207 ⎸ [Q&A] Accrual Accounting and Client Management Insights

Hey ambitious bookkeepers!

I absolutely love our monthly live Q&A sessions because they give me such great insight into what you're all struggling with in your bookkeeping businesses. This month's session was particularly packed with questions that I know resonate with so many of you, so I wanted to share some of the key takeaways here on the blog.

Listen here or on your favorite podcast player, or watch the video version on YouTube >>

Now let's dive into some highlights!

The Client Communication Game-Changer

One of the first questions was about client request systems, and I have to tell you - this is something that can make or break your efficiency. We use a simple Google Sheets system that I've been refining for years, and it's honestly a game-changer.

Here's how it works: We create one Google Sheet per client when we onboard them. That's it. One sheet, one link that never changes. Each month gets its own tab, but the link stays consistent. I always tell clients to bookmark it (though let's be honest, they rarely do), but we send them the same link every month anyway.

The magic happens when you combine this with Xero Ask. We pop that same Google Sheet link into Xero Ask every month, and it sends automatic reminders to clients who haven't completed their questions. Plus, we have our sheets set up to alert us when changes are made, so we know immediately when a client has updated their information.

The beauty of this system is that if a client falls behind, we just let them know they're behind on months X, Y, and Z, and they can catch up using the same familiar format.

The Xero Migration Reality

I got several questions about Xero migrations, and I want to be transparent about this: I'm a huge advocate for Xero over QuickBooks Online, but migrations aren't always seamless. We use Jet Convert for QBO to Xero migrations, and while it's a solid tool, you need to understand what transfers and what doesn't.

Classes come through as tracking categories, which is usually fine, but locations can be trickier. My advice? Check the Jet Convert website for their current migration checklist before you start any conversion. It'll save you headaches down the road.

When Cash Basis Clients Want to Go Accrual

This was probably the most complex question of the session, and it's one that really highlights the difference between basic bookkeeping and true accounting expertise. When a client wants to switch from cash to accrual basis, you're not just changing a setting - you're fundamentally changing how you handle their entire financial picture.

Here's what you're signing up for:

Revenue Recognition: For service-based businesses, you might need to set up deferred revenue systems. I have a SaaS client where I spend 30-60 minutes every month just on revenue recognition because they have multi-year contracts that need to be recognized monthly.

Accounts Payable Accruals: You'll need to accrue AP for bills that come in after month-end for the previous month. This requires strong communication systems with your client.

Inventory Tracking: If they have inventory, you're now dealing with cost of goods sold calculations and inventory valuation.

Balance Sheet Reconciliations: Everything that hits the balance sheet needs monthly reconciliation - prepaid expenses, loan amortizations, short-term vs. long-term liability splits.

This isn't just "a little more work" - this is corporate-level accounting that requires expertise and significantly more time. If you're not charging a premium for accrual work, you're undervaluing your services.

The Six-Figure Question Everyone's Asking

Tim asked if six figures in year one is really possible, and I want to be completely honest about this. I didn't hit six figures in my first year because I was working very part-time, but that doesn't mean it's not possible.

Here's the math: 15 clients at $500/month gets you to $90K. 20 clients at $600/month gets you to $144K. That's really not that many clients when you think about it.

The key is systems and automation. If you're going to manage that many clients without burning out, you need to stick with one niche, one software system, and create consistent workflows that don't require you to reinvent the wheel for every client.

Pricing Strategies That Actually Work

Speaking of pricing, I got several questions about my pricing calculator and how to avoid undercharging. This is such a common struggle, and I think it often comes from not fully understanding the value of what we provide.

When you're doing accrual accounting, you're not just entering transactions - you're providing strategic financial insight. When you're managing client communications efficiently, you're saving them time and mental energy. When you're handling their month-end close process, you're giving them peace of mind.

All of these things have value that goes beyond the hours you spend on the work.

The Niche Question

Crystal asked about focusing on contractors and construction companies, and I have to say - if you enjoy job costing and that level of complexity, there's absolutely a market for it. In fact, when construction companies come to me, I refer them out because it's not something I want to handle.

The key with any niche is systems and communication. Construction bookkeeping becomes difficult when there's a breakdown in how job numbers are tracked or how information flows from the field to the office. But if you can establish solid processes with your clients, it's definitely viable.

Looking Ahead

I'm so excited about the Bookkeeping Biz Workshops coming up in August. This year, I'm doing them a little differently - evening sessions over three days instead of daytime sessions for a week. I want to make them more accessible for people who are building their businesses as side hustles or have other commitments during the day.

If you're just starting out or thinking about starting a bookkeeping business, these workshops are honestly the best place to begin. We'll talk about building your business around bookkeeping skills, and if you don't have those skills yet, I'll point you toward the best programs to get them.

The Bottom Line

What I love most about these Q&A sessions is that they remind me that we're all figuring this out together. Every question that gets asked is a question that dozens of other people are wondering about too. Whether you're dealing with client communication challenges, considering a switch to Xero, or trying to figure out pricing strategies, you're not alone in this.

The bookkeeping industry is evolving, and there's room for all of us to grow and succeed. The key is staying curious, continuing to learn, and remembering that every challenge is an opportunity to develop a better system or process.

Keep asking questions, keep pushing forward, and remember - you've got this!

Want to join our next live Q&A? Make sure you're on our email list so you don't miss the announcement. And if you have questions you'd like me to address, feel free to email them to me throughout the month - I save them all for these sessions!

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