Working as a bookkeeping specialist, I provide advice and support to small business owners, partnerships and sole traders: three situations in which web developers, web designers and other web professionals often find themselves.
In a series of articles for SitePoint, I’ll be exploring – and resolving – some of the major issues I see affecting web professionals when it comes to bookkeeping. Broadly, I’ll be covering the following topics:
- Introduction to Bookkeeping for Web Pros
- Accurate and Timely Bookkeeping – Make it Easy on Yourself
- Contract Management and the Sales Cycle
- Keeping Track in the Web World
- Tax Time
- Growing Your Business with Good Bookkeeping
Introduction to Bookkeeping for Web Pros
Many common bookkeeping problems have very little to do with the actual books. Day to day bookkeeping is mostly just addition and subtraction. It is what the bookkeeping builds upon and how we approach it that often makes us stumble.
Set Clear Expectations
I’m going to quote Mary Poppins here: “Well begun is half done.” If you and your client are clear about expectations, you will eliminate a lot of customer service and bookkeeping issues. Your contract, estimate and/or policies should be very clear as to how much you expect to be paid, when payment is due, how payment can be made and what other responsibilities you client has in getting the work completed.
If your electric company sent you a bill but had no information as to why it was due, where to send your payment or if you were able to pay by credit/debit card, how anxious would you be to get that payment out? You also need to follow through with your invoicing. If payment is due at a certain stage, then you should invoice within 24 hours of that stage being complete. You don’t want the client to be confused as to how much work is complete or, as often happens, forget how far along they are in the process. The less time you spend re-hashing what was or wasn’t done and what payment is or isn’t due, the more time you have for paying work (and happier clients).
Consistency is another big secret in bookkeeping. If you invoice your clients every month for maintenance or other periodic work, it should be done as close to the same day each month as humanly possible. Sending out invoices on the 2nd of one month and the 15th of the next means the client builds no expactation of when they are required to pay. They may form the impression that they don’t owe you anything when a month comes and goes with no invoice. When they finally do receive it, they are surprised. They may have even already spent the money that was originally allocated to you or feel otherwise justified in delaying payment to you.
I am so consistent in my billing that when I have occasionally been a little late with invoices (nobody is perfect), I have clients contacting me to ask if they missed it.
Consistency is also important in keeping track of your books – your bank account, credit card(s), PayPal account and merchant account. If you check them each day, the end of the month reconciliation is quick and easy. With some accounting programs, you NEVER have to do a monthly reconciliation. If you start or end the day with: who paid today? Did I have any business expenses today? Can I pass them through to a client? Is anyone due for an invoice? Was there any time for which I missed billing? Then you will eliminate bookkeeping issues before they begin. Again, a little time each day has a big payoff in billable time.
If you are not using a timer, you are just guessing how much time you are spending on website or maintenance projects and therefore you are leaving money on the table. A good time keeping program (and there are some free/cheap ones out there) will not only put more money in your pocket, but it will speed up your invoicing process immensely giving you more time for paid work.
Track Your Time
It’s also a good idea to use your timer even if you are charging a flat fee for a project. I know, you are thinking that you charge a flat fee so you don’t have to use a timer. You may discover that you have sorely undercharged. If you have empirical evidence, you are more likely to adjust your pricing next time.
If you find that some projects take you a lot less time than you thought, you know which ones are more lucrative and where you have some room to negotiate in an upsell. A time keeping program that links to your accounting software is a wise investment. Invoicing can go from faster to speedy.
Call an Expert
I realize that these tips are not very sexy. I referenced about Mary Poppins, for goodness sake!
I know that to a Web Pro time tracking and contracts are nowhere near as interesting as some great code or the awesome new design you are working on, plus they take time away from that fun stuff! There are professionals out there that actually find these matters enjoyable, they like rockin’ the contract and prepping the invoice. And just as not everyone who can copy a jQuery snippet is a web developer, not everyone who owns a copy of Quickbooks is a bookkeeper.
If you really dislike bookkeeping or simply do not have the time to do it, consider hiring a bookkeeper. The returns in money, time and stress will be well worth it.
Having said that, if you take the time to set up a few systems and good habits, you might find it’s not as hard as you think. In coming weeks, I’ll try to give you enough info to decide which approach works best for you.
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