How Low Can Bookkeeping Go?

Posted by Kristi Baxter

Big or small, every business needs a good bookkeeper. More importantly, you need a bookkeeper you can actually trust.

Your bookkeeper tracks your bills, manages your cash flow, and saves you a lot of time, so a good bookkeeper is a treasure. A bad one, however, can be a real disaster. Knowing how to tell the difference between the two is necessary for your company’s survival.

How Do You Know When It’s Time to Fire the Bookkeeper?

Bad bookkeepers generally fall into two categories: They’re either dishonest or incompetent. Either way, knowing how to spot a problem can save you a lot of headaches.

I’m speaking from the voice of experience here. A long-time bookkeeper for our small business missed a few appointments and started giving vague answers to our questions. Shortly later, personal problems caused her to pull up stakes and vanish with all of our records for that year. 

If I’d paid better attention to the early warning signs of trouble, we could have avoided a major upset that derailed our plans. 

What Are the Red Flags That Say Your Bookkeeper Is Bad News?

Incompetence and fraud can look a lot alike. Here are seven signs your bookkeeper needs to be replaced:

  1. Your checks start bouncing because the deposits aren’t being made in time.
  2. Your bookkeeper isn’t providing the correct financial reports (profit and losses, balance sheets, and cash flow statements) regularly.
  3. Your bookkeeper can’t adequately explain the statements they do provide to give you a clear view of your company’s financial health.
  4. Your books are always behind without any reasonable explanation or the excuses seem to be piling up.
  5. Your phone calls, emails, and texts to your bookkeeper regularly go unanswered or they miss appointments without a good reason
  6. Your bookkeeper doesn’t want you to look at their work or uses software that’s outside of your system and beyond your access.
  7. You can see the books but the information is missing, the paper trail is unnecessarily convoluted or the accounts aren’t being reconciled.

Should You Give a Bookkeeper Who Made Mistakes a Second Chance?

Mistakes happen, it’s true, but an incompetent bookkeeper can do just as much damage to your business as a dishonest one (and some dishonest ones will try to pass off their deceits as mere mistakes). 

Even a bookkeeper who used to be reliable can turn bad on you for all kinds of reasons (like ours did). Forgiving mistakes might be kind, but it isn’t good business.

There are plenty of excellent, honest bookkeepers out there — and your experience with them should be the polar opposite of the problems listed above.

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