Our accountant is raising their fees based on our revenue figures. They have a broad pricing model based on annual revenue, that doesn't take into consideration any other factor (e.g. number of transactions, complexity..etc). Our revenue figures increased during the year and hence they are revising the contract so we'd pay three times as much as what we paid at the beginning of the year.
We are looking for quotations from other accounting firms, but we're faced with the question: what's a good price?
Since accountants charge monthly here in Ireland, and we barely interact monthly (we do our own book keeping), it's hard for us to evaluate their worth based on the amount of work done since most of it will be done at the end of the year.
Now that you have some experience under your belt, you know what you like and don't like about a relationship with an accountant. You also know more questions to ask before you start your next engagement, such as:
* What do you base your fees on?
* What do you provide on a monthly basis for your standard fee? On a quarterly basis? On an annual basis?
* How often do we review the contract?
* How much extra is doing the book keeping?
* How do you help ease the money management pains of running my business?
Once you've found an accountant who answers such questions to your satisfaction and determined what rate you'll be paying monthly, assess the time the accountant will work on your business, calculate the hourly and compare that to your hourly. If you're comfortable with that difference and with the fact that a professional will be overseeing your finances, then it makes sense to sign on with him or her.
If you wish to discuss, send me a PM through Clarity for 15 free minutes.
Well, I understand your need.
There are multiple components in accounting itself. List down all activities he is doing such as bookkeeping, Accounting, compliance, and Financial Strategy and Tax Planning. Find out the total transaction of your business and total revenue. Ask yourself do you need a comprehensive service - compliance, Financial Strategy, and Tax Planning? Now each job is different. It all depends on your total revenue, number of employees you have.
To minimize the cost you can opt for outsourcing your non-critical work out of Ireland. Companies outsource their accounting and tax jobs in India, and other Asian countries You can save some money. You can also outsource your According job to Ireland based company. According to some industry expert, there is no benchmark however in some cases they say it is 4%.
Now before outscouring or employing anyone you should follow the Lean Outsourcing Process to create a Req Document.
1. Write down the problem statement
2. List down all activities
3. List down total transactions
4. Your Total Revenue
5. In the current situation how much you are paying?
6. What is the % account cost you are paying of the total revenue?
7. How many days accounting person comes in a month and year?
8. When you need Most?
9. Create an Analysis document from this activity - define a matrix
10. Finally, create a Requirement Doc.
11. Start Collecting quotations based on this document
12. Keep Interviewing people and select top 3/5 do the price negotiation -
13 Build a Vendor Value Proposition worksheet - who is giving what
14. Finally, Select the best.
It depends on the country you are in and the accounting application you are using. Can you share some details on both.
A simple method I tell startups to do is to use a reliable accounting application, Sage or Quickbooks. Once you setup in the cloud versions, they have a list of finance guys on standard rates they connect you with. Finance outsourcing is a little tricky, so only trust a platform you know.
In ideal scenarios, there is no reason to increase the price based on the revenue unless working involves increased efforts to a substantial extent. I would quantify the efforts required in hours and get a quote from the freelance consulting accountant. Based on your details, it appears that you do most of the bookkeeping activities and so the consultant has to validate and do Govt formalities. Unless you are doing some specialized business where you will need to defend or work with Govt officials for certain things within accounts, you should be paying charges wrt to the effort involved and yearly inflation rise.
I am a corporate strategy consultant with 35 startups in my background as an angel and professional investor,m Founder, CEO, Director, advisor, or consultant.
The difficulty in answering this is lack of context and framing. If you were a startup with little revenue and significant losses that had paid € 1000 and now you are more mature with revenues at break even and the firm is asking € 3000, then you have one set of conditions. If on the other hand that cost was € 10,000 going to € 30,000 it is an entirely different set of facts.
In the US, we often have large accounting firms work at reduced rates with startups they like with the understanding that the rates will rise as the company thrives. They do not require anything other than a verbal agreement, i.e. they cannot and will not force you to stay if you choose not.
Finally, that you do your own bookkeeping is not relevant. It is expected that you would do so by all accounting firms. However, they do have to review all of that bookkeeping to summarize the financials because they will be at legal and brand risk should something implode; your bookkeeper will not be.
Hope that helps.
when you receive 2 offers, what is your selection criteria? the lowest price or the one the can add more value to your company?
First, you need to know the scope you are asking for:
1. to meet statutory requirement only?
2. to have better internal control in place?
3. to have good financial data for decision making?
From the way you decided, you probably looking at 1 (or a little bit of 3) of the above.
You need to make sure the accountant can help you to meet the statutory requirements and not just looking for the lowest price. This is quite challenging as most accountants had listed what they will do as a total package but you are not able to determine whether they can prepare quality accounting services or not.
I had many clients come to me on accounts prepare 3-5 years back where they are under investigation by the company registrar authority and Inland revenue authority. Most of the time, these accounts are poorly prepared although the books are balanced and met the statutory requirements on the surface level. I need to investigate the financial numbers, reinstate the financial positions and explain to the relevant Government authorities to help my clients to avoid further fine, punishment, or even jail. Therefore cheap, not equal to save money, it may cause more in the future.
Recently, I have a client ask me to prepare accounts for them, as the sales are low and the transactions are not a lot, after including the preparation to meet the respective authorities' requirement, I make a relatively low price for the job. My intention is to help my client at a very affordable price while ensuring good quality accounting practices and financial statements prepared in place at the same time. My client, however, asks me to reduce the price so as to be in par to others where the price will never able to prepare the minimum accounting service quality. In the end, I decided to give up this opportunity. I am here to solve the problem and not to make money and put a time bomb at the same time!
Therefore please give more thoughts when:
1. the price is too low,
2. any unrealistic promises
Some guides may help you to determine quality:
1. 30%-40% time on statutory reporting requirements
2. 30%-40% time on good accounting practices
3. 30%-40% time on bookkeeping
(thus you revenue increase may have no impact to the bookkeeping but may trigger the statutory reporting requirements (may happen in some cases), your accountant increasing his price may due to a) want to make more money, or b) increase in workload (if any).
hope the above help you