All the bookkeepers I’ve met over the years tell me the same thing. They are great with managing other people’s money. Great with setting up systems for other businesses and great at making sure invoicing is all up to date for their clients.
But when you take a little peak into the behind the scenes of most bookkeeping practices, it’s a very different story.
Many bookkeepers don’t have great systems that work for them. Many bookkeepers are not managing their own finances, as they know they should be. And many are not invoicing in a timely manner so that their cash flow is manageable.
So here are some quick ways you can overcome some of the more common stumbling blocks so that you’re on your way to more ease and less overwhelm.
1. Overcome mindset obstacles
So what is Money Mindset? It’s how you think and feel about money. Your money mindset dictates how much you make and how much money you have. And your money mindset also decides what your earning capacity is.
To have a strong money mindset, it’s imperative to focus on what you want, visualise yourself having what you want and feeling positive about money and what it represents. But what people tend to do is focus on what they don’t want. They focus on things they don’t have. When your money mindset isn’t coming from a place of abundance & instead is coming from lack and not enough, often you will attract more of that into your life. Not enough clients, less than ideal clients, clients who don’t pay on time. Clients who don’t value what you do and a business that isn’t making enough money or isn’t making a profit. So it’s really important to start adopting a mindset of abundance and getting rid of the limiting beliefs around money.
2. Know what you need & what you want
Often when I speak to bookkeepers, I’ll ask them how much they’re paying themselves. The answer is not usually uplifting. Some are paying themselves a minimum wage at best and others are taking money from their business in an inconsistent, ad hoc way.
It’s vital for you to start paying yourself what you need and require, but you can’t do that unless you know what it is you need and require first. How much do you want, in your pocket, each month or each year? What are your personal goals that need funding? Family goals? This simple calculation can make a massive difference because it’s a way of reverse engineering what you need to create in your business to provide you with the money you need in your life.
3. Create repeatable systems
Ask yourself – could someone come into my business and start working on my client’s accounts? Do I have the systems, files, documents and procedures in place for how each client works? If not, then there is a massive big gaping hole in your business.
It means your business is solely reliant on you and the information in your head in order to operate. If you are on leave, sick or out of action for any length of time, your business stops. If this sounds like you, this area needs your immediate and undivided attention.
4. Automate invoicing
A number of bookkeepers that I have spoken to often charge by the hour or don’t have a set time when invoicing happens in their business. This is not only detrimental to your cash flow, it also means that you end up spending far too long on the admin side of your business.
I usually suggest moving to fixed or value pricing as it makes it a lot easier to use the recurring invoice feature and save time. It also means that you know what is coming in each month and your clients can also budget for your fees. If this is not something that you are doing or you are not ready to move to this model, it is still possible to streamline invoicing.
The best way to start is to use something like T-sheets to track time, which also allows for the auto import function to an invoice in either Xero or QBO. Alternatively, set a time each fortnight or month and make sure all invoices are being sent and there is no backlog. I also suggest that you move every client direct debit as this will mean that you are pretty much guaranteed payment.
Also, always charge in advance for rescue work so you are not stuck chasing payment for your hard work!
5. Apply the Profit First System
Profit First is a book written by Mike Michalowicz. It’s based around taking the Generally Accepted Accounting Principals (GAAP) and flipping it around. As you are already aware, the GAAP is Revenue – Expenses = Profit. This cash management system changes that to Revenue – PROFIT = Expenses.
It’s about taking Profit FIRST, not last and not as an afterthought. It’s about paying yourself properly and putting money aside for GST and taxes. It’s about curbing the excess spending in business and keeping ongoing expenses under control. The Profit First system is a game changer and has revolutionised many businesses, including our own.
By looking at these 5 core areas, you can turn your bookkeeping practice around from a business that is draining you to one that lights you up.
If you are looking to build and grow your bookkeeping business then the Mind Money Business workshop and mastery program give you the one-on-one support and step-by-step instruction to do just that – grow a thriving bookkeeping business.