Do I Need a VA and a Bookkeeper?

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In this episode, Matt and Barbara speak to Bean Ninjas founder and CEO, Meryl Johnston about why it’s so important for companies to have a strong financial team, what that team needs to look like, and why financial reporting tools are the key to business stability and growth.

Some of the areas covered include:

• Meryl’s journey from a consulting firm to global, systemized, online business and the perils behind bringing in virtual contractors before you have your processes in place.

Let us know what your key takeout has been from this episode and join the continuing conversation over in the Virtual Success Facebook Group.

In this episode:

1:50 Xero as a Platform

2:38 Aspects of Utilizing Virtual Teams

4:50 Boundaries

5:12 Key Roles Within the Finance Team

8:21 Cost-Effectiveness Medium

10:14 Bookkeeping Role vs VA Role

12:55 Differences with Bookkeepers and VAs

15:11 Stop Doing Book

16:42 Xero Cleanup

19:29 Reporting Practices

20:53 Where to Start

22:10 Building Skillsets

23:22 Next Steps

Intro: Do you find yourself running out of time to accomplish your work, are you spending time doing things that you’re not that good at? There are effective ways to outsource these tasks so you can focus on your business. This is the Virtual Success Show, we bring the inside scoop on outsourcing success for entrepreneurs by entrepreneurs. And now here are your hosts Matt Malouf and Barbara Turley.

Barbara Turley: Hey everyone, and welcome back to another episode of the Virtual Success Show. Where we dissect everything you need to know about how to outsource, how to get the right team members into your business, and how to do it all in the right order. Because today’s show we’re going to be dissecting a very common problem, and I’m going to be sharing a big trap that I fell into myself. But of course today I’m joined by my cohost, Matt Malouf. Hi, Matt! How’s it going?

Matt Malouf: I’m well, Barbara, and yourself?

Xero as a Platform

Barbara: I’m great, thank you. And I’m pretty excited that on the back of last week’s show, we invited Meryl Johnston, who’s the founder and CEO of Bean Ninjas back to the show to dissect this particular problem with me. So Meryl, welcome back to the show.

Meryl Johnston: It’s great to be back. Thanks.

Barbara: So guys, I was chatting with Meryl after we interviewed Meryl around the growth of Bean Ninjas and her experience around managing a global virtual team. Because obviously, that’s the genesis of this show. But in chatting after the show, I was sharing a story that I… A trap I fell into myself around using Vas, bookkeepers, accountants. And in the very early days, not that long ago, really, I decided in my wisdom that if I had Xero as a platform, which is your, you know the platform that everyone’s using I guess globally for bookkeeping and accounting. And a good VA that I could show a few tricks of the trade to, that then I wouldn’t need a bookkeeper.

And I went that route, and needless to say it blew up in my face. Let’s just put it that way. After a couple of years, and really cost a lot of pain. It wasn’t the VA’s fault. It was just a whole host of problems. And Matt, I’m sure as a recovering accountant yourself, this is making you chuckle because I’m sure you see this a lot.

Aspects of Utilizing Virtual Teams

Matt: I do. I do. You know, I think it’s interesting. Barbara, you and I have talked about this in many aspects of utilizing virtual teams, but find it, yeah. People’s expectations of that whole concept of the super VA that can do everything is still very, very prevalent in today’s society, business community.

Barbara: Absolutely. And you know, actually, I am still recovering, honestly, from that mistake myself. I was quite badly burnt. All my own fault. Completely and utterly my own fault. And Meryl, that’s kind of what led me to your company in the end, to go, “Oh my God. I really need to fix this. And quickly.” But I’m sure Meryl, is this something that you commonly seeing people coming? Going, I made a mess of this. You know, how can you fix it?

Meryl: Yes. It actually, it surprises me, but it happens regularly. So we will be talking with a business owner, and they might initially say, well, why do I need you? I could have a VA doing this. And my answer to that is to discuss what the role of a bookkeeper is, and the tasks. VA can definitely help with Xero, but they have their place in the finance team as well. And then we also have many clients that have come to us after trying with only a VA, and their tax accountant, and just found that they couldn’t trust the numbers in Xero. And parts of the process were working well, and they’re definitely were parts that the VA did well, but they didn’t necessarily have the processes, the training, the review steps in place to make it work effectively, and they couldn’t trust the numbers in Xero.

Barbara: Oh, yeah. That was me. I had the accountant, and I had the VA, and I had myself, and Xero. And the whole thing was an almighty mess. And actually, the ramifications of me making a mess of it myself means that when clients come to us, and they even mention Xero or bookkeeping or anything as part of their brief when they’re looking to get a VA, our entire team freezes and goes, oh, we need to be really clear with this client that we’re not comfortable with VAs being in Xero unless they’re clear on the boundaries.

Boundaries

Barbara: So yeah, like I said, I’m really keen for you to share with us today what those boundaries look like, and where does the VA come into them? You know, how do we start this whole process? And I think how you were saying off air, maybe defining the roles and the responsibilities and where everyone fits in a business from an accounting and financial perspective would be a good start?

Key Roles Within The Finance Team

Meryl: Sure. So I’ll start. There’s a couple of key roles within the finance team. And I say, finance team. You might be starting off small. So there’s a tax accountant. There may be a bookkeeper, a virtual assistant, virtual CFO, and the business owner. And you may not have all of these team members at the beginning. But I’ll go through and define the roles.

A tax accountant is an accountant, and it’s usually the first person that will be helping with the business. Their role is to help with things like business structure decisions. Tax planning, tax minimization. And tax compliance. The role of the bookkeeper is different in that they’re in charge of all of the transactions being captured in Xero and being accounted for correctly. They wouldn’t be providing tax advice, but they’d be making sure that all of the day to day transactions are captured accurately, and management reports, or the monthly reports are ready on time. And everything’s being allocated correctly.

Virtual CFO is often mixed up with a tax accountant. But they have a different skill set. So if you were looking at a big company, within their finance team they would have tax specialists, and then they would have the CFO who oversees everything, and they would also be looking at projection so that they’re kept looking forward. Cash [inaudible 00:06:35] forecast, budgets. And working with the business to make better decisions based on the numbers that are coming through. And that’s quite different to looking at things from a tax perspective.

A virtual assistant can help with a number of processes within the business like raising invoices, helping to pay bills, managing receipts. But their role is to follow processes that have already been established, rather than creating the processes, and you would want to have some kind of review of procedures.

And I’ve left the business owner till last, but their role is really important. They’re ultimately responsible for everything within the business. And it’s important that they understand their financial reports, and also their tax position. Yes, they can be outsourced to other accountants or bookkeepers, but ultimately the CEO or the business owner is responsible, and they need to have an understanding of… A little bit about their tax situation, and the key numbers in their business.

Barbara: And obviously you’ve mentioned that the tax accountant, and obviously that’s the first person that even if you’re just a solopreneur, for example, you would have a tax accountant. I think what I see happening, and I’m interested to see if you see the same thing, I think the next position that people naturally flow to, or at least what I see, is they go, I need a VA. They go tax accountant, VA, me. And that’s their finance team in the early days. Would you see that as well?

Matt: I do. And a lot of that’s because of leverage. A lot of business owners, when they start out, they’re doing the books, they’re doing everything. And then they’ll have a coach come along and tell them that they have to stop doing a whole heap of things. And so naturally then what they look for is a cost-effective medium in order to leverage. And so they’ll look at VAs as a mechanism for that.

Cost-Effectiveness Medium

Matt: And it really is in this instance, particularly in the finance, the wrong move. And you know, [inaudible 00:08:45] I think most people are looking at it as a cost-saving or cost-effectiveness perspective. You never want to be in a situation where your accounts are not reflective of what’s going on. Because number one, they tell you the story. It’s the report card of what’s happening in your business.

But number two is, if you need to raise capital. If you want to buy a home and get a home loan. Whatever it may be, if your accounts aren’t in order, particularly as a business owner, it makes it a lot harder to do a lot of these things that the numbers are critical for.

I just wanted to add one other thing. I think the way Meryl has described and outlined each of those roles, I would recommend that everyone go back and relisten to that unpack because it’s on the money. And each of those roles are essential in a business. Just knowing at which time along the growth journey of your business you need to bring those people in. In order to continue your growth, but also as your business grows, you’ll [inaudible 00:09:57] deeper and different understanding of things. And I think it’s a really, really clear picture of the roles of each of those and how they play out.

Bookkeeping Role vs VA Role

Barbara: Yeah, Meryl, I just wanted to share, even when you were explaining there. When you came to the bookkeeper part and the VA part, the virtual assistant part, even still in my head I was thinking, I can totally see how somebody would think that you can, one can replace the other, sort of thing. And if I could just share, I did do that. I didn’t have a bookkeeper. And everything was fine in the early days when it was simple. Reconciliation of money in, money out. But when it came to things like having to void invoices, and then split payments. And someone who didn’t pay exactly the right amount. And if that all happens over a number of transactions, I ended up with a real mess in Xero that I couldn’t even fix.

And then of course the other issue is, I don’t even know what it’s called. You know where you have to have the zero balance, and the bank balance matching? I’ve never understood that bit. And it was never matching. It was all over the place because we were using Stripe. And there was no Stripe feed. And all this sort of thing. So can we drill down into that VA bookkeeper bit a bit more? Around where is the line between the two of them, really?

Meryl: Sure. And I actually just wanted to add to your story, around the bank account balance in Xero not matching the statement. And this is, I would say that is the number one mistake that I see if I pick up a Xero file. That would be the most common mistake. And I know this isn’t, I won’t go into too much detail, but I’ll just quickly explain it because it happens so frequently.

Xero has a bank feed which pulls information in from transactions every day. And sometimes there can be a break in that bank feed and a couple of transactions are missed, and occasionally it can bring in duplicates as well. And so when your bank balance in Xero doesn’t match the statement from your online banking, it means that there could be a bank fee issue, which means that your account might be missing transactions or have duplicates. And so that is one of the common reasons that your accounts don’t make sense. And that is a cross-check that a bookkeeper would know how to do, but a virtual assistant, without financial training, they wouldn’t necessarily know how to go find that error, and then bring in the missing transaction. So that’s probably one good example.

Barbara: Now that you mention it, I really think that happened to us because what ended up happening was some of the wrong account lines got reconciled against the wrong invoices. But it looked like they were the right match at the time. But then we had all that host of issues, and we had to go back, and unmatch things. The minute we started that, the escalation, the problems just exploded after that.

Differences with Bookkeepers and VAs

Meryl: And I think that leads into one of the differences with bookkeepers and virtual assistants. Where virtual assistants may be doing a great job of reconciling transactions, but they might not understand the theory behind what they’re doing to pick up errors, like missing transactions. And follow a process, so bookkeepers will follow a process at the end of the month to check their own work. And to figure out what doesn’t look right, and what needs to be changed. And they’ll know about the quirks, like splitting transactions or how to handle payments that don’t quite… Someone hasn’t paid the right amount, or you’ve bought something that you paid for with cash. They’ll know how to handle all of those situations.

But if I answer this question from a bigger picture perspective, a bookkeeper will be able to help you to set up your processes. So standard operating procedures around how your customers pay you, how you pay bills, how transactions are reconciled. How you prepare the end of month accounts. And over times, as those processes improve, you may actually be able to hand over more and more to the virtual assistant. But I think what’s important is that you don’t start with you as the business owner and the tax accountant. And you doing the bookkeeping not really having standard operating procedures around it, and then training a virtual assistant without a lot of information and documentation.

Whereas, if you go the bookkeeper part, you can have all of those processes set up. Things are running smoothly, and then you can gradually introduce the virtual assistant to help with things over time. And I think that’s similar to how you would introduce a virtual assistant with another business function outside of finance too.

Barbara: Yeah, and I honestly believe that the majority of people out there are doing it the wrong way around. I’m seeing it. You’re seeing it. And that’s why I think this really is, it’s an important topic that we address here so that we also protect business owners. But also protect the VAs, because they don’t know what they don’t know either.

You know, sometimes they’ll go in and try and fix something, or try to help. And of course, they go on the Xero videos, and try and figure out what to do, and then make the situation worse. That’s actually my experience, what’s happened.

Stop Doing Book

Matt: Just to add to this, one of the things I wrote about in the Stop Doing List book, and I’ve included it in the tool, is when you look at a task. So let’s take a task, which is bookkeeping. One of the questions you’ve got to ask yourself is, does this task require special skills in order to be performed? And bookkeeping is a special skill. We think it’s just a case of, you know, clicking okay or whatever. But if it’s done incorrectly, it really turns into a big mess real quick. And so it’s understanding certain… When you’re going to leverage and hand the tasks over. Is a special skill required? If yes, what are those skills? And who’s the best person or company or people in order to outsource that to?

Barbara: You know, if I could add, Matt, to that as well. Sometimes you don’t know the answer to that question yourself. And if you’re unsure, which was where I fell down, I didn’t know what I didn’t know, so I sort of made up the answer. I should have actually probably asked somebody that was more in the know than me. Around whether this required skill or not. And deeply understand exactly what we’re talking about today, so that I could then make a decision, rather than just diving in, and going, oh, the VA can do that. It’ll be fine. That’s sort of… Well, it’s the classic you don’t know what you don’t know.

Matt: Absolutely.

Xero Cleanup

Barbara: Yeah, and obviously, Meryl, I know one of the packages that you offer is a Xero cleanup, which I availed of myself. Because people just must hand over an entire mess to your team. To go, I don’t even know where to start with this. To get off the ground on a decent path, we have to fix it first.

Meryl: That happens quite often. And so we usually start by doing a health check where we go through and check everything and put together a list of changes. And then we can, from that list someone can go and clean it up themselves, or we can go and fix everything as well. So that’s often the first place that we start with working with a business owner.

Barbara: Yeah. And look, for all the listeners out there, the good news is we’re sort of conversing on this topic today, but Meryl and I are actually going to be doing a webinar deep dive into actually how to set this whole thing up. Because it is a much deeper topic. And the link to that webinar, you’ll be able to get the recording. It will be in the show notes. So just jump on that if you feel you want to dive deeper into this topic. Matt, interested to know from your perspective, how many clients you’re coaching, that you go in and the finance part of the business is humming nicely.

Matt: 5%.

Barbara: I was thinking, how do I word this? Like humming nicely, the right team structure, the right knowledge, and that’s part okay?

Matt: Yeah. I mean, 5%. And largely because it’s a function that a lot of business owners in the early phase of their business leave till the last minute. Until it’s tax time. Until it’s reporting time. And so then they rush it. And really having trained as an accountant, and for me, and you introduced me as a recovering accountant, but for me the numbers are the report card of my business. They enable us to make better, more informed and faster business decisions. And like, if all you’re doing is making decisions off gut feel, where gut stands for cave up thinking.

Reporting Practices

Matt: And the reality is that if you’re not looking at your metrics, or as in looking at the historical numbers or forecast into the future on things, you’re going to lose a lot of money. And so often when I start working with people, their accounts look like, just not meaningful. And what we need to consider, as Meryl was unpacking earlier, the various roles. There’s also different types of reports required. So the tax office, and what you submit is a format that’s very different than what we call management accounts, that might look at some ratios, we may look at even displaying things in a slightly different way that are more meaningful to the business.

But compliance requires us to look at things differently. And so it’s really a case of having… If the data that goes in is done well, then the information and interpretation that comes out is more meaningful. And enables you to really see your business through a different lens.

Barbara: Yeah, so if the data going in, like if we look back to the virtual assistant, let’s say, who’s usually the data type person at that level. If there are errors or mistakes, it’s almost putting too much responsibility, actually, on an untrained virtual assistant when you’re not trained yourself either, and you don’t have the right structure around, and as you said, Meryl, processes. That can actually, they can, like I keep saying, make a big mess even though they’re doing a great job and they’re doing their best. You know? So with this… So you recommend getting a bookkeeper first, really, and getting things nicely set up?

Where to Start

Meryl: I would. And then a virtual assistant can be introduced into the bookkeeping process. And I see that working well as a business grows. I’ll give you an example. Some of our bigger clients, our point of client will be the virtual assistant rather than the business owner. And so they might be responsible for raising invoices, but they can ask us questions if they have something like a split payment or something that doesn’t look right, and we can go in and reconcile that. Or they just raise the invoices, and we do the reconciling, and ask them questions. If we’re looking at chasing our missing receipts, again, the virtual assistant would be managing that rather than the business owner having to ask those kind of questions.

Building Skillsets

In some cases, we’ve trained the virtual assistants on how to look for spikes in expenses, so they actually do a preliminary look at the profit/loss that goes out. And try and flag… They won’t get that right from day one. But over time those kinds of things can be trained so they can be going in and looking at where there’s a spike, and where they may be able to cut costs. Not every virtual assistant will be able to do that, but I have seen that working. So I see it as a gradual transition in building the skillset of someone internally, and virtual assistant’s role is to really stop questions going to the business owner so that they’re looking accurate reports without it needing a lot of their time. And the bookkeeper is running the transaction processing and making sure everything’s accurate, and liaising with the virtual assistant.

Barbara: You see, for me, I just feel like oh my God, even you saying that has just like, my shoulders have relaxed. Because you’re basically saying, and listen up everyone who’s listening. You’re basically saying that there will be no more of the VA coming to you with a 100 million questions, and the accountant saying, “Sorry. I don’t know what you’re doing there, but this is all wrong.” Like, I have done two week stints where the accountants have said to me, “there’s problem here.” And it’s taken me probably two weeks just to intensively go in and try and fix Xero. So I just think it’s such a common mistake, and it’s just not worth it to not have the bookkeeper as well, is what I’m hearing. [crosstalk 00:23:19].

Next Steps

Meryl: And I just recap on that. So we talked about the initial stage. It’s probably the founder, the business owner, and the tax accountant. And I would see the next phase being founder, tax accountant, and bookkeeper, and then after that, then you want to introduce a virtual assistant. And it’s probably about that time or maybe a little bit later that you would introduce the virtual CFO. And the reason for that is you have to pay taxes, and you need your structure right at the beginning. And that’s why you introduce the tax accountant early on. Next you want your bookkeeping processes to be running really effectively, and that’s when you need the bookkeeper. And once you’ve got accurate data, that’s when you can start to get advice from a virtual CFO around how to improve your business performance, based on the numbers. If you haven’t got accurate numbers, and that’s not all humming along, and you’re not getting those reports regularly, then there’s no point in you working with the virtual CFO.

Barbara: That makes so much sense. I mean, I’m really glad, and thank you, Meryl, for sharing all that stuff. I’m really glad I got a chance, actually, to share my own negative experience with this. Happy to always share warts and all on this podcast. That it can happen to anyone. Like, I class myself who’s actually pretty good on the financial tools. I’m one of those people who, I actually didn’t have metrics. But I sort of know it in my head. I’m one of those people, where I know kind of where things are at. But that’s, as you get bigger and bigger, it’s an absolute bomb waiting to explode on you because you’re just relying on, not necessarily gut, feel mad, like what you were saying.

But the numbers are sort of in my head. I kind of know what’s right and what’s wrong. But no concrete dashboards or metrics or anything. And in the last year I’ve really been focusing on getting this bit right. So yeah, Meryl, awesome topic. Matt, have you any sort of closing questions or bits you want to touch on with Meryl?

Meryl: Just a couple of things to add. So to add to what Meryl was saying, so I know in our business we’ve had one of our virtual assistants doing our invoicing fees. And that process works really well. And I think that that process works well because it was set up and tested first by myself and our accountant when we set Xero up. That it was actually really easy to plug a VA into that function. And it didn’t require necessarily a bookkeeper to do that.

Barbara: Yeah, but you’re an accountant, though. So you know—

Matt: But I worked with my accountant as well, it wasn’t just [crosstalk 00:26:01].

Barbara: Yeah, so it wasn’t just you. But [crosstalk 00:26:01]

Matt: Accountant make sure Xero was set up properly. Which then enabled us to take the invoicing function and actually have a VA do that. And keeping in mind, you know, in our business we probably got six standard invoice templates that we use. So because it’s quite repetitive, and it’s quite simple, we do that. If there’s a one off kind of invoice, that won’t go out until I’ve signed off on it. So I’ll still send it to the VA. But our normal, recurring invoices go out without me even realizing, versus something that may be a little bit different. We have a slightly different process for that, which will be… It’s in the instruction. Utilizes certain template. Send it to me in draft that I can sign off and go from there. So just to add to what Meryl was saying, you can get your VA in time to do certain functions, but it’s got to be set up properly.

And the only other thing is that don’t hold on to these aspects of your business. Get the right people to do the right work for you, so that you can focus on growing and operating your business. Versus having to try and fumble your way through all of this. I always say that for many people, the numbers and finance of the business they’ve never been trained in. But you need to be trained in to do it effectively. It’s like any skill. It’s like any function of your business. And so I think having the right people, like the team at Bean Ninjas, and the like, to do these functions for you I think is critically important, and I can’t recommend it enough.

Barbara: Yeah, so Meryl, I know, I’ll just do the plug for you for Bean Ninjas, given that I’ve already become a client. Your company essentially solves… The core thing is the bookkeeper problem. Which is the ongoing bookkeeping. But I love about what you’re doing is you also have a program where you can train VAs on the bits they can do. And I’m actively talking to Meryl about doing training for our VAs so that our clients can benefit from this a bit more as well. So just a really great offer, and I think it’s something, like I said, we’re going to do a deeper dive webinar on this. And you’ll be able to get the link in the show notes to this, and actually watch that at a later stage. So thank you so much, Meryl, any final things you’d like to share before we sign off?

Meryl: Not really. I think we’ve talked about the different roles of finance team members, and that virtual assistants, they definitely do have a place, and it’s about introducing them at the right time, when you have established processes, and having clear boundaries about what they do and don’t do. And I think some business owners can feel a bit hesitant about passing their financials to an outsourced bookkeeping company or a virtual assistant. And there are controls, there are measures you can put in place to protect your data. And I do recommend not sharing things like bank account authorization logins.

And so you can protect yourself in that way, if that is something that you’re worried about. I don’t want to take the conversation in a different direction, but there are definitely ways to protect yourself if you are handing over bookkeeping. And I do encourage you to get bookkeeping off your plate, and gradually introduce a VA in your process, but having them trained first.

Barbara: And I 100% agree, and I know, Matt, you would too, with that advice.

Matt: Absolutely. Absolutely.

Barbara: Guys, if you enjoyed this show, please remember to share it. Because all of these topics we’re talking about, I always say to people, this show is very tactical. Where we’re literally talking about real-life stuff that happens. And we’re expanding the show into the topics like, you know, the bookkeeping topics. They’re all about VAs, really. But it’s starting to branch into a lot more tactical depth, is what I would say. So love to get the show out to more people.

Give us a rating or a review on iTunes. And yeah, till next time. Thank you, everyone. I’ll see you on the next episode.

Matt: Thanks, everyone!

Meryl: Thank you.

Outro: Thank you for listening to the Virtual Success Show. If you found this show helpful, take a moment to share it with a friend so that we can all grow together.

The Hosts

Matt Malouf

Matt Malouf is a passionate business coach, speaker, author, and entrepreneur on a mission to help entrepreneurs around the world break the shackles of mediocrity and reach new levels of personal and business success.

Barbara Turley

Barbara Turley is the Founder & CEO of The Virtual Hub, a company that specializes in recruiting, training, and managing superstar ‘Virtual Assistants’ in the social media, digital marketing, and systems automation space.