Season 3 Episode #001 Bookkeeping Health Checks: Should I charge for them?

In this first episode back after a break Amy and Maia discuss Bookkeeping Health Checks and, more specifically, whether or not you should charge for them.

They get into the nitty gritty of how to bring it up with potential clients that they need to pay for a health check, and talk through the process they use when doing initial consults.

Key takeaway: A health check is a useful document for any business owner to have, whether they end up engaging your services or not.

Podcast Info

Episode: S3E001

Series: FAQs

Host: Amy Hooke & Maia Coghlan

Topic: Charging for Health Checks and communicating this with your clients

Useful links
Read transcript

Bookkeeping Health Checks: Should I charge for them?

Amy Hooke 0:00 Hey, welcome back to the bookkeepers voice. It's been a while. So I'm here with Maia. Thanks for joining me, Maia.

Maia Coghlan 0:08 That's all right. I'm pretty happy to be here.

Amy Hooke 0:11 Yeah it's pretty exciting. So as you may have noticed, we have not been podcasting for quite a while. And we've really been spending a bit of time just really focusing on our members and developing our programs and making them just great. So. And we've also been thinking about, you know, if we bring the podcast back, what are we going to do for our new series and some new episodes. So my I came up with a really great idea, which was that we get a lot of questions from our members and from people in the community in general. So we just wanted to kind of, yes, start a new series, where we're just gonna go through and answer like tons of questions. So you will be able to also send us in your questions as well if you would like to. So the episodes will be available on your favorite podcast apps. And we'll also be playing some of the episodes on our YouTube channel, the savvy bookkeeper. So if you would like to go and find that you can pop your comments in there. That's where we'll be looking for new questions to answer in future weeks. So feel free to jump across and locate our YouTube channel. And go in there if you want to post some questions. All right, so you're ready to go? Yeah, first question.

Should I charge for Bookkeeping Health Checks?

Maia Coghlan 1:27 First question. Today, we're gonna be talking about bookkeeping health checks, and whether you should charge for them or not, because a lot of people offer free health checks, some people charge for them, and some people are unsure what they should do. So, Amy, should I charge for bookkeeping health checks?

Amy Hooke 1:53 That is a very good question, I'm thinking I might actually just go back a step. And just for obviously, most of our listeners will probably know what a bookkeeping health check is. But for those who may not have ever done a health check before, so what we do at off the hook, and also what our savvy we teach our savvy members to do is to do a bookkeeping health check, as part of the initial consult process. So what it looks like is we want to get into the client data file, and have a little bit of a look around and see actually what's going on in there. So sometimes, I mean, I'm sure if you've been a bookkeeper for a while you notice that many client accounts are in a mess. So in my experience, it can be something like, I would guess it's around eight in 10 new files, that new clients that come across are actually in a mess. So there's a really good way to go in and have a look at the accounts and find out like what what state the accounts are actually in in the first place. So we do this for two reasons. So part of it is to do with being prepared for when you start the bookkeeping, obviously, it's good to know the condition of the file, but we also use it as part of the initial consult, process. And we also use it as a way of forming part of our quotes. So for anyone who has made the switch from hourly rate billing, to doing fixed price billing, or any kind of packages, you'll notice that sometimes it's a bit easier to quote for the ongoing work. But to quote for upfront, fix up work and things like that, it can be a bit tricky. So we use the bookkeeping health check. So we have a health check masterclass, where we go through, and we have, we have the template, we have a very specific template. And what we do is we go through all of the usual suspects, which are basically the accounts which are very common for there to be mistakes. So we're basically looking for transactional errors in the accounts. And we're also looking for problems where there might be a problem with how the accounts are set up and things like that. So we're really just looking for balances that don't look, right. We're looking for things, you know, debits that are negative and should be positive or, and things like that. So we're checking like the we're checking basically the balance sheet and the profit and loss so that we can go through and see at any of these accounts that usually have errors in them. Are they are we finding errors in it? So that's basically what a health check is? It sounds right there. It's also forms of Yeah,

Why would you charge for it?

Maia Coghlan 4:40 it sounds like a bit of work, which I guess is why some people would think about charging for it.

Amy Hooke 4:47 Exactly. Yeah, that's the thing. So what happens is we go through and we train our members on how to do the bookkeeping health check. When they first start start out, it depends on where they're at, in a business business. So Forex Import, when I first started doing bookkeeping health checks, I did them for free because I wanted to get really good at doing them. And I wanted to get really good at preparing the report, and I wanted to kind of develop a process around it. So I was happy to do it for free, then what's, what starts to happen over time, like, I think, you know, in yourself, this will normally tell members, you kind of know within yourself that it's time to start charging for the bookkeeping health check. Because you'll start to feel like, you sort of start to feel like maybe it's a bit of a waste of your time. So what I mean by that is, basically, when you do the health check, as part of the quoting process, what will happen is, you'll do this health check, it can take anywhere from about 40 minutes to up to maybe 90 minutes, depending on the size of the file. And what will happen is you'll prepare your quote based on the bookkeeping health check report. And then what's gonna happen is vary quite often, depending on where your, your potential client came from in the first place. If it was a referral, you probably have much more better response rate. Whereas if they're coming from your website, it might, it's going to be much lower, you're going to find that people don't even get back to you. So you'll start to feel like oh, well, am I wasting my time? Or am I wasting my time on, you know, spending 40 5060 minutes on doing a bookkeeping health check? I'm not getting paid for my time. And this, these people are not getting back to me about quote, so you'll start to feel within yourself, okay, I feel like I've had enough practice doing it for free now. And because not everyone will get back to you or value their bookkeeping health check, you'll start to see, okay, perhaps charging for the bookkeeping health check, check upfront, is a good idea. So that you can just make sure that you're covering your time, but you're also filtering out the people that never really wanted to pay for it in the first place.

How do you justify to your potential clients that they need to pay for a Health Check?

Maia Coghlan 6:53 Yeah, cool. That sounds sounds like a great idea. So how do you if you do decide to charge for your bookkeeping health checks? If you reach that point? How do you justify it to potential clients that, that they need to pay you to do a bookkeeping health check? Essentially, paying you to give them a quote is how they would perceive it?

Amy Hooke 7:24 Yes, yeah, that's right. So I have people had I have people had potential customers literally say that, to me, before I've had customers, especially you're gonna find, especially industries that do quotes for free, they're going to be especially annoyed about this, potentially. So you know, there's certain industries, for example, some of the trades and that kind of thing they used to doing, it's part of their job, they do quotes for free. So to someone like that, who does quotes for free, they might find that offensive, and they some, some people depending on the person, they will not hesitate to let you know that they are not impressed with that. And they may ask the question in quite a strong manner. And then obviously, some people are going to be a bit more friendly about it. So what I did was I actually set the I set up FAQ on our website, so that they can go through and they can find out most of this information before they before they speak to me or any of my team members. Because what I want them to do is when they realise that they have to pay for a quote, I want them to find this out in private so that they can let out their frustration, like, away from me, let you know they can, they can do that in private, and they can let their frustration out. And then they can just decide not to go ahead. So that I use that as an active filter. But of course you are going to from time to time have people who haven't read the page, and this will be common. And you might have people who ask you during the initial consult, why should I pay for it? So the the I, the thing that we make sure we let them know is that you're going to pay for it anyway. It's just that we're being upfront about it. And we're charging for you it for we're charging you for it upfront. So that's the first thing. And the second thing is that what they receive, the bookkeeping health check document that they receive is actually a valuable document. And so we explain to them why that's a valuable document. So with the first part, you know what most people are going to be used to, depending on what industry they've come from and what their kind of background is, they're going to be used to going to a bookkeeper, they'll call you up and they'll say hey, how much do you charge and the bookkeeper says I charge $70 An hour or whatever it is, and then they will the person will think okay, do I like that hourly rate or do I not like that hourly rate and then they will decide whether they want to work with you or not. Then what will happen is you will start they will start working with you. And hopefully when you first get started you will do a health check but even if you don't do a structured or a formal one as you continue knew your way through doing the bookkeeping, you're going to discover and run into these errors at some point anyway. So then what will happen is you'll start doing, though you'll find those errors, and then you'll start fixing them. And you know, I guess as bookkeepers, we we find these mistakes, and we're like, oh, cool mistakes, we can fix them up. And then we send the client, the bill at the end of the month, and the client goes, Oh, okay, like, that was a bit more than what I was expecting. And you say, Well, you know, there was lots of errors in the account, and they go, Okay, fair enough, and then you continue to fix those errors. So, at this point, they are going to be they are actually paying for that service, they just didn't know that they were going to be paying for it. So what we explained to them is that you, we do the bookkeeping health check upfront, and we charge you a fairly small fee, we give 50% Approximately 50% of that back as a credit if they decide to go ahead with us. So that's like an incentive. And then we basically just, yeah, we just let them know that they that they, after we do the bookkeeping health check, we will give them a report, which will tell them exactly what needs to be fixed and how much it's going to cost to fix that. So then they can also decide which items on that list they want to fix. Whereas if they just go off and give it to someone, that's an hourly rate for bookkeeping, there's a good chance that the person is just going to go ahead and do the work. And they may not even have that conversation. So in the end, they do pay for it. They it's just that they're not aware of it upfront. So that's one, you know, that's one explanation that I would give to clients. Now. I know my you also do consultations with clients. Have you had any? Have you had anyone say that to you? Yeah,

Maia Coghlan 11:41 not really. I've only done I've done I've done a handful of consultations with clients. they've mostly been pretty lovely people, I've been lucky enough to get that pool. But also, like, I'm aware of, of everything that you've just said, because we've talked about it before. So I did know to explain it to them. Like the approach that I took was when I got to the part where I had to talk about them paying for a bookkeeping health check. I just gave them the explanation about why it's so useful for them first, before they had a chance to form an opinion. And then like after I explained it to them, they all said, oh, yeah, that makes total sense.

Amy Hooke 12:30 Yeah, exactly. Exactly. Once you give them the information, you know, so when you're telling them that you know that you're giving them this value valuable document? Like they, I guess yeah, as you said, you're putting that information in there before they kind of have too much time to think about it. So if you just kind of go, I think as well if you get because if you stop and pause and kind of go, like, will you get awkward yourself, then they're going to start thinking like, they'll they'll at least even if they don't notice it, they'll sort of feel it. And they'll be like, Ah, okay, so that it'll sort of make them nervous as well. And this is a very similar principle to what we do when we're transitioning clients from an hourly rate to a path to a package, when you first call that client to let them know that they're changing over to a package, you do not get in a discussion with them about pricing, you, you you are in charge of the conversation and you take the conversation the way that it needs to go on that first conversation. So it's the same thing with this, you know, taking that conversation, this is the way the conversations going, because ultimately, we're there to educate the clients. And then when we explain to them that this is a valuable document, and the value that we you know, in the FAQ is that you know the value that says that they get aside from knowing upfront what they're in for and being able to decide what they want that or not. The other part is that they can use the bookkeeping health check. If they decide not to go ahead with our service, they can take that bookkeeping health check. And they can go shop around for a bookkeeper, they can say hey, and say, Hey, I've got the bookkeeping health check. These are all the issues that have been found in my data file, can you let me know how much to charge for ongoing? And also, you know, to fix this up? Can you give me a bit of an estimate. And then that way, you know you're giving something valuable, it's also giving something valuable back to the industry because then this report is going potentially to another bookkeeper. And they you know, the bookkeeper is then not in the dark about, you know what they're getting into with the client. It's like, oh, okay, these are all the issues that have been identified with the file. And the other benefit would be really around, you know, the fact that they may have paid someone or entrusted their bookkeeping to somebody. And so by doing their bookkeeping health check, you're able to show them what issues are in the file. And they may wish to go back to the person who did the bookkeeping and say, hey, you know, like, Would you mind fixing this? Now, you know, in the event where I have found some issues in the file, and it's turned out that it's been a bookkeeper and accountant doing those accounts, I always Caution the person to be very to tread very lightly when they take these reports, because, you know, when I do the bookkeeping health check report, I can see what's there. But I don't know why. So, you know, when you do these bookkeeping health checks, you do want to just make sure that the client is clear that when I received the bookkeeping health check not to, like run off and like ask the bookkeeper for a refund, or, you know, get angry about it, but to, to use this as a working document for having, you know, facilitating discussions. And so I would recommend for them, you know, not necessarily to go and get the bookkeeping health check report to a bookkeeper. But maybe, you know, they could ask a couple of questions about, you know, one of the areas and say, Hey, like, Would you mind having a look at this? Just something doesn't seem right, would you mind investigating it and see if you can, you know, figure out what's going on. And so I just encourage them to have like, a friendly conversation, because, you know, you really don't know what's the mess left there. But the current bookkeeper was at the previous bookkeeper was at the client themselves, who made a mess prior to engaging that practitioner, like you really don't know the full story. So I think that's sort of like a little important, like, part to kind of pop in there as well. So but it is a valuable document, and they can use it to, you know, make sure that they get the right service that they need, and also to be able to get their file in, in good condition. And they can even if they want to take the report and try and fix the errors themselves, maybe they've been doing their own bookkeeping, then they can take that as feedback and go, Okay, great. These are the areas where I need to actually have a look and fixing.

When do you let them know they need to pay for a Health Check?

Maia Coghlan 16:30 It could even save them money in like starting, if they start with that information, it sort of makes it easier to plan out the work that needs to be done without it blowing out of proportion. Whereas if you you know, you just start on an hourly rate, and then everything gets found as you go along. Yeah, can work out really well for them. So that's right. In in the consultation process. This comes up while you're actually doing the initial consult. Well, yeah,

Amy Hooke 17:06 I mean, it has done before, but as I said, like I've I mean, I don't like confrontation, and I don't like it when someone like really like, when if someone asks a very direct question like that, I feel sometimes I'm gonna get thrown off. Whereas once you've done the preparation, as you said, like you're, you know, when you do the consults, you're prepared now. So if someone says, You might, the first couple of times, you might feel a bit like, oh, but um, you know, once you're prepared, you'll know, you know what you want to say? And? Yeah, so Oh, my gosh, I actually forgot what I was gonna say. So, can you remind me,

Maia Coghlan 17:42 the question was just, you bringing up this conversation during the initial consult?

Amy Hooke 17:48 Well, so what we do is we have the audit, yeah, that's always gonna say, so we try and filter it out. We try and filter out like, we try and answer as many of their questions as possible before they even get to the console, if possible. And then if not, you know, you can have the FAQs in front of you. And we, you know, I get them to open the page up if they're at their computer. So the other thing that we do is when they first fill out their form, saying like that they're inquiring about bookkeeping, that we give them an auto responder, and the auto responder has a bookkeeping, getting started with your bookkeeping guide, and it's got the four steps to getting started. So in a guide, they go through and it just points them to the pages. But in that letter in that email, we actually explained to them that there is a process involved with the quoting. And so the first step is for them to go to our pricing page, which we actually have hidden from the website, but it's, it's linked into the email. So they can have a look at the pricing page, and just make a bit of an estimate from some example packages as to whether we're in their price range. And so some of them will drop off from there. And then the next one, the next step explains that there will be a health check, which is a paid service, and that they will then you know, that they'd be required to pay pay for that. And then once we've received, we've got the bookkeeping health check report, we will then prepare a custom quote for the ongoing fees and any upfront work that might be required.

Do you ask them to buy it while they're on the phone or send them a link after the call?

Maia Coghlan 19:07 So if you got them on the phone in the initial consult, and you get to this part, do you ask them to purchase it while they're on the phone? Or like how does that work? Or what do you find is best in that situation?

Amy Hooke 19:27 Oh, you mean, just ask the question again.

Maia Coghlan 19:30 So do you ask them to purchase it while you're on the phone with them? So you've said to them You need to purchase this bookkeeping health check. They're like, Oh, okay. Do you say so go to this link. And you can buy it here. Or do you say I'll send you the link afterwards and you can purchase it in your own time? Yeah, so

Amy Hooke 19:47 during the console, I get them to open up the page. So I have like I get them to open it up in front of them, but I never asked them to buy I never asked them to actually purchase the health check. On the spot, I think you definitely can, it's just really going to depend on your personal style and the type of clients that you work with. I'm such I feel for me personally, I'm someone who I do not like to make a decision on the spot, I like to. I mean, sometimes, obviously, I'm ready to, but I sort of feel like, you know, if I want to do that, I will tell the person, so I like to have the information go away and have a bit of a look of it, look at it. But I do you know, I would say to the client, ask them, you know, ask them, what they, what their thoughts are, ask them to, you know, to find out what they're actually thinking. And just to kind of gauge so I would also like, I don't have sort of a blanket rule, I would just really test out how the conversations going, how open Do they seem? You know, what was the initial response to the bookkeeping health check? And yeah, by all means, if if they felt to me that there was a definite opening to ask them to sign up, I would. But generally, I would say that I will send you the link to the bookkeeping health check. And you can purchase that as soon as that comes through, we'll activate our process and get started.

Do you give them a discount for engaging your services after they purchase the Health Check?

Maia Coghlan 21:16 Just one last question on the list. So once they've paid for the health check, and, and they you've sent the proposal, and they've signed up, I think you did touch on this before briefly, but just want to focus on it for one minute. You give them a discount, based on which health check package they purchased, is that correct?

Amy Hooke 21:42 So we have we have like, similar to our pricing, example pricing table, we have a bookkeeping health check packages table. And it just helps to work out like what size and stage of business that they're at. And so we base the bookkeeping health check package based on their size and stage of the business. And so like, rather than the duration that the bookkeeping health check actually takes, because all I mean, all bookkeeping health checks may take roughly around the same amount of time. But we charge more for larger businesses because there's, you know, there's there's I guess, sometimes they have like payrolls and more detailed GST transactions and things like that. But we also go off of like the you know, the affordability of the business, we kind of want to offer a good deal to some of the smaller, more startup businesses, although they don't get a credit back for that smallest package. We don't actually give back a credit because the fees so low anyway. And if we go, if Yeah, so on that pricing table, we have at the bottom, like towards the bottom, basically the bookkeeping credit that they get back from if they decided to go ahead, and we put that there as an incentive. So it's basically like, you know, we're putting this barrier up, where we're saying, like, unless you're serious about potentially working with us, you know, we're not necessarily going to do, you know, like, we don't want to spend our time doing bookkeeping health check. But if they are willing to put up that money, like we're actually going to give them a certain credit back. So I think it works out to be about it's like 40%, for the larger packages, and then it sort of scales down to more like 25 20%, something like that, on the lower packages. And that just gives them an incentive to know that, you know, if they are serious, they can get the bookkeeping health check, they can get those, you know, the results of the health check and find out what's actually going on. And then we actually reward them by signing up with us, we're like, hey, we'll actually credit some of that bookkeeping health check back.

Maia Coghlan 23:37 When do you apply the credit,

Amy Hooke 23:40 it's just applied to their first monthly invoice or they've or they're against their catch up fee. It really, it really doesn't matter. We normally charge whatever the upfront and catch up fees, they usually pay that upfront plus the first month. So it comes off of that first, first charge.

Maia Coghlan 23:56 So that's the end of my list of questions that I've gathered so far on charging for bookkeeping health checks. But as we said in the beginning, if you've got any further questions on the topic, or any questions about other topics, feel free to comment on the YouTube video. Well, we'll post this on our YouTube channel. Yeah, so you can ask any extra questions there.

Amy Hooke 24:21 Or any unrelated questions, any different questions on pretty much any topic to do with your business? Especially pricing that's my favorite

Maia Coghlan 24:31 pricing Pricing. Oh, but whatever. Also, if anybody is interested in learning more about how to do a bookkeeping health check, we'll put a link to our bookkeeping health check masterclass in the notes for this podcast episode and we'll link it on the YouTube video as well so you can go check that out and you can do our bookkeeping health check masterclass if you'd like to learn more about doing that.

Amy Hooke 24:55 Yeah, yes, it's a very good poker. It's a very good master class. And I just remember when I first ran that the life version of the master class, and the bookkeepers on there said that they were happily nerding out. And it's really funny. It's such a great skill to have because it borders on. It's a bookkeeping skill, but it's also a business skill. That really helps you with your pricing as well. So it's kind of got a crossover, it sort of ticks both the boxes there. So it's really good. So yeah, thanks for joining us for another episode of our FAQs and for learning more about the bookkeeping health check and how to charge for that. And we will see you again in the next episode. Thanks. Good job. Thanks, everyone. Bye