Albert Einstein said that the definition of insanity is doing the same thing over and over again and expecting different results. Sadly, many freelance bookkeepers feel stuck with the insanity of charging by the hour.

When you first started your business, you may have felt that was the easiest way to charge. That’s how it’s been traditionally done for years. However, you may have run into these problems:

• Clients don’t pay your invoice on time.
• Clients don’t pay your invoice at all.
• As you become more proficient, you’ll earn less money for the same amount of clients.
• Clients think you’ve spent too many hours doing the work.
• Clients think you shouldn’t charge the same rate for your staff person.
• There’s a limit to how much money you can make.
• You aren’t compensated for the hours spent on marketing or doing your billing.
• Your cash flow is intermittent because you’re billing in arrears.

Since there are so many problems inherent in charging by the hour, how do you break free from this insanity and change your business model in midstream?

First, you must change your own mindset and recognize the value of your expertise and that you deserve to be paid for it. Many businesses are shifting to a value-based model, so it’s very acceptable to clients. They won’t have trouble adjusting if you follow these steps:

1. With existing clients, create a block-of-hours package that they can purchase in advance. Offer five, eight or ten hours. The more hours they buy the better rate they receive. When you’re down to four hours left, bill them their next round of billing. It’s a great confidence booster to migrate from charging by the hour to receiving money up front from existing clients. And it gets them ready for the next step.
2. Offer work on retainer and in packages where you’re paid in advance in exchange for giving the client everything they need for the annual accounting cycle. That includes weekly processing of their bills, receivables and payroll, quarterly financials, an annual tax package for their CPA and a 1099.

These packages are based upon two or four hours a week, whatever the minimum amount of time you’ll work for that client. But don’t communicate that to the client. Instead tell them, “You’re in my Accounting 101 package, which gives you processing once a week. Here are 10 other things you will get in this package that meets all of their accounting needs within an accounting cycle.”

Caveat: When you begin working with a new client, you have to clean up their accounts first. You can’t jump into a retainer package. You have to price that separately. Do a paid bookkeeping evaluation to scope out what the client needs. If you get a good sense of what that is, give them an “estimate” based on a total number of hours with this proviso, “This is based upon the cursory review that we did. If there are any material changes to this as we progress with your project, we will let you know immediately.” That applies whether things are less or more than what you thought. You need to be fair.

Often the only thing holding a freelance bookkeeper back from making these changes is a personal mindset. At The Bookkeeper’s Club, we discuss how to get past those limiting beliefs as well as share practical advice on taking your business to its full potential. Why don’t you join us there?

Over the years I’ve come up with what I call a price increase formula. I have never had a bookkeeping client object to my rate increase since I began implementing it. I discovered that the key was to be prepared. I recommend that you script out what points you want to cover in a verbal conversation as well as written communication in the form of an email or letter.

Start off with what you’ve accomplished since you’ve been working together. This is not every single little thing that you’ve ever done. If you’ve been working for a client for several years you can reference some big things that you’ve done together.

Next, let them know there will be an increase. Do this at least 45 days out. It’s only fair to set a date in advance so that your client doesn’t feel like you’re pushing this on them at short notice.

There are two ways to communicate the increase depending on what you think will work best with your client’s personality.

• One way is to give them the incremental piece. If you’re doing packages, you can say, “Effective January 1st there will be a slight increase to your monthly fee of $75 per month.” If you are doing an hourly rate increase you can say, “There will be a $15 per hour increase.”
• The other way to represent it is to do the full increase. You can say, “Effective January 1st your new rate will be $XX.” That’s it. It’s a very simple sentence. Keep it short, sweet and clean. You don’t have to justify why you’re increasing your rates. We are a professional services firm. That’s the end of the conversation.

Next, tell them how much you enjoy working with them and invite them to ask questions. Simply say, “Do you have any questions or concerns?” Do not be afraid of that conversation. This does not mean that you have to cave and not increase your rates.

This is the part of the conversation that reveals why you must first do some internal work. If you don’t, it’s at this point that you’ll allow your boundaries to slip. Without the proper mindset going into this conversation, you’ll lose your courage.

If they ask, “Why are you increasing your rates?” you can say, “I’m raising my rates to stay competitive and bring you the best resources. I pay my people well in order to do that. That’s evident in the services that we provide to your company. Would you agree?”

End by recapping how much you enjoy working with them and that you want to continue working with them. If you’re writing the letter first, include those two things in that last paragraph, “We really enjoy working with you. It’s been exciting seeing your business grow. I invite you to set up a time to speak with me if you have any questions.”

This is the basic formula I’ve used, and taught other bookkeepers to use, to successfully increase rates. You might send the letter first and then have the conversation, or visa versa, depending on what you think the particular client would appreciate. Make sure to do both.

Having this money conversation can be one of the hardest things a freelance bookkeeper does. That’s why so many bookkeepers and accountants are gathering at The Bookkeeper’s Club. We’re a community that supports each other, gives valuable feedback, and teaches processes so you can confidently make your bookkeeping business productive and profitable.

But won’t you lose business? Maybe you’re worried if a potential client sees your website on a Sunday afternoon and they can’t get a hold of you because you don’t work weekends…  The next day somehow they never get around to calling again – even though they had every intention of doing so…  And you end up missing out on the business.

Should you take the call on Sunday? Is there a way to balance the demands of instant access without sacrificing your personal life?

Thankfully there are tools that can help you balance it all! Here are a few tools I’ve used to make me more accessible to my bookkeeping clients, without sacrificing my personal time:

1. Virtual Assistants. A virtual assistant is like an administrative assistant. They call themselves “virtual” because they can be anywhere in the country or world. One of my virtual assistants is in Knoxville, Tennessee. I have another one in Missouri. My web person is in Oregon. You can use virtual assistants for different things as they have different specialties.

You can have a virtual assistant work as your receptionist. This will not only make your business appear more professional, it also frees up your time. For example, I had a virtual assistant who was my client relationship manager for my bookkeeping division. It was her responsibility to make sure the information came in from clients when it was scheduled. She would do the follow up if the client didn’t submit something.  This freed up the time of my bookkeepers so they could focus on actual bookkeeping, instead of communicating with clients.

Key Benefit: Virtual assistants are professional sub-contractors so you only have to pay for the time you need. Perhaps just a couple of hours of work a week could free up your time to focus on other important areas of your business.

1. Use a Virtual Phone System. These systems were designed to help small businesses stay connected and sound more professional. You can choose between a local or toll free number, and enjoy features like unlimited extensions, call forwarding, on hold music, name directory, and more. Calls can be forwarded to any number so you can be reached on your home, office, or mobile. I use a service called Grasshopper and I have it set up so I get an e-mail whenever I have a new message.

Key Benefit: Services like these help you stay on top of how YOU want to communicate with clients.

1. Online Appointment Scheduling. It can be really time consuming setting up appointments. Sometimes it takes 5-6 emails to get a time that will work for both parties hammered out. But as you know appointments are critical to customer satisfaction and to accelerate the sales process with new leads. I personally use TimeTrade to help me manage my appointments. For example, I post times that I have open for coaching sessions with bookkeepers. My clients will view my calendar online and choose an appointment that works for them.

Key Benefit: Not only does this eliminate the time-consuming process of scheduling, it provides clients and leads the “instant access” they’re looking for.  They can set up an appointment while it’s on their mind – even if it’s midnight!

These are just a few of the many tools and services to help free up your time as a freelance bookkeeper. If you think about an area of your business to automate, I guarantee you there is probably a tool available to do it. It’s a matter of doing research to find it.

Would you like to hear what works best for your colleagues? We share all of our favorite tools, techniques and strategies at The Bookkeeper’s Club. I just added some exciting new benefits – click here to check it out.

But it’s unrealistic to think you can expect to work with everybody that comes along. Nor can prospective clients expect you to begin working for with them without an evaluation of what services they need.

Whether you’re doing the bookkeeping on-site or virtually, there are three phases that you have to take your prospect through in order for you to establish a solid, long-term relationship.

The first phase in your bookkeeping relationship is to qualify your prospect.

You need to find out if they match your ideal client or if they’re someone you need to refer to another bookkeeper.  Quite often you can do this qualifying on the initial phone conversation. Be prepared and have your list of questions ready so you make sure you cover everything.

If they qualify, send them an information request list of the documents you need to see.  If there is a partnership, you’ll need to see the partnership agreement. If there are numerous LLCs, you’ll need to see the LLC agreement. Gathering facts about these standard things will allow you time to come up with questions for the next phase…

The second phase in your bookkeeping relationship is the evaluation.

This is the fact-finding, search and rescue phase. I recommend that you sign your first agreement with them at this point. This agreement should include your confidentiality agreement and provide written consent that they’re hiring you to do the evaluation.

Here’s a list of things to consider in your evaluation:

• their accounting file,
• at least three months of bank statements
• three months of credit card statements,
• three months of loan statements,
• their previous year’s tax returns.

This information is what I call “the bible” or “gospel”.   It’s what ties everything together. If the client has no books or records, you’ll need to recreate the books from check stubs, bank statements, and credit card statements. You can’t do an accurate bookkeeping evaluation if you don’t have the right information.

If some information is missing, you’ll need to question them about it. In this situation, it would be wise to include a caveat that says, “Here is the estimate for what we will be doing. This is based on the information that I have reviewed. As we progress into the project and things come up, things can change.”

The third phase in your bookkeeping relationship is what I call “partnering up.”

This is when I use my standard three-page letter and a detailed project plan since we’re now moving into a more complex relationship. Once the account has been cleaned up, I’m an advocate for presenting your services in packages.

Would you like to learn all the vital systems that will help you build and sustain a profitable freelance practice? If so, join me and other high-achieving freelance bookkeepers at the Bookkeeper’s Club where we discuss real solutions to real problems.

But being a freelance bookkeeper is mainly about building relationships with your clients. And especially in the beginning of these relationships, there’s going to be a lot of what I call babysitting.  You have to teach them how to treat you – what’s acceptable behavior.  In the process you’re teaching them how you’re going to work together.

But what do you do when it things get way out of hand?

In a recent Q & A call with members of my Bookkeeper’s Club we talked about new clients that are difficult to work with. We talked about how to handle it when you’re getting calls from 3 or 4 people within one company besides the one who hired you.  And what if they’re all giving you different stories, or maybe it’s the same story told many different ways?

As with good physical health, there are also two ways of solving problems in a difficult client relationship when you’re a freelance bookkeeper:

1. The best medicine is preventative.

Everyone knows if you have a lifelong pattern of healthful eating and exercise you can ward off many diseases.  It’s the same with bookkeeping problems.  If you have written policies that address possible problems upfront, and you communicate these clearly to your client, you can prevent a lot of problems.

So the first thing you’ll want to do is examine your own policy.  Clearly define to yourself what you feel is acceptable. From the beginning you need to set office hours for answering calls and firmly stick to that policy.  You need to put parameters around not only the times you answer calls but also from whom you’ll receive calls.

Next, you need a clear way of communicating this policy to your clients.  An excellent way to do this is to incorporate this policy into your handbook that you review with your prospective client.  It’s not enough to hand them your book.  You should also verbally go over it with them.

2. Remedy the problem with the most effective, yet gentle, solution available.

You don’t want to ignore the problem, hoping it will go away.  More often than not it will just get worse.  You also don’t want to overreact and amputate that relationship if it can be saved and strengthened with the proper supports.

Maybe the problem started because you didn’t have a clear policy of communication, or didn’t firmly stick to it because of the emotions attached to the situation.  If that’s the case, acknowledge it and do what you can to fix it.

Go back to the one who hired you and say: “In order for us to have a good working relationship, it’s really difficult for me to be fielding all of these phone calls.  We need to have one point of contact.  Do you feel comfortable meeting with everyone to share information once I hand you the results of my work?”  Then I would recommend that you incorporate a weekly meeting into your service offerings.

Good communication is what will keep both you and your client from stressing out.  Giving in and not sticking to your policies will only make the situation worse.  It can be hard to stick to your guns, but it’s vital in order to keep your client relationships healthy.

Do you have a thorny and perplexing bookkeeping problem that you’re not sure how to handle?  Join us at the Bookkeeper’s Club where we, as a group of professional freelance bookkeepers, freely discuss real solutions to real problems we all face.

Communication is the cornerstone of building a successful freelance accounting and bookkeeping business. This is even more important when you’re providing your services remotely. Poor communication can lead to your client to think that nothing is being done and they’re not receiving the value they’re paying for.  Remember, clients will pay for a service where they can justify the value being received.

Here are some easy communication strategies to help your freelance accounting and bookkeeping business work remotely more effectively. The key with all of them is to execute them consistently.

• Create a set schedule for when client work will be received and when you will return it to them.  Are you surprised that a system is also a communication strategy?   Pretty great, isn’t it?  Implementing systems really does provide multi-faceted benefits to your business operations.

This strategy helps you create predictability. Everybody knows what to expect and when.   If anyone doesn’t do what they’re supposed to do, follow-up can occur. Everything stays on your radar.

• Create predictability in what information your client needs to submit to you.  You can create checklists for weekly, monthly, quarterly and annual information.  Once the standard checklist is created, you can use this over and over again with all of your clients.
• Formalize how communication is to be conducted between your clients and your business.  Put in writing your policy of how to reach you and your staff by email, phone or fax and the timeframe in which you or your staff will respond.  Again you are creating an expectation that you must fulfill. Otherwise, these systems won’t succeed.
• Set-up formal meeting times between you and your clients.  The meetings can be in person if they are within a certain geographic radius, or via Skype, which is a reliable free service. You can see the person you are working with – it creates valuable connection.

The number of times you meet with a client throughout the year is based upon the level of service they’re receiving. Define your meeting schedule to include a preparation for tax planning meeting, another meeting to go over year-end results, maybe even a review on a quarterly basis.  You can also include this as a value when you describe you services to them.

• Set-up a similar system for informal, frequent weekly or bi-weekly communication.  In my company, the Financial Manager would make sure that she either spoke or emailed each client just to see how they were doing each week.  This was outside of any informational requests.  This frequent communication also makes it much easier when you need cooperation from your client to obtain additional information or a reference for a referral!
• Include some type of direct mail and/or online newsletter from your business. Of course you’ll mail cards for the major holidays but be sure and shake it up a bit.   One year, I remember sending all of my clients chocolate coin candy on April 16th with a cute card that said, “To refill your pot of gold”. It was a big hit.  My clients got a good chuckle out of it and we had some impromptu phone calls.

Be sure and congratulate your client achievements and successes.  For each client who attained their revenue goal for the year, we’d send them a cookie bouquet.  It’s a small gesture that goes a long way. Keep this part of your communication strategy fun, informative and not overwhelming for you or them.

Remember to be consistent, keep it simple, and have your process clearly defined.  If you’re tired of struggling with your freelance accounting and bookkeeping business and want to attract the “right clients”, make more money, and have more free time check out my Bookkeeper’s Club to find out how systems can help you get there.

The ultimate goal of being a freelance bookkeeper is to gain freedom – to have a say over how you live your life and raise your standard of living.  Yet, so many of us experience a crazy roller coaster ride economically – that might even place us in a sub-standard of living.

How do you get off of that roller coaster of never having enough for yourself?

Tip #1 Set your freelance bookkeeping bill rates according to the number of hours that are actually billable.  Many freelance bookkeepers set their billing rates based on a full-time schedule, not the number of hours actually billable.  All of the hours you spend doing work will not be billable.  Therefore your billable rate needs to incorporate non-billable hours to ensure you are paying yourself enough to run your business.

Tip #2 Pay yourself on a regular basis.  Whether you’re a freelance bookkeeper solo-preneur or you have a staff, pay yourself  on a regular basis, even if it is a small amount.  Creating a regular payment to yourself sends a signal to the Universe that you are important and deserving.  When you don’t pay yourself at all you are telling the Universe everyone else is more important and the Universe always responds to the messages we are sending out!

Tip #3 Establish client retainers.  To smooth out your cash flow, establish retainers with your regular clients and have those retainers be paid in advance.  This is something a freelance bookkeeper can create and implement very easily.  Have your clients pay you for a set number of hours at the beginning of the month for services to be rendered, based on an average amount of hours you work for them each month.  (Even though I am no fan of trading dollars for hours moving to this format and being paid in advance is one step closer to changing your pricing model to one that is based on value and results!)

Tip #4 Establish multiple due dates throughout the month for your retainers.  To keep cash coming in every week, establish different due dates and assign at least two clients to each one.  Then when new clients are signed add them to each due date cycle until the number is even again. Schedule your clients with the largest dollar amounts to be paid to your company at least one week prior to your business’ heaviest cash flow week.

Tip #5 Identify how much it costs you to run your business each month.  This goes beyond just knowing how much you need in the bank to cover payroll for your employees.  You need to know how much you need every month, excluding payroll to run your business.  Be sure and include the dollar amount you need to be paid if you are excluding yourself from the payroll requirements.

Remember, being a freelance bookkeeper, makes you the business owner, and it gives you the advantage to create your own economy.  Why not create an economic boom by implementing these 5 easy small business bookkeeping tips? And don’t stop there. Learn the secrets that have helped many freelance bookkeepers to stop struggling with this problem once and for all. Check out How to Charge What You’re Worth and Get It!  You’ll find a proven system that really works! 

Do you have more work than you can handle yet you’re resisting hiring anyone because you believe you’re the only one who can do the bookkeeping correctly for your client? If so, you’re creating a self-fulfilling prophecy. You’ll find problems with any staff you hire and your clients won’t be happy.

Trust me on this one. I did it for years. When I started getting more business than I could handle, I reluctantly began adding to my staff. And guess what? Everyone I hired failed because of my belief that no one could do the work as well as I could.

The real reason they failed was because all of the key information about that client was in my head. I had not communicated that information properly so that my staff person could succeed!

Here are 3 vital steps towards creating a system to manage clients that will ensure the success of your team.

1. Create a Comprehensive Client Profile

The first step is to get key information out of your head and document it in a Client Profile that your staff can use. It needs to document both standard and unique client information. Here’s client data you’ll want to include:

• Contact information
• Mailing address
• Type of business entity
• Length of time they’ve been in business
• CPA information
• Payroll provider, etc.
• Unique information needed to successfully process that client. For example, specific ways in which data is recorded because of the type of business they are in or certain information needed on invoices to ensure payment is received.

Rather than overwhelming yourself by doing your whole client list, start with one or two accounts you’re delegating to your new staff person and go from there. Create them using a free form method for the first couple just to see what information you are capturing, then go back and edit them and create your standard format.

Don’t get hung up on it being perfect or you won’t get them done. You don’t need to know a head of time everything you’ll document in your client profile or any system that you create. As you are in the process the next steps will be revealed to you.

2. Create a Standard Processing Schedule

This involves a set day and time when the information comes into your office for processing and a set day and time when the processed information is returned to the client. When you create your standard processing schedule you need to communicate to your client when the information is due to you and when they can expect it back.

For example, if their information comes in on a Monday morning 10:00 A.M. their processed information will be returned to them on Thursday morning 10:00 A.M. If their information comes in on a Tuesday morning their processed information will be returned to them on a Friday morning. This creates definitive start and stops for each client account.

3. Stick to Your Boundaries

This means you should carry over any late information. I cannot emphasize this point enough. You’ve created this boundary and it is up to you hold that information until the next processing date – otherwise you have defeated the very reason you set-up schedule processing times in the first place.

Once you have communicated this new system to your staff and clients, you’ll find your clients respect the boundaries that you’ve set and your business will run efficiently because everyone knows what’s expected. Then, as the owner of your bookkeeping business, you can spend more time on business development and trust your team to do their work.

Click here to learn about The Power of Systems. You’ll discover 4 systems that your bookkeeping business needs to run at its peak efficiency. Also, here are some blogs about other processes that will help your business grow. Check them out and post your comments or questions!

Why Following a Process Increases Your Bottom Line

How to Create Consistent Results for Your Clients – Even When You’re Delegating Tasks

We’ve all had one.That client who on a good day is not the easiest person to get along with! Managing them can drain your energy and make you cringe each time the phone rings!

But that is exactly what you need to be doing – managing them and all of your client relationships. Taking the lead in your client relationships places you in a proactive position and will even help you to anticipate even your most difficult client’s needs.

The key to a happy client relationship is being clear and in charge of how you are providing your services and then communicating exactly this to your client. You don’t need to provide them with every detail of how you run your business, just enough information to give them a sense of understanding so that the questions in their mind are answered.

How can you proactively manage even the most difficult client?

There are many ways clever ways you can manage your client so that they feel cared for and regard you and your business with trust and respect. Here are seven simple ways to get you started.

• Routinely Check In With Your Client . Reach out to your client to say hello and check-in and see how they and their business are doing. Remember, to keep the call short and professional. The purpose of this call is to not follow-up on any missing information you may need from the client. It is purely a feel good call.
• Plan Ahead. Make it a point to plan at least three months in advance for all of your client accounts. This will help you to anticipate their needs and place you in a proactive position. Be sure and discuss what is coming up for your client directly with them so that they gain the sense that you have their needs covered.
• Create A Set Schedule for Client Work. Creating a set schedule for when work will be performed on each client account helps everyone involved with the account to relax and know when events are going to occur. This helps clients to know when to submit their information for processing and when the finished product will be returned to them.
• Say What You Do and Do What You Say. If you tell your client you are going to do something and have it completed at a specific time, be sure that is what you are doing! Saying you will do one thing and then not delivering what you have promised creates distrust in the eyes of your client.
• Ask for Feedback on Your Services and Listen to Your Client. This may be hard at first. I guarantee you that you will garner some very important information that will not only help you to improve your services, it will also help you forge a stronger working relationship with your client.
• Send out a Quarterly Recap Report. Once a quarter, send your client a brief one-page overview recapping the events of the previous quarter and HOW you helped them. I cannot even begin to write about the many benefits you will reap from this recap report.
• Share Your Successes With Your Clients. Everyone likes to hear good news and be associated with people who are successful. Be sure and share when you add someone to your staff or if you’ve added new technology to enhance the services you will be providing to your clients.

Remember, it’s that personal connection that matters most and will help you to create long-lasting client relationships.

Take some time today to think about how YOU can better manage your client relationships. Then chose at least one of the 7 ways listed above to implement this month. Who knows, that grumpy client could become your biggest advocate!