The Biggest Problem
The No. 1 biggest problem for bookkeepers is getting documentation. You need to get the receipts and the bills. You need to be told what project, cost code, or department those receipts and bills were for. You need to understand exactly what should be coded as Marketing Expenses and what should be recorded as Office Supplies. You need documentation so you can know what things are legally deductible. You need documentation to know what was purchased and how to code it. And the lack of documentation makes embezzlement and theft that much easier for bad actors.
Getting receipts from coworkers is a chronic issue. Getting receipts from business owners can be an even bigger issue. A business owner that JS knew had a two-inch-thick wallet with every card he'd ever received from anywhere in that wallet. And he would not be able to get her receipts for the credit card charges because he emptied his pockets each night at home, leaving a mountain of papers behind. It could take three weeks. What do you do? When you go to reconcile an account, you will be missing transactions if you are only adding data after you have the document in hand. You’ve already let people know you need receipts from them. But you don't want to hold off on reconciling because you need to keep the books up to date. The answer is to enter that transaction in an account called “Ask Owner.” If there are six people in the field you rarely see who have to ask for receipts, then you need to create six individual Ask accounts.
There is even an app called Uncat that will push requests for transactions in the Ask accounts to your coworkers. The goal is to clear up all the Asks as part of the month-end close and not leave months and months of questions lingering. Does the bookkeeper have any real power to enforce document collection and get the details they need to ensure the books are accurate?
One of the most vital things a business owner can do for the financial health of their business is to show that they follow the receipt rules and that they take getting receipts seriously. If the business owner doesn’t show that having financial documentation on file is important, the employees won’t either. It's also a huge waste of time when you have to chase things down that you need to do your job (remember return on Investment?). And frankly, bookkeepers should not guess what expenses are for; we need documentation to prove it’s a business expense to the IRS, to know quickly if there is credit card fraud, and to ensure there is no employee theft. You don't know what Amazon is without a receipt.
The best advice we can offer bookkeepers is to ask about missing data within no more than a couple of weeks of the purchase occurring. This is when the topic is still fresh in the mind of the purchaser. That means you, the bookkeeper, need to keep up to date on your work and be willing to communicate your needs to the owner and staff on a regular basis. If you are burned out from trying, tell the owner. Let the owner know that now, no one is keeping an eye out for embezzlement and theft. That might light the proverbial fire under their butt to take data collection more seriously.
One caveat, contract bookkeepers support business owners at all levels. They may only reconcile accounts, and the owner uses a bank feed to do their own data entry. You could be a bookkeeper who takes the time to look at the balance sheet and profit & loss so you can alert the owner to areas you see as a concern and guide them when you catch their coding errors. Or you could do it all, including pay the bills and process payroll. In our opinion, the more you are involved with a company’s books, the more you should feel responsible for data collection. If for no other reason than to cover your own butt.
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