The Freelance Bookkeeper

Have you wondered about this question? Right after being asked about how much to charge for bookkeeping services, usually I hear this one. And of course, the short answer is, it depends.

It depends on which method you are most comfortable with. It also depends on whether you can run your business more profitably charging one way or the other. And finally, it depends on what your clients will accept.

Which method do clients want?

There is a reason prospective clients ask, “How much do your charge?” But it isn’t really because they are price shopping. (Though, admittedly, some are.) They are more interested in value….and how much it will cost them bottom line to get their books done, or to get the help they need with QuickBooks.

If you quote them a simple per hour rate, say, $40 an hour, the very next question you will most often hear is, “How many hours will it take you to get the work done?”

So the question they are really asking is, “How much is this going to cost me and is it worth it?” For that reason, you will often hear a sigh of relief from prospective new clients when you quote them a fixed fee. Now that they know what it costs, they’ll want to see what they will get for their money (value).

We’ll talk about how you can demonstrate the value of your services BEFORE the engagement ever starts in a future article. For now, let’s stick with the flat rate vs. hourly fee question.

Which method is better for you?

Hands down, most bookkeepers and QuickBooks consultants prefer to charge by the hour. And it’s true. You run a very real risk of underestimating the amount of work needed for a new client. And if you do, you’ll have to eat the difference. Ouch! No one likes working without fair compensation.

So charging fixed fees do put more risk on your shoulders. Of course, that’s part of the reason clients generally like fixed rates better.

But estimating is an art and can actually turn out to be more profitable, when done right. To make that happen, you must learn how to estimate in such a way that you will be well compensated. That skill usually comes with experience. So if you want to build this skill, start slowly with small projects only.

To come up with an estimate, plan out the project as completely as possible BEFORE giving your client a firm estimate. That means gathering as much information as possible. You may also want to stress that it is ONLY an estimate, subject to revision. If the project turn out to require  more work than anticipated, agree ahead of time how that will be handled.

The key is to define all the parameters and expectations BEFORE you start work for the client. You will also want the agreement in writing.

Which is best for you? If you just want to keep it simple (and safer), charge by the hour. If you want to make it easier for the client to say yes, as well as build a skill that can dramatically boost your bottom line in the long run, try your hand at flat fees. Just remember that it takes some practice to get it right.

Making it Work for Both You and Your Client?

As I’ve suggested before, using a win-win approach will usually yield the best results. So if your clients prefer fixed fees, but you prefer charging by the hour, why not strike a compromise?

You can quote your hourly rate and estimate how many hours it will take, and then sell your client a prepaid block of time to get the job done. That way, it feels like a fixed rate to the client, while you get your hourly rate AND you get your money right away. (No risk of A/R woes after the fact!) You may even wish to give your clients an incentive to work with you on this basis by giving a discount, say 10%, for buying 10 or more hours at a time.

Whenever estimating for a job, though, ALWAYS include extra padding to cover any unexpected work that may be necessary. If you don’t end up using all the time when the job is complete, you can always use it against future services.

Ultimately, you will need to find the combination that works best for you. Know how much you NEED to make and then match that with the method that will give you what you need, while still making your clients feel comfortable working with you and getting good value for their money. Think win-win or no deal.

What methods have you found that work in your business? Let’s compare notes! Leave your comment just  below the Resource links.

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Gabrielle
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RESOURCES

Intuit Rates Survey 2007 (The 2008 survey has not yet been published)

NACPB 2008 Survey

How Much Do You Charge? [related article]

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One of the most common questions I hear about becoming a freelance bookkeeper is, ‘What credentials do I need?’

The real answer to that question has more to do with the type of freelance business you want to build. But for the purposes of this article, we will assume that you are focusing on handling the month-to-month bookkeeping of your clients as their sole bookkeeper.

You’ve Got Choices

I’ve found that most freelance bookkeepers are concerned with the technical skills needed to provide quality service. Of course, that is a good place to start.

So, if you’re starting from zero, the first step is to learn the ropes academically. Here are a few choices to consider:

the basics you need may be available locally in a classroom setting. Check a nearby community college or continuing education programs to see if there are any live classes offered for bookkeeping certificate programs.

If that is not available in your area, or you can’t fit classroom training into your schedule, you may want to consider self-study training courses available online. Penn Foster Career School offers a couple of choices for self-paced training that are good quality.  You can either get a Certificate in Accounting or take their Bookkeeping program.

Universal Accounting’s Professional Bookkeeper training is another option.
This training is a self-study program that takes the traditional paper-and-pencil approach. It is a course that centers on small business bookkeeping, designed and taught by a CPA. It also includes a module on practical steps for starting your freelance business.

Are You Certifiable?

If you already have a good understanding of bookkeeping principles, but want the credibility (and confidence) that comes with a few letters you can add after your name…

AIPB’s Certified Bookkeeper training which provides the CB (Certified Bookkeeper) certification is probably your most economical and recognized option for a professional bookkeeping designation. This is a thorough self-study, traditional debits-and-credits approach from the oldest industry association for our profession. I suggest that you pursue this after you already have a good, basic understanding of bookkeeping under your belt. You will also need some on-the-job experience in order to qualify for the certification.

NACPB’s Certified Professional Bookkeeper training provides the CPB (Certified Public Bookkeeper) designation. This is another self-study training option geared toward those who wish to start their own bookkeeping business, created by a CPA.

Of course, the best training, after you have the academics down, is real-world experience. But you can only get that kind of “training” by actually doing client work.

There are a variety of ways to get that hands-on experience, which range from offering to do the books for a friend or two who own businesses, to subcontracting from an established freelance bookkeeper, to working directly for an accounting firm. Working as an accounting temp may also give you the opportunity for varied experience, if you can land gigs with small businesses. (Experience with large corporations will be of little help in running your freelance bookkeeping business.)

Of course, it goes without saying (though I’m saying it here), you will also want to set up your own set of books and keep good records to apply what you’ve been learning AND see how it feels to be a business owner!

Finally, when you’ve got the bookkeeping principles and practices firmly ingrained, there will be one other major learning curve to tackle in the freelance bookkeeping puzzle. You must learn to use QuickBooks. The vast majority of small businesses use this software, and you will need to learn to use it correctly and well. Just knowing accounting principles does not mean you know how to use this “user-friendly” software accurately.

There are many bookkeepers (as well as CPAs!) who think they can just “fake it” with QuickBooks. That is certainly not the case, and those who do, often cause their clients frustrating problems rather than providing quality services.

So in my next article we’ll tackle this topic – Which QuickBooks credentials and training do freelance bookkeepers REALLY need?

In the meantime, if you need to brush up on your bookkeeping know-how, or start pursuing a certification program, for credibility and confidence before starting your business (or to enhance your existing services), then check out the options above and take action this week. Then let us hear about your success!

Remember, in tough economic times, small business need to have clean books more than they do in fat economic times. Opportunities abound in any economy for qualified freelance bookkeepers.

Of course, if you have questions or experiences you want to discuss about bookkeeper credentials, go ahead and click on the Comment link on the right side below my name below! I’d love to hear your thoughts on this (sometimes controversial) topic as well!

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Gabrielle

19 Comments »

FACT: The majority of small businesses today are using the Internet to find the services they need. They may want a local bookkeeper, but they will use their web browser to find her!

So you may be wondering, “How can I find these new clients who are looking for bookkeeping services online?”

In essence, that’s the question I was asked recently by a freelance bookkeeper who is looking to expand her client base. In particular, she asked about the viability of signing up for those project-based websites where people post jobs they need freelancers for, and freelancers bid on the jobs.

She had been perusing sites like Elance.com, Guru.com and Sologig.com. Does it make sense for us to prospect for new clients on these sites, with some of them even requiring you to pay a fee to participate?

It’s certainly possible to pick up a few clients using these resources. But in my experience, treating bookkeeping services like a commodity will cause you to grossly underprice your services and set yourself up for business failure in a hurry.

The Right Kind of Clients

Clients who think bookkeeping is little more than mindless data entry go to these sites because they do not value what we can really do for them. They are more than happy to find someone overseas who will charge them $5/hour just to plow through the numbers. These are the clients who do not realize the importance of clean and accurate financial records and how this relates to business management.

If you want to build a prosperous business, you do not want to be competing for clients on price alone. You should provide more than data entry services and be charging a much higher rate for the value you provide your clients.

I honestly believe that these types of sites are helpful to the global economy. They provide a “cheap” alternative for businesses who do not realize that a qualified bookkeeper can be an invaluable business consultant and advisor. To each his own. I’m just suggesting that they are not your best choice for finding quality clients.

As freelance bookkeepers, we want to find clients who have different priorities. It’s what they call in the marketing world, a product to market match.

So….how do you find the RIGHT kind of clients for your freelance bookkeeping services online?

A Great Place to Start

There are actually  many places quality-minded business owners go online to find local services. One of the most popular – and free – places to find entrepreneurial folks is Craigslist.

Craigslist provides a couple ways to find new clients. First, you can scan the job postings for part-time bookkeepers. These folks are often looking for permanent, on-site bookkeeping services. If that’s the type of service you offer, it’s a great place to start.

Some of these clients may also be open to the idea of virtual bookkeeping, but you will need to demonstrate how it is in their best interests to provide that alternative method for getting the job done.

The other way you can find new clients on Craigslist is to post ads for your services, and let the clients come to you!

Keeping your ideal client’s needs in mind, write a short ad that will speak to the benefits you provide for them – NOT just the functions you perform. You must answer the question, “What’s in it for them?” Think of the problems they face, and how you are the solution.

Here’s an example of a a benefits-focused ad:

“Get your books in order and take all the tax deductions your are legally entitled to this year. As a professional bookkeeper and tax preparer, I can work with you to streamline your financial records and meet your tax deadlines, without all the stress. Using QuickBooks software, I’ll take care of the bookkeeping details, so you can run your business and maximize profits.”

Make it Easy to Say Yes

Because the Internet is a semi-passive form of communication, your ad should direct prospects to your website, if you have one. A website contact form will pull many more inquiries than a direct phone number will. Make it easy for shyer client prospects to give you their contact information. Then you can follow-up with them directly via either phone or email.

There are many other ways to find clients online, to be sure. But the best way to build your client base is using one strategy at a time. The learning and growing is in the doing.

So get into action now and check out Craigslist to see if it is a strategy that will help you find several new freelance bookkeeping clients this month.

If you are working on a virtual basis, you may also want to review my quick video on how to search Craiglist nationally using a neat little search tool I found.

Are you already using Craigslist to find new clients? Comment on your successes (or challenges) right here on the blog. I’d love to hear from you!

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Gabrielle

7 Comments »

This is always a hot question, especially when you are in the planning stages of your business. But that is also the best time to set your sights for how your business will give you the lifestyle you seek!

One of the biggest problems I see many new bookkeepers and consultants make (yes, I made this mistake myself too!) is to set their rates too low. Do not undervalue the benefits you provide others! If you don’t value what you do, neither will your clients. You will also damage your credibility in your clients’ eyes.

The first step in learning how much you SHOULD be charging for your expertise is to see what others are doing. You DO NOT want to set your rates below your colleagues. If you feel you need more experience, go ahead and set your rates closer to the lowest rates they are charging, but not at the bottom. As your confidence builds, you should raise your rates. So that means your rates should be going up at least once per year.

As a guide to follow and get your bearing on what other successful freelance bookkeepers and QuickBooks consultants are charging for their services, here are two recent national surveys that you should take some time studying.

Intuit 2007 Rate Survey

NACPB National Survey

By reviewing these real world results, you will not only get a good idea about how much you can charge for your services, but also zero in on the profit centers you would like to develop and specialize in as you grow your business.

I’ll look forward to hearing your comments about how you are doing in setting your own rates, or raising them as the need may be.

When it comes to your fees, the best way I’ve found to know if you’re charging enough is to just go ahead and raise your rates, and then see if anyone complains. If no one is complaining, your fees are not yet high enough!!

And the best part is that when you charge just a little bit more than you really feel like you “should,” the clients you attract will be the kind who highly value what you do and are the easiest to work with. I’ve done this many times in my own business, and despite the fear of losing clients that is always there, it just doesn’t happen. The only clients you ever lose are the price shoppers who are the hardest clients to work with and don’t pay on time or value your services anyway.

So again, think long and hard about how you want your business to succeed, the kind of clients you want to serve, then set your rates (fearlessly) in line with your intended outcome.

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