How to Buy Accounting Services
Accounting is a necessity for every business. However, the level of support you need can vary. More often than not, during an initial consultation, I hear things like,
“I have an accountant, but I’m not sure what they are supposed to be doing for me.”
“I have an accountant, but I manage my business based on my bank account balances.”
“I don’t know what I need from my accountant, but I know I’m not getting it.”
“I’m not getting any value from my accounting spend.”
After years in this business, I have found that buying accounting services is complicated. The buying process has two major flaws. One, we have under-educated owners who are buying something they don’t totally understand. Two, we have highly trained accountants who are number wizards, but often subpar communicators.
Our industry isn’t doing enough collectively to educate our buyers. Let’s fix that.
Levels of Service
To start, there are three basic levels of accounting support a business needs, outside of tax preparation (which is a totally different beast).
Bookkeeping
Controllership
CFO
Bookkeeping is all about getting your transaction data into your accounting system in a timely and accurate way. This type of service includes entering vendor bills, creating customer invoices, categorizing transactions into the appropriate accounts, saving supporting documentation for those transactions, and reconciling bank and credit card accounts to your monthly statements. Bottom-line, this is the basic service you need to have a set of somewhat usable financial statements. Typically, for a small business, this work should be done routinely, either weekly or monthly.
The second level of support is Controllership. Controllership is all about “tying down” (proving accuracy through documentation) your books. Controllers review bank and credit reconciliations, tie-down key balance sheet accounts like lines of credit, loans, or fixed assets, and make journal entries for payroll, tax liabilities, etc. These services should include reviewing your profit and loss statement for reasonableness, meaning there aren’t any wild swings in the numbers per account, and if there are, asking why. A Controller acts like your financial translator, making sure you are getting the best transcript possible.
The last level of support is CFO. CFO services are a new-ish service (many accounting firms call this Client Advisory Services or CAS for short) and probably the most complicated service to buy as each vendor has their own way of supporting your needs. If bookkeepers are fluent in your accounting language, and Controllers are your translators, CFOs are your storytellers. They find insights, create meaning, and help you take action.
How to Know What You Need
Now, let’s move on to figuring out what you, as an owner or leader, need in terms of services by asking yourself a few questions.
Do I look at my financial statements? If not, do I want to?
Do I think reviewing my financial statements is vital to having a healthy business? If not, why?
Do I lose sleep often when thinking about my financial situation? If so, why?
Your answers will help guide you toward the appropriate level of service. If you're not looking at your financial statements but want to start, you might need bookkeeping and some controllership services. If you're reviewing statements but struggling to derive actionable insights, CFO services might be beneficial.
Questions to Ask Potential Vendors
When shopping for accounting services, it's crucial to ask the right questions. Here are some key inquiries to make:
What specific services are included in each package you offer?
How often will you update my books and provide financial reports?
What software do you use, and how will I access my financial information?
How do you communicate with clients, and how often?
Can you provide references from businesses similar to mine?
What is your experience in my industry?
How do you handle data security and confidentiality?
What is your fee structure, and are there any additional costs I should be aware of?
How do you measure the success of your services for clients?
What kind of support can I expect if I have questions or concerns?
Remember, the right accountant should not only provide accurate financial data but also help you understand and use that information to make better business decisions.
Choosing the right accounting services is a critical decision for any small business owner. By understanding the different levels of service available, assessing your own needs, and asking potential providers the right questions, you can make an informed decision that will benefit your business in the long run.
Don't settle for an accounting service that leaves you confused or unsupported. Look for a provider who can grow with your business, offering the level of service you need now and the potential to scale up as your business evolves. With the right accounting partner, you'll gain not just accurate financial records, but also valuable insights and guidance to drive your business forward.