Compliance v Advisory Bookkeeping
Are you wondering what is the difference between compliance v advisory bookkeeping business? What is compliance business and what is advisory business? Which is better for your practice?
Compliance bookkeeping is all the tasks that must be done. Basic things such as entering transactions, bank reconciliations, vat and payroll and HMRC reporting. Self-assessment tax returns, corporate tax returns are all compliance business. See here for the list of bookkeeping tasks.
Most bookkeepers have traditionally offered compliance bookkeeping. This forms the backbone of services offered to clients.
Compliance Bookkeeping Under Threat?
There will always be a need for compliance bookkeeping – after all every business in the UK must keep books. However, a client is often looking for the cheapest price from the bookkeeper. Therefore, compliance work becomes very competitive.
A business owner comparing one bookkeeper offering compliance services against others has nothing to choose from except price. Location might be relevant, however, as compliance becomes more digital it is not such an important factor.
The rapidly advanced FinTech means that the compliance side of the business becomes quick and easy to do. Some clients will expect you to be spending less time on the tasks once they understand this.
Spending less time on compliance work is an advantage to you. This means you can develop other services that are of value to the client.
Bookkeepers appear much the same to the client – what is going to help them decide to use your business? How can you make yourself stand out? More and more bookkeepers are trying to compete on price. There are two problems with this route.
Firstly, you will put yourself out of business in time, unless you can streamline your bookkeeping practice to be super-efficient and keep your own costs very low. Secondly, and more importantly, your services are not being valued if the client is price shopping.
Value pricing, not time pricing
Bookkeepers often under-value themselves for many reasons. Remember, you are an expert and you have spent time and money on making yourself an expert. Think about what are you really good at where other bookkeepers may not be. You need clients and potential clients to understand your services and how you can make a difference to their business.
Most bookkeepers charge for their time – an hourly or daily rate. But you are not selling time, you are selling expertise
Be very clear what you can offer to a client that is above and beyond compliance work. Monthly management reports, cashflow planning, credit control are some examples. Continue to offer compliance work but add in extra services that make you stand out from the crowd.
Instead of charging by the hour perhaps look at fixed pricing which most clients prefer as there are no nasty surprises. Have a basic book-keeping service at one price. Add some extras in for another higher price. Offer different cashflow planning services at different fixed rates.
Spend time thinking about the packages you can put together to make you stand out. Further blogs coming “How to Price Bookkeeping Services” and “How to Market a Bookkeeping Practice”. Please sign up to our newsletter here to ensure you don’t miss any!