Most bookkeepers and accountants charge you, the business owner, by the hour (a.k.a billable hour). Without much hesitation, you pay the hourly billing rate because this method of billing is familiar. The billable hour is an old billing method that is not advantageous to you. Here’s why.
1. Paying for Inefficiencies
If the bookkeeper you hired is inefficient, you pay the price. Inefficiencies could result from the bookkeeper, or you. Are they the type to streamline processes and setup automation? Are they tech-savvy? Honestly, most bookkeepers and accountants are not. They're comfortable doing things like they've always done. That doesn't fit our fast-based, tech-focused world anymore.
Whatever the inefficiencies, the result will be the same: you’ll get an unexpected higher bill, and you won’t be happy. You might even dispute the bill with the bookkeeper who will begrudgingly write off a portion of the bill.
2. Incentives are Not Aligned
The bookkeeper has every incentive to work slower and you have every incentive to have the bookkeeper work faster.
Pushing the bookkeeper to work faster will reduce your bill, but the trade-off may be in the quality of the work. Suppose the bookkeeper comes across a complex problem with your books that will require time to work out. Because the bookkeeper doesn’t want to surprise you with a higher bill, they may cut corners instead of taking the time to solve the problem.
3. Humans are Horrible at Estimating Time
Let’s face it. Humans are bad at estimating the time it will take to complete a task. If you are hoping that your bill-by-the-hour bookkeeper will spend less time than they estimated, keep hoping. It won’t happen.
Humans are optimistic. You’ll pay for that optimism.
What’s the Solution?
The solution is that you should pay a fixed priced for results that you and the bookkeeper mutually agreed on. If the bookkeeper is unwilling to work with a fixed price consider looking for an outsourced firm that will. Here at Basis 365, we give you a fixed price for the work that we perform. This puts you in total control. We will always discuss with you any need for additional work and the pricing for the work.
Schedule your consultation today to learn if outsourcing your bookkeeping is more effective for your business.
Photo by Lukas Blazek on Unsplash