Updated: Jul 13, 2018
A few years ago I had a bit of building work and a new kitchen fitted, and as somebody who doesn't know anything much about building, or fitting kitchens, I asked three local builders to quote for the work. The first turned up with his dad and quoted me a price which was half of my budget. The second turned up in his very nice looking van and quoted me three times the price of the first. The third turned up, gave me some suggestions of ways I could improve the layout, add more light and get the best deal on my tiles, and quoted me a price somewhere in-between. In true Goldilocks style, I went with him.
When you're starting any project, be it a kitchen, or a business startup, you need to have the best people on hand to help you. Price is of course a factor, but here are my top 4 reasons why you should think twice before hiring the cheapest bookkeeper.
1. They might not be qualified
It can take years to train as a bookkeeper. To obtain an ICB Practice Licence, you need to take up to 7 exams. There are additional exams if you want to prepare tax returns or payroll. As an accountant, I'v also taken 14 accountancy exams which took four years alongside full time work.
A qualified bookkeeper will know the value of their time and will charge a rate which is reflective of the knowledge and skill they bring to your business. Somebody who isn't qualified might not value their time so much and is more likely to charge a rate closer to the minimum wage.
2. They might not be experienced
I recently saw a post in a bookkeepers Facebook group where somebody had applied for a bookkeeping job but didn't know how to use Excel or the accounting system mentioned in the advert. I discourage my clients from using Excel, but it is still a key piece of software used in the finance profession and I was surprised that somebody applying for this kind of role wasn't able to use it. It made me question what kind of work experience they had, and if somebody is quoting a very low rate for bookkeeping work, it might be because they don't have much experience so don't have the confidence to charge more.
3. They might not have the right paperwork
As bookkeepers, we are obliged to have the right paperwork in place. But the Books for example has a practice license from the ICB, professional insurance, we're registered with the Information Commissioner's Office for Data Protection and the General Data Protection Regulations, and we check out all of our clients so we meet the requirements of Money Laundering Regulations. A cheap bookkeeper might not have the right licenses and documentation and you should always check before hiring a bookkeeper to ensure they're properly qualified and insured.
4. They might be putting your data at risk
The final thing to be wary of is that sometimes bookkeepers are particularly cheap because they outsource work to people outside of the UK. I have no issue with subcontracting, I sometimes subcontract work myself, but if your work is outsourced to a country which doesn't observe the requirements of the General Data Protection Regulations, your data could be at risk. Additionally, if your data is outsourced to somebody who doesn't understand UK accounting regulations, this could result in errors in your accounts.
5. It might cost you more in the long run
If one bookkeeper is charging £10 per hour yet they take longer to do your bookkeeping because they're inexperienced, or they need to re-work it because they've made errors - or dare I say you have to hire somebody else to re-work it because they've made errors, this is going to cost you a lot more than the £10 per hour you originally expected to pay. Surely it's better to hire a professional who costs more but gets it right first time?