HOW TO HIRE AND MANAGE A BOOKKEEPER
It was only after 30 years of miscommunication, pain, suffering, embezzlement, and all-around general bamboozling that I finally figured out how to hire and manage a bookkeeper for my shop. I don’t know about you, but at least 95% of all the shop owners I know suffer from the same problems I have suffered from in the past. There is typically a real disconnect with the one person in your shop who can put you out of business…and you won’t even know how it happened!
Here are some key things to watch for and do with your bookkeeper:
Learn Bookkeeper/Accounting Speak
Just like technicians who say things that your customers do not understand, bookkeepers have their own language. You must learn enough of their language to understand what they are saying to you. When they get all technical with you, have them stop and teach you what they mean. If you do not know how to read your monthly Income Statement and Balance Sheet, AMi (Automotive Management Institute) has a couple of great courses that will teach you how to do this. It is critical to the survival of your business over the long haul, that you learn how to do these two basic things! Keep working at it until you know enough to communicate well.
Set Clear Job Expectations
You should have a Bookkeeping/Accounting Checklist with duties for your in-house (or external) bookkeeper and your tax accountant listing all daily, weekly, monthly, quarterly and annual duties. You can set this up yourself over time or you can use modify the one I use (email us to ask for your copy). Have the bookkeeper give you the checklist regularly as tasks are completed with the date done and by whom recorded. Now you can hold them accountable for performing the minimum expectations of the job. You should also set higher expectations of watching out for your cash and expenses. This will take a little training to teach what you expect, but it is well worth the investment.
Qualify Them Going In
You must test the bookkeeping skills of each prospect. If you are not capable of doing this yourself, hire your tax advisor or tax accountant to test the math and accounting knowledge of your finalists during the screening process. Check references and make sure they can perform and are reliable. Longevity in past employment is a good sign, but not if they owned their previous employer (read on to learn more about this one!).
Good Cash Controls
There must be separation (checks and balances) within your organization to control cash properly. Daily cash reconciliation is critical and must have at least two people in the loop. Do not trust your bookkeeper to do the deposit with no oversight AND at the same time manage your checkbook – DANGEROUS, DANGEROUS, DANGEROUS!!! And never have your bookkeeper as a signer on your bank accounts! You must talk with your outside accountant to set up proper controls and then never vary from them under any circumstances!
Bookkeepers Are Not Managers or Customer Service People
Keep them away from your other employees and customers! They should answer to you and have no authority to interact with employees or customers in any way other than necessary actions that you direct. The more invitations (and thus control) you give them to meddle in other areas of the business, the more they will own you! They already know more than anyone else in the business (probably including you), so why give them opportunity to use that knowledge to begin manipulating or playing games with other employees? Stop the insanity and get them out of everything else! It is dangerous!
Hire the Right Personality or Suffer
Should you hire someone who is strong or weak? That is the age-old question about bookkeepers. If they are too weak they can’t get everything done you need. If they are too strong they will tend to be an “empire builder” who will take control of more and more things. This will happen very naturally as they offer to do things for you that aren’t getting done outside of their area of responsibility. Since these types of people tend to perform at a high level it will be easy for you to give them more and more to do. You must resist this if you have one of these people, and instead keep pulling the reigns in hard from time to time. The best bet when hiring a new bookkeeper is to hire a personality somewhere in the middle – a little less aggressive than you might want, but with less tendencies toward controlling everything. If your current bookkeeper is one extreme or the other…it might be time for a change.
Don’t Pay Bookkeepers an Incentive
The bookkeeper is the only position in the shop that must not be paid an incentive. Remember, you do not want to give them any reason to “cook the books!” Pay them an hourly wage and then load them up with work and manage them with the Bookkeeping Checklist!
Pet Systems Are Dangerous
Everyone on the team must create “institutional memory.” That means nothing is hidden, confusing or inaccessible to others who need to know. As the owner, you must always maintain control of all knowledge, systems, passwords, accounts, customer lists, reports, metrics, documentation, etc. Allowing a bookkeeper to develop and control pet systems that are not transparent and accessible is giving them permission to dominate you or hurt you should they leave. They can also use this power to manipulate undeserved raises, benefits and/or favors. Have your outside accountant help the bookkeeper set up a good Chart of Accounts that you all agree on, and then hold your bookkeeper accountable to using it correctly and consistently.
Monthly, Quarterly and Annual Review by Outside Accountant
Your tax man must review the work of your bookkeeper regularly. They need to know they are being supported AND WATCHED! As your outside accountant finds areas of concern, have him communicate them to the bookkeeper until you can speak the language and lead them on to better conformance. Expect batter and better quantity, quality and understandability as time goes by.
Set the Example
Don’t demonstrate any level of dishonesty in any way. If the bookkeeper (or any other employee) sees you being dishonest with a customer, employee or vendor, you just gave them license to be dishonest or steal from you. Remember, in many cases your bookkeeper knows your financials and systems better than you do. They know where the holes are! If you give them reason enough, they can hide their own dishonesty from you for a significant amount of time – maybe long enough to really hurt you or even put you out of business!
These are just a few of many lessons learned from over 35 years as a shop owner. You don’t have to make all the mistakes I have made. I hope this will help you avoid all that pain and lost money I have experienced! If you are an auto repair shop owner, and would like to access this information at a higher level, please contact me. I enjoy helping my peers.