And other methods of charging for bookkeeping
There are different ways that your bookkeeper can charge you for their services. When finding a bookkeeper, it is important to check how they charge and whether their method will work for you and your business.
One of these is transactional charging, which is a newer way of charging that more bookkeepers are using to help their customers get more value for money.
Before we dive into what is transactional charging and how it can help you, let’s first talk about bookkeeping.
What is a bookkeeper?
A bookkeeper is someone who helps keep your company accounts up to date. They record sales, purchases, payroll etc and are more interested in making sure records are accurate and everything is as it should be, rather than trying to interpret the data like an accountant.
Bookkeepers are invaluable to a business as they keep track of all financial transactions, prepare for year-end taxes and manage cash flow.
What is transactional bookkeeping?
Transactional bookkeeping is very straightforward. It is also a slightly different way of charging for bookkeeping services.
A business will be charged per transaction that the bookkeeper processes. This could be payroll, cash flow or invoicing. The bookkeeper will agree on a nominal charge for each transaction they process so there are no hidden costs.
How can it help your business?
Smaller businesses benefit from transactional bookkeeping as they’ll likely have fewer transactions to post and therefore pay for. Your bookkeeper will be able to forecast the potential savings you can make against hourly/monthly or project fees.
By paying per transaction, you will know exactly what you’re being charged per month and what for. It will also keep your business running efficiently so as to reduce the number of transactions being posted each month.
How does it differ from other methods of charging?
Bookkeepers can charge in three ways – transactional, hourly and monthly. The way you get charged should work on both sides so make sure you speak to your bookkeeper before any changes in pricing are decided and signed off on.
Hourly charging – you’re charged for hours used to input transactions. However, this can lead to lost time, especially if your processes are efficient or the bookkeeper doesn’t keep track of their time used and estimates their hours.
Monthly pricing – this is based on hours they think will be used and you pay an agreed monthly amount. There are some issues with this method of charging including knowing just how much time your accounts take up compared to what they charge. If they don’t use up your set amount of hours, do they reduce or refund part of their invoice? This method is better for larger corporations who need bookkeepers and accountants in-house to keep an eye on things full-time.
Can I ask my bookkeeper to change to transactional charging?
Of course! It’s something that doesn’t need to be scary, so a simple conversation will help both sides gauge if it’ll be the best solution.
Small businesses, sole traders and recently self-employed are probably better off going down this route.
If your bookkeeper isn’t sure or doesn’t want to change their pricing structure, have a chat with us at d&k accounting and we’ll be happy to help.
Call us on 01302 613515 or email firstname.lastname@example.org.