Monday, March 24, 2014

Fashion and Finance

This weekend, I attended Vancouver Fashion Week to watch my daughter's debut as a Canadian Designer.  It was a most amazing experience, and I am so happy that I was able to see her hard work being recognized by her peers.

For the remainder of the time, I spent easily 20 hours working with my accountant unfurling a mess that had been created over a period of time by other accountants.

I find this frustrating because I paid for services that were either not done or done badly.  It turns out you have to be an accountant to hold the accountant accountable.

Accounting is a business and it requires specialized knowledge and expertise. Since I am not an accountant, I hired in good faith and on good recommendation.  This is my third accounting company since starting my business in 2011, and I learned more about business in 20 hours than I did in the last 20 years, because quite honestly, the ball had been dropped, and I didn't know how badly because I didn't know what questions to ask, or how to hold them accountable to me.

This is a big problem for business of all sizes, but in a right sized business it can be the fine line between success and failure, between giving up or not.


2 comments:

Unknown said...

Yeah, you have to be extra careful when outsourcing your accounting, especially since it's your finances they're handling. While it's good that you've learned your lesson, it's still awful that you had to change accounting companies anew. I hope the next one takes care of your money better than the last two!
Angel Richards @ PerfectAccountingService.com

Anonymous said...

"You have to be careful when outsourcing your accounting?"

How does the business owner "be careful"? They have hired someone to do a job - someone that has claimed a competency in the area. If you hang your shingle, and charge people a fee, you should be able to provide that service. This is basic business. The problem is that anybody can claim to be a bookkeeper. This is not a regulated industry. I see this all the time in my accounting practice. Not only does the business owner pay the bookkeeper, but then the accountant also has to be paid to fix the mess.

Lets differentiate between what an accountant and a bookkeeper do. A bookkeeper records the transactions that flow through the business. At the end, the records should include a reconciled bank account. This is very basic. The records then go to the accountant who will review those records, produce financial statements and a corporate tax return. If the bookkeeper has not done an adequate job, the accountant will have to spend time correcting the bookkeepers mistakes. So now the business owner has paid the bookkeeper to do the job, and the accountant to fix the job. Has the business owner learned their lesson?

What if the accountant does not properly review the bookkeeping records and does not inform the business owner that the bookkeeper is not doing a good job? What if the accountant doesn't take the time to talk to the business owner about what the numbers say? What if the accountant doesn't do a good job? How would the business owner know? After all, they will be provided with a hefty bill, and will therefore assume, that everything MUST be done correctly. Has the business owner learned their lesson?

You don't know what you don't know. The bookkeeping and accounting are not within the wheelhouse of the majority of small business owners. This is why they pay for these services. And in my opinion, they have every right to expect that it is being done correctly.

Business owners - if you sense something is wrong, something is probably wrong. You have great instincts, go with them.

Accounting information is historical, it has already happened. However, where you've been is a good indicator of where you're going. Your accountant should be reviewing this upon completion of your year end accounting package. And this should be done within 3 months of your year end. Numbers don't lie - a good accountant can read numbers just like a book. If your accountant is not engaged with you and your business, move on.

Its awful NOT to change bookkeepers/accountants when they have not been providing adequate services. A good accountant will make the change seamless for you. And, a good accountant can usually recommend a good bookkeeper. You're going to be paying for these services anyway, so why not get some value for your hard earned money?