry is now focusing on upgrading his business further as the “category authority” – not just built on referrals. He’s also focusing on building his virtual delivery system and focused marketing.

Doing market research helped him find the sweet spot of quality clients and premium pricing.

Book mentioned on the interview: The Pumpkin Plan by Mike Michalowicz

One thing Barry would have done from the beginning that he now has started to do as a result of joining TFB Premium, is to build a network of fellow freelance bookkeepers who he can respect. He said, “it has changed everything.”

Barry has embraced the idea of working virtually with his clients and loves it! (This was a mindset shift for him, since he always worked with clients on-site previously) He now uses a hybrid approach. He reminds himself that if he leaves his office or touches a piece of paper, he starts losing money. Now 80% of what he does for his clients, he’s doing from his own office.

Big lesson learned that helped Barry the most was to adopt the mindset of specializing. It makes everything easier and is core to success and a busy practice. It helps you say no and recognize that “all clients looking for bookkeepers are not clients.” In the long run, it pays off!

If you’re thinking about specializing in restaurant clients, Barry also shares his “insider tips” for how to do it successfully, specifically for working with restaurant owners and their managers.

Finally, Barry shared how technology is changing in the restaurant industry, and the apps he’s been using in his business to work virtually.

Contact Barry:

barry @


What about you? Do you have a special focus in your bookkeeping business? Or are you working more on a virtual basis than you used to with clients? Share your thoughts, experiences and comments on this Spotlight interview below!

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Online Bookkeeping: Adventures with Bank Feeds

online-bankingIf you’re working with any of the online bookkeeping programs as a freelance bookkeeper, you know that things don’t always go as planned. But using bank feeds for your client’s bank and credit card accounts makes a lot of sense for getting the monthly bookkeeping done a lot faster than manually entering transactions.

I’ve been shocked at how many freelance bookkeepers still enter client transactions manually, often from bank statements. Many have been doing it this way for years, and feel intimidated by automating the process. Others feel that using automated bank downloads is just a recipe for technical headaches. I’ll admit that it’s not always a smooth ride, but spending hours doing data entry is a sure way to put your services in danger of becoming obsolete and ultimately eliminated.

So let’s unravel the truth about using online technology, the roadblocks, and how you can leverage it in your bookkeeping practice.

What are bank feeds?

If the term and / or the concept of automated “bank feeds” is new to you (or you didn’t know what they’re called), here’s what they are: Your bookkeeping software can be connected to your bank account, usually through the same login you use for online banking. That is, when you go to your bank’s website to log in and check your balance via the web.

When the software connects to your bank account (after going through security systems and checks) it is able to “pull” the bank transaction information into your bookkeeping records. Usually this is done one or more times per day automatically. It is a one-way connection, meaning that the bookkeeping program can only “read” the info in your bank or credit card account, but not touch your money in any way.

Why you want to use them

If you’ve been following me for a long time, especially any of my QuickBooks training videos, you know that I used to NEVER recommend using the bank downloads in the desktop versions of QuickBooks. The reason was it was just too easy to really mess up your books, if you didn’t use the online banking process correctly. Many clients didn’t use online banking correctly and it cost them A LOT of money to get the books cleaned up after a few seemingly harmless push-button follies.

But I’ve changed my tune drastically on this topic. QuickBooks, especially QuickBooks Online (but the desktop versions are also 100% better than they used to be), has made it very safe to automatically pull the daily bank transactions in a way that is quite easy to keep the books clean and accurate, and save a lot of time in the process.

But QuickBooks is not the only program that’s good at it. Many other online programs do a great job of pulling the data too. Programs like FreshBooks, Xero, Wave and more can pull bank and credit card transactions for you. There are also many document handling apps that integrate with these bookkeeping programs to pull bank and even monthly bill information straight from the your bookkeeping records. A few of these are HubDoc, Tallie, Expensify, and many more. There are A LOT of choices!

The bottom line for why to use them (even when they have a monthly fee) is the huge time savings. Many of these programs “get smarter” the longer you use them, since they pay attention to how transactions are categorized and start doing the coding for you. Your job is to simply oversee the accuracy of the automation and accept the transactions into the books.

What can go wrong?

Now that you may be warming up to the idea of using bank feeds, let me tell you the rest of the story. Things don’t always go as planned. The automation will never 100% replace a thinking human.

If you’ve been working virtually for any length of time, you know that technology is wonderful when it works. But when it doesn’t, it can be a huge, time-consuming and frustrating journey that makes you wonder if going back to pencil and ledger paper wouldn’t be such a bad idea after all. But when it’s all said and done, online technology is worth the bumps and bruises.

Sometimes the software you’re using and the banks your clients use don’t get along so well. In particular, many of the banks have hoops for security to jump when making the connection and it’s a challenge for the bookkeeping software to keep up with the “upgrades.” You need to monitor the connections and be ready to work out the kinks, which may mean facilitating communication between all parties involved (client, bank, and software tech support). Fortunately, that’s not the norm.

One way that I’ve learned to work around any issues with bank feeds, if they last more than a few days, is to have a backup system. For me, LedgerSync is the best solution for that. I use this in addition to having my clients’ bank accounts hooked up to the bank feeds in QuickBooks Online. If I’m under a time deadline, I can still access the needed information to get the work done, even when Intuit and the banks are not playing nicely together.

If you’ve been looking for a way to increase the number of clients you can serve so you can increase your revenue, automation is a great way to do it. Using bank feeds is how to ultimately remove the most time-consuming part of what we do, and spend that found time serving more clients! From where I sit, it’s worth the time and effort to learn how to use bank feeds (now that it’s easier and far more accurate).

Learning how to take your bookkeeping business online is a step-by-step process that doesn’t have to be mind boggling. That’s why I created the Insider’s Guide to Your Own Virtual Bookkeeping Business. It takes you from zero to paying clients in as little as 30 days, using simple, easy methods.

Have you been using bank feeds to get the “data entry” done? Have you found that it saves you time every month too?


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Bookkeeper Marketing: How to Use a Blog to Attract More Clients

Bookkeeper Marketing: How to Use a Blog to Attract More ClientsHave you considered writing a blog or sharing helpful information as part of your bookkeeper marketing plan to attract better quality clients?

Blogging is one method of marketing your services called, “content marketing.” The idea is to attract people who care about what you have to say and sharing valuable nuggets of info… with no strings attached. It’s how you build relationships based on giving, instead of selling.

For blogging to work as a marketing method, it’s not a one-and-you’re-done approach to attracting more clients. It takes some effort consistently. It also means a shift from focusing on what you’ll get (more clients) to giving [helpful info]. You need to trust that the rewards will follow. That’s a tall order for some people.

How I Discovered Blogging

I learned the power of blogging pretty much by accident. I started a blog to attract more bookkeeping clients online. I had been sharing tips for how small business owners could use QuickBooks more effectively, but got unexpected results. I started attracting more and more bookkeepers!

In hindsight, this makes total sense, but more about that in a minute.

When these bookkeepers saw that I was running my business virtually, they started asking me to show them how they could start a freelance bookkeeping business working through the Internet too. So as a way to draw them away from my business blog (I saw them as competitors, after all), I started The Freelance Bookkeeper blog!

As a result, I’ve built two sides to my business, primarily because of my blogs: (1) attracting bookkeeping and consulting clients and (2) training and coaching for freelance bookkeepers.

I did NOT know a lot about how to do blogging “right”. But I learned through experience. Here are a few tips I’ve gleaned that you can use, if you want to blog as part of your marketing strategy.

Share info your best clients care about

The blogs that don’t work, or don’t work the way the owner intends, are those that share information the blogger cares about, but the intended audience does not. 

As mentioned above, my QuickBooks mechanics blogging attracted more bookkeepers than small business owners. Why? Well, who’s more passionate about getting bookkeeping? Bookkeepers or business owners?


My results started to shift when I began sharing tips on how business owners can maximize their cash flow using QuickBooks. Business owners are more passionate about cash flow. This approach helped me attract more clients for years after I posted the info.

SIDE NOTE: That blog has been inactive for quite a long time now, but I STILL get inquiries from small business owners who want me to help them with learning how to use QuickBooks to maximize their cash flow!

Bottom line: Write about what YOUR BEST CLIENTS are interested in most.

Go ahead and be opinionated

Part of the benefit you get from running a blog is that people who follow you will start to view you as an expert. And you ARE! Go ahead and share your opinion on business topics. You can share ideas of what you think clients (in general) could do to improve their business’s bottom line, or avoid risky practices that could get them into hot water.

One way to set yourself apart from most other bookkeepers is to show you really care about your clients’ success, and not just making sure the books balance. Sharing your opinions on business matters will demonstrate that, and attract potential clients who share your views.

Share stories

When we share our own experiences, case studies, or results we’ve achieved for clients past and present (of course, not disclosing anything that should be kept confidential), we start to build a connection with our readers. They’ll feel like they know us and understand what we do. That’s the stuff strong business relationships are built on.

This is an area I could do better in my own writing (there’s always more to improve!) Sharing personal stories is far more interesting than sharing dry facts and figures. Bookkeeping and financial information, by nature, are rather dry. When we can add a personal touch with stories and experiences, it really makes what we have to say more interesting to readers.

Tell them what to do next

One of the most important lessons I’ve learned is this: you can be writing fantastic blog posts that people love. You can build up a large following of readers. But if you don’t give them a “call to action” for what they should do as a result of what you’ve shared, you will not get the results you’re after.

When setting out to write a blog post, think about what you want your readers to do as a result of your article. Do you want them to join your email list so they can be notified when you post another article? Do you want them to contact you for a free consultation? Think about what you could offer as a next step to build the relationship, and help them feel like they want to work with you.

If you’ve been a reader of this blog for any length of time, you’ll see that I usually offer one of my training programs as the next logical step to continue growing your freelance bookkeeping business. That’s done by design.

Get your blog in front of people

The #1 reason most bloggers don’t get the results they want is because they aren’t getting enough readers. That’s because no one is finding their blog.

You can’t rely on search engines alone to send you a ton of readers in a short amount of time. You MUST promote your blog in order to gain a following. That’s where social media is a big help. In my own experience, I use Twitter, Facebook and G+, but by far, the best results come from LinkedIn.

Post a status update on your LinkedIn profile about your latest blog post, and add a link to it. You can also start a discussion in groups  where your Ideal Clients gather and ask a question related to your blog post. You will likely start a discussion within the LinkedIn group, but also get group members to click through to your blog and start following you.

Will a blog attract more clients for you? Plan it. Work it. Then watch for results over time. It’s the only way to know for sure. For me, blogging has been one of the best things I’ve ever done to grow my business. So give it a try and let me know how it goes for you.

In the meantime, if you’re looking for additional low-cost and effective ways to market your bookkeeping business, take a look at The Freelance Bookkeeper Marketing System training course, where you learn how to develop your own 30-Day Marketing plan that gets results, specifically for freelance bookkeepers.


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  • May 2015
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