Minimising Accounting Costs
The following information may assist you in minimising accounting costs.
Firstly, it may help if you understood the process undertaken by the team here at PECA to complete your job. Some common questions that you have asked are these:
QUESTION: HOW DO ACCOUNTANTS CHARGE?
ANSWER: All Accountants charge by time. The longer it takes to prepare your Return the dearer it's going to be. Some businesses sell hamburgers, Real Estate Agents get paid commissions, and ACCOUNTANTS SELL TIME. The more presentable you submit your financial statements, the quicker we get it done, and the more cost effective it is. We only have 7.5 hours per day to sell and we would not be in business if we gave our product away.
QUESTION: CAN YOU GIVE ME A QUOTE FOR THE JOB?
ANSWER: Just like its impossible to quote a building job over the phone without looking at the plans, or value jewellery over the phone, its not possible to know how long any accounting work might take. Two sets of records for the same business can take twice as long for one set as for the other depending on how the records are presented. We can give a quote after reviewing your records. If we have not prepared financial statements for you before there will be additional one-off setup costs
QUESTION: WHY IS MY BILL SO MUCH MORE THIS YEAR THAN LAST YEAR?
ANSWER: Basically three reasons
(a)There is a lot more work this year. Examples are: Purchase or disposal of investment property, GST did not reconcile, wages do not reconcile;
(b) Increase in our charge out rates as our labour costs are going up every year.
(c) Missing information. If information is missing we will leave the job, pick up a new job and wont come back until the current job is complete. The more often a job is put down & picked up the more time is added to the job.
It is in our interest to complete the job quickly so we can get onto completing the next job. We earn the same amount of money and have a lot more happy clients.
QUESTION: THE M.Y.O.B. SALESMAN SAID THAT THE SOFTWARE SHOULD REDUCE MY ACCOUNTING COSTS BUT IT'S ACTUALLY DOUBLED - WHY?
ANSWER: Basically garbage in, garbage out. It takes much longer to sort out garbage.
The most frustrating thing (and every Accountant says the same thing) is when a client gives you a year's computer printouts (after spending hours getting it to this stage) and we have to spend hours and hours sorting out the mess. Efficient computerisation of your records depends solely on the operator. If the operator is good then it would definitely reduce time. However if the operator is not good then it takes a lot more time to try and sort out the mess. If the operator is not good then it's much more cost effective to use a simple manual cashbook system (or simply supply cheque butts & bank statements). We can use a more junior staff member to process it at a lower charge out rate saving you money.
QUESTION: WHAT ARE YOUR CURRENT CHARGE OUT RATES (Exclusive of GST)?
Partner Level $200.00 p/hour
Manager Level $160.00 p/hour
Support Staff $90.00 p/hour
Administration $55.00 p/hour
QUESTION: WHEN WILL THE PARTNER LOOK AT MY TAX RETURN?
ANSWER: Subject to the complexity and urgency of the job, Support Staff process all the records and produce a draft set of financial statements. They then go to the Manager or Partner who reviews them and discusses any tax planning. It's this tax planning session that could save you thousands in tax. The Support Staff then finalise the financial statements according to the Manager or Partner's instructions. Sometimes the client is called in to discuss various problems or look at options. This process is similar to the surgeon and the nurse or the mid-wife and the Obstetrician. These processes are designed to minimise the costs to the client / patient.
QUESTION: I ASKED YOU TO RUN YOUR EYE OVER THIS DOCUMENT AND YOU SEND ME AN ACCOUNT?
ANSWER: Don't forget our business is to sell time. If the task takes less than 6 minutes (like a phone call) than it's done for free. More than 6 minutes it's charged (including phone calls). We only have 7.5 hours per day to sell. If we give it away for free we would not be in business and be able to offer our services.
QUESTION: WHY HAS IT TAKEN SO LONG?
In the PEAK PERIOD between May and November the turn around time may stretch out to 3-4 months or more, as every one wants their work done in this period. Every chartered accountant in NZ is in the same boat. So please be patient in this period.
In the OFF-PEAK PERIOD between December and March turn around time drops back to a few weeks.
Just like there are peak and off-peak periods for holiday accommodation every chartered accountant is in the same boat. So be prepared for delay in the peak period. Remember how hard it is to get accommodation during school holidays.
PAYING ACCOUNTS ON TIME.
Please help us provide you good service by paying your accounts on time. Without payment we cannot provide the resources to give you prompt service. Some clients take a long time to pay but expect us to drop everything and attend to their needs immediately. It must be a two way street. You have to get the best service possible and we have to be given the opportunity to provide it within the constraints available to us.
10 STEPS TO HELP YOU MINIMISE ACCOUNTING COSTS
- Efficient computerisation - make sure that you understand the computer packages you buy.
- Provide all the information in the first instance.
- Summarise and reconcile as much as possible
- Explain any unusual events at your initial meeting
- Ask yourself the question "can I attend to this without contacting PECA" i.e. sometimes you may contact us to fax copies of documents, which you may already have in your possession. E.g. Tax Returns
- Discuss with us areas that can be improved or work that you can do to present the job better.
- Use our support staff for the minor things and use the partner only for the important things.
- Provide missing information quickly.
- Do most of the running around yourself e.g. calling banks / solicitors, collecting statements etc.
- Use email and our website to ask for answers to questions.