How to run a successful bookkeeping business with a tailored Bookkeeping Service Agreement
In our work assisting bookkeepers over the years, and having a bookkeeper ourselves, we know firsthand just how incredible you are. You take on a lot of the critical elements that many business owners don't like to do or aren't skilled at. You ensure that the reconciling and payroll is up to date, and for some of you the BAS as well.
In the work we do with bookkeeper business owners, we also know just how challenging your role and running a bookkeeping business can be. We see how bookkeepers can find themselves in challenging situations with clients that can make the business of bookkeeping more stressful than it should be. That’s why we’re sharing with you the top 5 issues we see arise for our clients and how you can avoid the lessons that other bookkeepers have had to learn for themselves. And it all starts with the contract or agreement you have (or don’t have), with your clients.
Our editable bookkeeping service agreement template is designed for Australian businesses:
Have a website? Also consider this:
Issue 1: Using a contract that is not tailored for bookkeeping
Even if you’ve never had any issues with clients to date, you really need a contract in place that details the key terms of your engagement as their bookkeeper. Rather than a general service contract, you need a Bookkeeping Service Agreement that caters to the specific elements of what you do for your clients.
Any good Bookkeeping Service Agreement that will genuinely save you from the headaches that some of our clients have experienced in the past should set out the following:
What your service includes (and what it doesn’t)
How much you will charge
When you are to be paid
How you protect their sensitive and confidential information
Your expectations in relation to responsibility (to limit your liability)
Your Bookkeeping Service Agreement needs to be very clearly written and speak specifically to what you will do or will not do based on your skills or the package option they have engaged you for. Too often we see bookkeepers who have been called into question and there’s no clear record of what was agreed upon at the start of their working relationship.
It should already be apparent that when you use a contract with your clients that is not specific to the bookkeeping services you offer, or you just don’t have one in place at all, this makes it all the more difficult when an issue does come up. It is far less stressful to be able to reply to a client with:
“Let’s take a look at our service agreement that you signed when we first began working together.
Here are the terms of our engagement. It doesn’t include [extra thing], but let’s negotiate a new rate to include [extra thing] ”
Issue 2: Over delivering and sacrificing time (and income) for clients
Another common issue we see bookkeepers face is when they over deliver for clients and don’t charge for it. Perhaps sometimes you just need to get the work done quickly and you don't end up having a conversation about costing that work and then sending the invoice, particularly if you have a regularly scheduled monthly retainer invoice automated. We know this can become a regular occurrence and it often leads to resentment, especially when the extra work is every month, not just once in a while. It’s also harder to charge later when you haven’t charged before.
Instead, a good Bookkeeping Service Agreement should cover these types of instances by detailing how this will be covered. For example, in the event that the volume of transactions increases or the number of people on the payroll increases, this naturally creates additional work for you. By including an hourly rate in your service agreement that your client agrees will be payable in these instances, or an automatic upgrade to the next package price for example, you will then be covered without having to negotiate and quote up these extras each time.
Another issue that comes up and affects your time and income is how you get paid. Currently are you paid in arrears or are you paid upfront? Ideally being paid upfront is best and in your Bookkeeping Service Agreement it must specify whether they pay you a monthly fixed retainer or project based and by the hour. To be able to preempt your cash flow, you will ideally aim to have clients who are in an ongoing arrangement unless they terminate that agreement, following the notice period detail in the terms of your service agreement. Detailing how you will be paid in the terms of your client agreement will be a great point of reference if there are issues with non-payment or delays in payment.
Issue 3: Responsibility for financials and scope
This issue is possibly the most important of all. You are working with some significant financial and confidential information as a bookkeeper; however, you are only as good as the information you have been given to work with.
Your clients need to ensure they understand their responsibilities such as giving you accurate and full information and other important obligations such as keeping a record of their receipts. You also want your agreement to include that the client agrees that they are required to check and sign for everything before it is lodged so that you are not liable for issues if the tax office assessment is different from your figures. Your client agreement needs to ensure that they understand their responsibilities and also limit your liability as their bookkeeper.
Then there is also the consideration of protecting you if you make a mistake. Sometimes things can slip through the cracks. Perhaps you have forgotten to notify your client of a payment date or overlook an important deadline. For all of these reasons, your Bookkeeping Service Agreement should include a disclaimer to limit your liability. In the event that an error causes financial loss or detriment, you could end up facing a legal claim for the losses incurred. A disclaimer can limit that liability, provided you haven’t been negligent. That said, it is a good idea to have a joint calendar with the client listing all due dates well in advance!
You should also consider a privacy policy and website terms of use if you do not have them already. It is a good idea to have a privacy policy in particular, to demonstrate how you will deal with clients’ confidential data, especially given the sensitive nature of the information you have access to.
Issue 4: Misconceptions about what you do
For our bookkeeping clients, the goal is to help them avoid hearing phrases like this one:
“But you’re our bookkeeper, that is your job”
You want to avoid scenarios where a client has a misconception that you are responsible for something that you are not. For example, you may or may not be a BAS agent. You may or may not be a registered tax agent. Or you may be both, but your client may have chosen a service package that does not include those extras or they didn’t want to pay extra for the next service tier.
Because the scope of the work you do often varies from client to client, the terms of your client agreement should be specific to the services you will provide. With so many bookkeepers offering varying degrees of services your Bookkeeping Service Agreement must detail what you are authorised to do and not authorised to do, specific to the project or the package they opted into. A contract with your client that considers the specifics unique to bookkeeping services can go a long way in ensuring that you can avoid client misunderstandings or mismatched expectations.
Issue 5: Managing challenging clients
And then sometimes you will, inevitably, come across a client who is just plain difficult. You may already know the type. Perhaps they complain, want extras included, or they just don’t keep up their end of the arrangement which creates pressure on you or creates unreasonable turnaround times.
When clients change their instructions and add to the scope regularly, consistently do not give you the information you need to do your job, don’t check their financial reports or follow your instructions and fulfil their obligations, this can wear you down. As a bookkeeper you can elect not to work with people who make your role difficult, as long as your Bookkeeper Service Agreement covers you in that way.
It is for these clients that you may need to say:
“Let’s take a look at the terms of our service agreement and see what it says.”
It’s far harder to argue with terms that they signed and agreed to. It’s also great to be able to have the option to terminate the contract with the more challenging or difficult of clients, creating space for clients who can keep up their end.
How to run a successful bookkeeping business
I often say to my clients that 95% of your clients will be lovely however it is the 5% that will cause you grief. And it is for the 5% that you really MUST have your client contract right. Though the other 95% will appreciate the clear communication and boundaries detailed in your client agreement, it’s the 5% who help determine the inclusions in the contract. These are the issues that our bookkeeping clients have had to manage, even when they’d gone for years without having one troublesome client, and was the impetus for developing our bookkeeper service agreement template.
And, while all of this is great to have in place and you have all of these elements covered in your Bookkeeper Service Agreement, it must be signed by your client. While it might seem like an unusual tip, you must review the contract, make sure it’s signed without any changes made to it.
While you have the skills to offer the bookkeeping services you do, the success of any business is often attributed to your ability to be paid well for what you do and not have to spend time solving issues with clients that could be avoided. The impact that conflict with clients can have on your reputation is especially important given how common referrals are in your field. When you have an agreement that is clear and covers everything we’ve outlined above, you can easily refer back to it if there is ever any confusion about your and their obligations and expectations.
If you are ready to ensure your bookkeeping business is set up for success, take a look at our Bookkeeper Service Agreement. We offer customised agreements in that’s required. If you are unsure if it will be suitable for your business, reach out to Emma or Lianne to get your questions answered. You can email or book a time here.