He says stuff like, "Yeah, I knew that stock was going to triple. It was so obvious." Or "Man, I knew she was going to dump you. She had that look about her." Whenever Mr. Hindsight opens his mouth, you usually find yourself rolling your eyes.
Commenting on things that took place in the past is easy to do, and doesn't add much value. Many accountants do just that. They provide a reactive service. But what if you could get a proactive service?
If you're reading this blog, chances are that you're working hard to make your business profitable. That's the goal, right? Part of building a profitable business is having the right kind of bookkeeping service, and there are two kinds of services out there. This blog post will help you determine what they are and which type of service will fit your needs the best.
Type #1: After-the-Fact Bookkeeping Services
This is the most common form accounting available. In this scenario your business runs along at its merry pace while the accountant sits on the sidelines until the end of the month. At that point, she jumps in and starts "reconciling everything". Her goal is to quickly book all of the month's transactions so that she can show you where you spent your money and how your business performed.
If she's good at her job, you'll end up with a set of financial statements that give you a sense of where you're headed. The accountant doesn't take an active role in the business. It's very passive. You send her the receipts at the end of the period and she tallies the numbers. This system is used by both small and large businesses alike.
The pros of this system are cost and convenience. It's usually cheaper to to send everything at once, have the accountant crunch some numbers and then give you a report. You and your team will also save a lot of time since you don't spend much, if any, time with the accountant throughout the entire month.
The downfall is in the transparency. The CEO has no idea what's going on financially in the middle of the month. The other con with this type of platform is that the bookkeeper usually gets hung up. Given that she wasn't in the books throughout the month, she will often have questions that will slow down the process. It's not uncommon for a bookkeeper like this to get behind because they're trying to uncover what happend with all of your transactions.
Type #2: In-the-Moment Bookkeeping Services
This type of accounting service is less common because it takes more effort for the accountant to offer it. This platform creates an accounting system that processes transactions as you go. The accountant is more active in your business and can help with in-depth needs like invoicing customers, providing financial status udpates to management, etc.
This system allows your business to operate off of the numbers versus a gut feeling, and you have a go-to person to help manage the finances. Typically you would have a scheduled meeting with your accountant at a set time -- we recommend once a week. A lot can happen in one week. If you're the kind of business owner that needs to know cash positions, outstanding receivables, and more, you're going to need a more engaged team.
It goes without saying that these kinds of bookkeeping services are going to charge more since they're taking an active role in your company. In fact, some bookkeeping services will virtually attend to your company every day if you need it. Keep in mind that outsourced bookkeeping services fees should always be more affordable than hiring someone in-house though. If you want some help shopping around for these kinds of accountants, check out our article on bookkeeping fees here.
Since the accountant is more active in your business, they may have questions for you throughout the month. Weekly meetings also add to your time commitment, but doing so would keep you in the financial loop.
In-the-Moment platforms are not a food fit for entrepreneurs who are too busy to be a part of the relationship. Just remember that if you choose an after-the-fact system, you can't hold it against your bookkeeper when they don't know the answer to something.
Which One is Right for Your Company?
Both systems are great. I'm not going to tell you which one is best for your company. It all comes down to your needs as a business owner. Ignite Spot is an in-the-moment bookkeeping service. Our goal is to accomplish 3 things:
- Get your business profitable by 10% or more
- Get your company out of debt
- Save you money over the cost of an in-house bookkeeper
With that being said, we typically support businesses that are in the $1 - $7 million annual revenues range. Smaller companies tend to hire after-the-fact bookkeepers and larger companies tend to hire in-house.
Would your business be better if you had a financial system in place with weekly performance updates?
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