Kim
G’day, I’m Kim Bigg, and welcome to our podcast, tailored for small and medium business owners who want to understand more about accounting and tax in Australia. Please note, the insights and tips we share in this podcast are general in nature, and are not designed to replace personalized advice.
Your financial situation is unique, so it’s essential to weigh the information we discuss against your specific goals, current financial status, and individual needs. Seeking professional advice is always your best bet for making informed decisions that align with your personal circumstances.
Kim
Hi, everyone. I’m Kim Bigg, and welcome to episode 6 of our podcast, Show Me The Perks, a series tailored for small and medium businesses and their owners, in which we offer practical insights around the big accounting and tax matters in Australia.
We are recording this episode on the 6th of March, 2024. And I’d like to introduce my guest for today, who is Liz Elliott, Director of Perks Bookkeeping. Just throw to Liz firstly to provide a little snapshot of her career to date, and her previous roles and things like that. Liz.
Elizabeth
Thanks, Kim. So my career at Perks is probably a little bit unusual, or my career in general. I started in hospitality. And then moved into the accounting world when I was in my mid 20s, and did my degree later.
And did commerce, and then came to public practice about 15 years ago, where I went through a traditional business services role. And then saw an opportunity in the bookkeeping arena. And then started the bookkeeping service at Perks, as its own business unit. So that’s my brief summary.
Kim
Excellent. And the Perks Bookkeeping unit is a separate sort of section or division or service offering, isn’t it, within the accounting division? Is that right?
That’s right. So it’s obviously well integrated into the accounting arena, because it’s obviously, a lot to integrate. However, it sits out as its own team and specialization, so that we can get the efficiencies and technical know-how, which is different from the accounting arena.
Kim
Yeah, you obviously need to integrate closely with the accountants in the building, as well. So, a quick question before we go into some of the detail. So, part of the reason for having Liz on this week, is it is International Women’s Day on the 8th of March, 2024. So two days time, this Friday.
Elizabeth
Woo-hoo!
Kim
It is a woo-hoo moment. Just like to throw across to Liz a question on, what does International Women’s Day mean for Liz?
I think for me it’s a reflection point. And those moments throughout the year are really important. And it’s not so much what it means for me, it’s what I can do. And reminding myself that people in leadership positions have to take an active role in parity.
And it affects all of us, no matter what your gender is. But just reminding yourself that, where you can help or whether you can see something that needs addressing, that you take that moment and you address it well.
And also, it’s a wider world out there. You’re a small part of it. But what you do can have an influence, as well. So it is a reflection point on what’s happened, what achievements have been made, and what we can do in the future as a collaboration.
Kim
For society in general, absolutely. Yeah. And certainly the benefits of diversity are far greater than coming up with all the reasons why you can’t make it.
Elizabeth
Absolutely.
Kim
Can’t make it work. So, yeah, absolutely. You’ve got to, I think you’ve got to be pushing and trying for parity and diversity, so absolutely. All right, I’ll jump on to the main topic, which is bookkeeping. So in today’s episode, we’ll be discussing bookkeeping more generally and how they affect SMEs.
So first question I’ll throw to Liz on all things bookkeeping, what factors should SMEs be considering when they consider the best bookkeeping solution to suit them?
Elizabeth
So, this is probably different depending where you are in your business cycle, as well. So if you’re a new business versus an existing business. If you’re an existing business, you need to consider what the needs, the bookkeeping needs of the organization.
And to be honest with you, I get a lot of queries that come through to me, because people don’t necessarily understand or distinguish between bookkeeping and accounting. And they don’t know where that line ends and begins.
And so I guess, if you don’t understand those concepts, then probably be speaking to somebody as well. Then work out what the tasks, what you think the tasks, the bookkeeping tasks would be in your organization.
Because I worked in commerce as bookkeeper and as an accountant, I can attest to a commerce bookkeeper would tend to work in operations, as well as in bookkeeping. So you need to consider what skills you want that person to have, and what sort of person is best suited for those skills, or what solution is best suited for that skills.
Do you need someone who’s out on site and then challenged change the notion?
Because there’s pros and cons to outsourcing and/or having someone on site. What capacity do you think you need? Because most people who don’t understand bookkeeping, and to be fair, most SMEs, specialists in the business that they’re operating, not in the finance function and not in the bookkeeping function.
So sometimes, if they already have an existing accountant, they’re probably worth having a conversation with them about.
Kim
Fair to say there isn’t really an optimal. There’s no tried and tested optimal structure for how to structure internal finance slash bookkeeping slash accounting. It’s testament to that SME and what their unique circumstances are, depending on what they are. Or is there an optimal structure there?
Elizabeth
I think there’s certain critical elements that you need to consider. And also, the size of it does matter from a capacity perspective, as well, because you might need, there might be low level work that takes up two days a week.
And then you have that high level work, which takes up a day a week, for example. And it’s very hard to find one person who suits that. And so you either end up, I see it a lot, especially when people come over, you either see organizations asking a person who doesn’t have the skill base to stretch and take on many hats that they’re not qualified to do. And that leads to issues.
Or you’re overpaying someone to the nth degree to process an invoice and do a bank req. So you’ve got to understand, it’s worth investing the time, even though it’s really, most people don’t want to consider it, because most people, it’s not their cup of tea. It’s not what they’re good at, which is fair enough.
Kim
Yeah. And the portion of bookkeeping that is prepared by let’s say, the Perk’s Bookkeeping team, is dependent on what each SME has available to them within their organization already. As you just mentioned, you might have someone who’s very high level and maybe think trying to think strategically around the finance function moving forward but are constantly being dragged into bookkeeping style of queries that’s taking them away from their strategic outlook. It’s that the thing where you encourage them to try to work out which roles do you want the bookkeeping team to play, and which ones do you want to retain for yourself.
Elizabeth
Yeah, that’s right. And also, where you see a lot of potential issues, is not a separation of duties. So you see in, especially smaller organizations, quite often, bookkeeper can have an immense amount of power, including control of the banks, subscriptions.
And then they have access to all the source document process as well. And then they have the financial side as well. So that’s probably not advisable. That separation of duties and control is–
Kim
Is an issue.
Elizabeth
And a lot of small businesses can’t afford to have.
Kim
They put a lot of trust in one or two people within an organization.
Elizabeth
Yeah. So you need to be able to, and that’s more and more an issue, because we have to be smarter about the way we work. And it’s more and more an issue as potential growth comes into it, as well, and as more people move through your organization.
So it’s a potential risk area that you just need to consider, and what’s the right course of action, and look at the different options that are available. And then make an informed decision. Don’t take the path of least resistance, because you’ll end up with problems.
Kim
Next question. What challenges do you see coming into the bookkeeping space for SMEs in coming years? Some of this could have been that discussion just then regarding fraud or otherwise or risk. It’s probably what I was just thinking then ties into that question. Your thoughts?
Elizabeth
Yeah. I think one of the challenges that potentially out there is keeping up to date with technology, too. And what that looks like, how to control it, how to be innovative in the space. But also have considered approaches, as well.
As I said, a lot of small businesses don’t have the resources, and they put innovation into their operations systems. And they’ll invest in those sorts of systems. But in the back end of the systems, potentially that just falls to the wayside, because no one has a focus on it.
And so you either have to get people who have got to focus on it or outsource the problem, so that people have the right focus on it. Or you need to have the right people in the position that allows them to be innovative and keep up to date with what’s going on in industry. Because it’s a really challenging thing, even for a big organization like us to do.
Kim
New apps and new technology and new things coming all the time, and it’s easy to get distracted by the next shiny thing coming past.
Elizabeth
Yeah. But also, if you don’t–
Kim
But if you don’t look at the shiny thing–
Yeah.
–make sure it’s something good or something worth.
You get behind–
Yeah.
Elizabeth
–as well. And you need all the competitive advantages that you can get.
Kim
Because if you’re not doing it, then someone else is doing it.
Elizabeth
Well, there’s a lot of wastage in that, because what ends up happening is, people throw resources at it to redo something that someone else should have been responsible for. And so you’ve got these, and I found that a lot when I worked in commerce, because people don’t make people responsible for the bit that they should be responsible for.
And that becomes evident when you actually, because I help process engineer people, as well. And when you do that and you start looking at how information moves around the system, big holes start appearing.
Kim
And what you mean by that, is people just do the same thing they’ve always done without actually contemplating that trying to do it a better way might be a good thing to do. And half of it’s because, as you say, they haven’t been made responsible for that area and that task. They’ve just been doing what they’ve been told to do.
Elizabeth
But they probably also do it poorly, but they’re never held to account, because it’s the bookkeeper picking up the slack.
And that their weight probably doesn’t count as much.
Kim
Hmm, interesting. Next question. Common traps to watch out for with bookkeeping solutions. What do you see coming up as a common issue insofar as bookkeeping? What you just said there was probably one of them, to be fair. But is there any other traps that you’d see when you’re reviewing either a new client or existing clients?
Elizabeth
For new clients or existing clients, is probably, as I said before, a bit of a process. Reengineering that needs to be done. But really, other issues that I see for bookkeeping is really around the amount of fraud that goes on with someone hacking in and changing bank details.
You need some pretty robust systems around that, and potential software that can assist with those trails, so that as small businesses, you don’t get caught. So I see that.
Kim
There’s other changes coming through with payroll and things like that in the next couple of years, and same-day super and that sort of thing?
Elizabeth
Yeah, the same-day super one’s interesting.
Kim
That’ll keep bookkeepers on their toes in a couple of years’ time?
Elizabeth
Well, yeah.
Kim
1st of July, 2026 I think it is.
Elizabeth
I’d be interested to see how they actually propose that works. My argument is, that the ATO lodgements that you can make through their portal don’t have the same conditions as what a clearinghouse does.
Kim
Not a level playing field.
Elizabeth
No. And to me, I don’t get why that would be. And I think that if they’re going to impose those rules, then they have to change that, as well. Because clearinghouses can take 10 days to process.
Kim
Yes, that’s exactly right. Briefly, what sets Perks Bookkeeping apart in supporting SMEs with their bookkeeping needs from either internal commerce functions, if you want to call it that, versus what other providers may provide in the bookkeeping market?
Elizabeth
Yeah, sure. So I think service is a big element. While there’s still a lot of automation that potentially you can take advantage of, people still really want to speak to somebody and be able to talk to someone.
So we’re set up in a way where we can facilitate a lot of that, as well as try to make the client process dependent, as well. I think that we have really strong relationships with either the accountants at Perks or for other clients that have other accountants. We have strong relationships with them, as well. And that’s important, no matter who you work for.
And also, assisting the client to understanding their business, understanding their situation, and making recommendations accordingly. And help them through the process, because they might be from a very manual process.
But as long as–
you have to be dedicated. You have to see the bigger picture and be dedicated to what outcomes you’re looking for. And if everyone’s on board with that, then we can really help people with how their systems work and how information moves around. And hopefully, get them better data.
Kim
Their systems operating well.
Elizabeth
Add value. Add real value, instead of just, we have to be a support system that allows other key stakeholders to add the value, whether that be accountants, whether that be the business owners or a combination.
If you have a solid, robust system, we try to be robust as well, with the way that we’re set up with making sure that the templates are held. We’re not person-dependent.
Kim
That’s probably a good point. One of the things internal finance versus let’s say, Perks Bookkeeping, is you’ve got a team of bookkeepers who are well-trained and understand how things work. One of the problems that faces in SMEs is, you’ve got a great bookkeeper, but then they move on, and you’ve got to start again in terms of training the next person,
Elizabeth
Yeah. And that person-reliance instead of process-reliance is where we would try and educate people and help them through that process, and really challenge the thoughts around that. And to be fair, not everyone’s ready for it and not everyone wants to do it, and that’s fine.
But if that’s the case, we’re just not really probably the right people for you, because that’s really required to be able to get the most out of the service we provide. And it has to be a partnership. It can’t be good for one and bad for another. Like, it has to be a partnership and work together for the same sort of outcomes.
Kim
Excellent. All right, I’ll jump on to the next part, which is the case study, in which regular listeners will be aware of. So I’ve got a sort of a case study here that I’m going to put to Liz, to say in the event that a new customer, if you like, or a new client comes to Liz and asks, you know, what sort of questions would they ask.
So I’m going to use the example of, let’s call it Billy Elliot’s Dance Studio, in reference to Liz’s surname. So imagine Billy Elliot turned up to Liz’s office and said, I’ve got several dance studios around Adelaide and I would like to utilize some bookkeeping solutions to assist me, handle it, because I’m having some issues.
Let’s not go into the issues that Billy might be having. Imagine Billy’s in your office, though.
You know, what sort of questions are you going to ask here? What sort of questions are you going to pose of this musical place?
Elizabeth
Yeah. So, the first question I would ask is, what issues you’re having?
[LAUGHS]
Kim
Well, he’s going to say, let’s say I’ve got three different places and I can’t keep track of all my invoicing. One store doesn’t talk to the other.
Every time I try to do my payroll, I can’t get my payroll right, because I’ve got three stores feeding into one person who works from home. Yeah, et cetera. So those style of issues. What are you trying to uncover before you work out how Perks Bookkeeping can assist?
Elizabeth
So, understanding their issues and understanding how their business currently operates is really important to understanding whether we’re the right providers for them. Because if they’re really set on having someone, because some people I get contacted for our bookkeepers to go and work out on site, and that’s not how we work.
So there has to be an understanding of what’s stopping them from doing that. Multiple sites and multiple, that’s not an issue. We have processes.
So I’d be talking through the processes which we have, which will help prevent invoices going into the wrong entity, those sort of checks and balances that we have in place to be able to give them a bit of a surety around that your information is going to end up in the right spot. Then I’d ask him–
Kim
Does anyone pay with cash or does anyone not pay with cash? How do you handle those things, all those things. Billy Elliot’s Dance Studio, you might have a few people paying in cash.
Elizabeth
Yeah. So potentially, but probably more focus on their current processes. What’s not working for them, and then what we would do to try and solve that.
Kim
Where is their biggest pain points.
Yeah. And then give them an understanding of how we work and why we work in that way, as well. So I would ask them, like very detailed things like, how many bank accounts do you have, do you have a credit card, are you financials, do you have tracking categories or job categories, like what is your chart of accounts look like.
Kim
How often do you run payroll?
Elizabeth
How many employees do you have?
Are you happy with the setup?
Because it’s very important that you distinguish between a bookkeeping service and HR service, and we don’t do the HR service. So explain to them those sorts of potential elements that need to be resourced outside of that.
So, down to how many invoices, how many suppliers, how often do you need information, how often do you want to pay suppliers, all those sorts of finicky things. And also from a sales perspective, a lot of how does information come through, invoices generated within the accounting software.
Do they have a point of sale? If so, what do they use? Are they using any add-ons that are connected through to their accounting software? How is that? Are happy with it? How is it managed? All that.
Kim
And as part of reviewing Billy Elliot’s situation, do you look at it at the end and say, right, well, he’s engaged me to do these things, we’ll take care of that, bed him down, and then eventually you’ll say, you’re doing things this way, but that could be better.
For example, do you recommend I think you need a timesheet app or I think you need something else. Do you kind put these sort of things to them? Is that part of the, not necessarily the first thing you do.
Elizabeth
But I explain to them, that the more I put it up front, the more I can put into a process, the more the cost–
Kim
The better for everyone.
Elizabeth
Well, the cost is going to be more appealing. Because the more ad hoc things you do, and the more things that I can’t put under a process, you’re going to be paying someone to look at that each time. Because I can’t let technology run.
So the recommendation is always to use technology wherever possible, and understand what it can do, and have your processes work it. Because a lot of people blame technology where it’s not the technology.
Kim
You’re saying it’s not the tech, it’s user error.
Elizabeth
Could be.
And myself included.
For sure, IT would be aware of that. But I would have that conversation up front to say, would you consider going to this, even if you couldn’t do it right now, would you consider doing this.
And so when I quote, I would say, this is what it’s going to be. And this is what the difference would be if you can get it to there. So it’s that sort of thing. And again, if there’s processes aren’t working or whatever or I can see improvements, or my staff can say, hey, that’s not working.
And because they might be a new client, and they might have complexities as you work them out as you go, and so then we’ll have a conversation. So nothing is set in stone. I think it’s important to go, listen, we’ll have the conversation. If there’s issues around it, or if we think that you can do it better, then let’s have the conversation.
Kim
You’re actively sort of keeping an eye on those things to try to offer people with a solution. That’s good.
Excellent. We’re on to question of the week. This week it’s anonymous again, which is starting to be a bit of a theme here.
But in any case, this is on a theme of International Women’s Week, perhaps. International Women’s Week, international Women’s Day, which is on Friday. So the question this week is, last week, there was a report released for the first time on gender pay gaps at firms with more than 100 employees following legislation passed in March 2023.
This has forced large companies to reveal the pay of male and female employees. In some large companies, such as Qantas and Woodside, they are both above the national average of 19%, and even Deloitte, in the accounting industry, has an 8% gap.
So there are considerable gaps in these companies. What do you think can be done to help close the gap? Gender pay gap, I should say.
Elizabeth
Yeah, that’s a tough question.
Kim
I can’t just give you an easy one, Liz.
I know.
Too easy for you.
Elizabeth
Yeah.
I think that you need to understand what’s causing the gap. And I think that opportunity is a potential barrier. And having a supportive pathway for diversity. It’s very easy to say you’ll be diverse.
I think that it’s a lot more difficult to actually put the actions behind it and actively try and resolve them. I don’t know if those organizations even see that as an issue. So, understanding of what it could look like, and what the benefits of having parity within organizations and having leaders–
Kim
Drive it.
Elizabeth
Well, that are diverse, as well. Diverse leaders. Because it’s meant to be reflective of the community, as well. So getting people from different walks of society and being able to provide pathways for a diverse group of people and get them.
Not just give it lip service, but actually assist. I think that people sometimes think that they don’t have to do that. But I think we mistakenly think that our best minds are in this subset, and they’re not. But you have to develop the minds. But you have to have an open mind to begin with. Because we’ve all got biases.
Yeah.
We have to recognize that and really see it as a problem. Don’t know if we really see it as a problem. I think a lot of people get defensive about it pretty early on, and actually start to think of why, no, no, no, I do. And instead of just trying to understand what the counter arguments are.
Kim
The counterargument is the opportunity, isn’t it? It may not be a problem. Maybe it’s not, in some people’s eyes. But if you’ve never tried the alternative and the opportunity of seeing what might it be like if you had as much diversity as you can possibly get, if I can put it that way, then, how do you ever know whether it’s not going to be better?
Elizabeth
It will always be better.
Kim
It will always be better if you try. All right, thank you, Liz, for coming along today.
Elizabeth
You’re welcome.
Kim
Thank you for giving everyone an insight into bookkeeping, and more closely, Perks Bookkeeping. I’m sure that’s touched on a few key points for those listening who have their own bookkeeping solutions and have pondered whether they’re getting the best out of it.
And I’d encourage any of those who have any questions or thoughts on that, to give Liz a call or give Perks a call, and she’d be happy to take people through any questions they may have.
Thanks very much for coming on, and thanks for answering those tricky questions. And we’ll sign off episode number 6 there. Thanks, everyone.
Elizabeth
Thanks for the opportunity.
Kim
Thanks, Liz.
