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Preparation For EOFY 2022: The Necessity Of Collaboration Betweeen Accountants And Bookkeepers

Author: Harry Hoang | Tailored Accounts CEO

Most people assume that bookkeepers and accountants get along very well―both share common goals and contribute to the long-term financial success of businesses and clients. The reality, however, is they tend not to share a lot of information with one another. A few weeks ago, a new customer asked us if we do tax preparation and lodging as he didn’t want to deal with too many parties (i.e. bookkeeper and accountant). I explained to him that bookkeepers and accountants work together as a team because they each have different skillsets and make up different stages of the financial cycle.

Before engaging us as their bookkeepers, some of my customers have previously requested for their accountants to perform both bookkeeping and accounting for them. While many hope that their accountants can be “one-stop shops” for their financial needs, many realise that their accountants don’t offer bookkeeping services. So, should bookkeepers and accountants compete with one another, or should they cooperate with one another? Based on my past experiences dealing with business owners, clients, and accounting firms, I think that bookkeepers and accountants should dance around with each other to realise the best possible outcomes for their clients.

But why are such harmonious and effective relationships hard to achieve most of the time? In my opinion, the problem lies with both accountants and bookkeepers.

Many bookkeepers think that their job scopes are limited to bookkeeping, so they prepare the books their way and hand them over to the accountants who will “fix them” at the end of the financial year. At the same time, many accounting firms don’t equip their staff with various software skills which can help with identifying and solving issues. Here is one good example: Xero regularly updates its product with new features, and one of the features which they released last year was Asset Register. One of our bookkeepers was very excited about this new feature as the clients he is managing has 20 cars. With Asset Register, she can handle depreciation of the cars easily in Xero. However, without Asset Register, the same client’s accountant struggled to calculate the appropriate amount of depreciation for the cars and messed up the books further. Such an outcome isn’t favourable to all parties―the client, the bookkeeper and the accountant―as it incurs extra time, effort and costs. 

The lack of communication is another major issue that often leads bookkeepers to feel let down by their accountants and vice versa. We have had clients who had to act as intermediaries between us and their accountants, which is both a distressing and time-consuming affair. I remember clearly one of my clients who typed and sent us a long e-mail at 2:00 am to explain, on behalf of his accountant, the issues with his books. My staff read the e-mail the next morning and felt both upset and stressed, so I assisted with rectifying the issues and writing the e-mail response to our client. Several back-and-forth e-mails with our client and our client with his accountant ensued, to the extent that our client realised that it would have been more efficient and clearer if his accountant had communicated with us directly. He subsequently invited us to his year-end meeting with his accountant and what was initially assumed to be an issue was just a matter of miscommunication. The “issue” was settled within five minutes and the meeting also ensured that all three parties were on the same page.

Many relationships between bookkeepers and accountants aren’t strong because both parties are not familiar with one another, and most importantly, there is a lack of trust. More work needs to be done to build strong bookkeeper-accountant relationships. Coupled with the support of cloud accounting and other add-on features, we are better able to work and discuss on similar platforms and on the same page. Here are my tips on ways to strengthen the bookkeeper-accountant relationship:

  • Keep the roles of accountants and bookkeepers separate (i.e. separation of duties). If there are overlaps, both parties would be unclear as to what they should or shouldn’t do;
  • Maintain regular communication. Clients should organise joint meetings with both their bookkeepers and accountants at least three times a year, specifically, at the start, middle and end of the financial year;
  • Work towards the best interest of the client by using best practices, being upfront about the pros and cons of each software, and tailoring solutions to fit the client’s business environment;
  • Plan ahead so that all parties are less stressed when deadlines approach. At Tailored Accounts, we aim for year-end tax preparation by April each year so that our staff have enough room to make adjustments in our clients’ accounts before 31 June;
  • Last but not least, sharing is caring. All of us have limited time and skills, so let’s focus on our competitive advantage and work with one another. Here in Tailored Accounts, we often invite experienced accountants to facilitate training and workshops for our staff on different topics such as tax accounting. We are also happy to send one of our Xero experts to your accounting practice to update your staff on new features in the software and assist with any technical queries you may get from existing clients.

At Tailored Accounts, we believe in building strong, serious, and sustainable relationships among our clients, our clients’ stakeholders and us. We live in a sharing economy, so let’s work on a successful marriage between bookkeepers and accountants!

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Winners will be announced tonight: Accountants Daily Australian Accounting Awards 2018

Tailored Accounts has been shortlisted for the Accountants Daily Australian Accounting Awards in April 2018. Tonight Tailored Accounts will attend the winner announcement event at Hyatt Regency Sydney.

Harry Hoang has been chosen as a finalist of CEO Of The Year and Tailored Accounts has become a finalist of Innovator Of The Year. This is the third time Tailored Accounts is shortlisted for these prestigious awards.

“On behalf of the team at Accountants Daily, sincere congratulations to all the deserving finalists in this year’s Australian Accounting Awards,” said Accountants Daily managing editor Katarina Taurian.

“It’s great to see such a diverse mix of firms, from micro-businesses right up to nationwide networks.

“We are also pleased to be recognising the broader role accountants play in their locales and in the lives of their clients. Accountants are the backbone of small business in Australia, and the community flow-on effect is enormous.”

Tailored Accounts team and Harry Hoang are humbled by the nomination and wishing other finalists all the best!

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How can accountants help you build Wealth?

Most clients only use their accountants to source advice on corporate structure, tax and other financial details. This sorely limits the potential benefits of their expertise. A start-up ourselves, we built Tailored Accounts from scratch and have now created one of the biggest accounting firms in Canberra. How, you ask? Our strategy is the same one we recommend to all our clients. It all comes down to cash management.

There are indicators of wealth in business, including, assets and turnover, size of business and number of clients. Personally, I prefer to monitor wealth based on a company's net cash flow, since the only way to build wealth is to re-invest positive net cash flow back into your business. This allows a company, and the community surrounding it, to grow.

Start-ups, for instance, are considered a great means of boosting wealth in many sectors. Yet many people are confused at how relatively new start-ups facing significant losses are still considered widely successful. Uber and AirBnB both operate at a loss, but are still giants in their respective fields. The simple explanation is that the companies are building wealth through alternate means.

As mentioned above, a prime indicator business of wealth is a businesses' net cash flow over time. Uber and AirBnB are definitely cash flow positive- otherwise they would be facing liquidation! Moreover, job creation is another essential aspect of wealth building. Thousands of jobs have been created by Uber and AirBnB, injecting cash into the community.  Further cash injections from investors are another reason for these businesses' net positive cash flow, even though they trade at a loss. Finally, these companies' intellectual property is a sustainable ongoing source of wealth, since it does not depreciate in value.

So how can Accountants help your business create wealth. We can help you to monitor your cash flow to ensure that you are always cash positive. Accountants have insight into your financial situation, and can thus keep track of your past, current and future cash movements. Furthermore, we also provide analysis to ensure your cash moves according to business plan and offer advice accordingly. Effective planning is the key to successful wealth accumulation!

It’s undeniable- investing in your accounting team is vital to maximise your return and build overall wealth. Consider the potential for your business and invest in your own future wisely!

 

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