Dev Purkayastha (CEO, Indevia Accounting, Inc.) holds an M.B.A. from Harvard Business School and is a qualified Chartered Accountant. In addition to his accounting experience, he has over 25 years of experience in the venture capital business as well as in investing in public enterprises. For more information on outsource accounting & bookkeeping services please visit: http://www.indevia.com
Once you have selected an outsourced accounting and bookkeeping vendor be prepared to invest some time in defining the relationship. At a minimum you should have a written agreement defining the following:
- The accounting statements that you expect and the time when you expect it. Whatever it is it must be defined.
- You also need to define what quality means. Not all defects have equal consequences. We will cover quality in accounting in another article in this series.
- The outsourced accounting and bookkeeping vendor and you need to agree on a quality level. 100% accuracy is unattainable. Even the most advanced companies like Toyota target one defect in a million. Confusion on this point creates most of the difficulties in an outsourced accounting relationship.
- How will the outsourced accounting and bookkeeping vendor work? There are several ways it can be done:
a. You upload your data to the vendor’s server, and they process it. They will email you the reports.
b. You transfer your data to the vendor by email, fax, or secure file transfer. They keep the books on their machine and send you the reports.
c. You give them remote access to your server and the outsourced accounting and bookkeeping vendor work on your server.
Pricing – I highly recommend fixed price contracts. If the outsourced accounting and bookkeeping vendor is inefficient you should not pay for it.
- Payment terms – there should not be any upfront payment. You should pay the same way as you pay your staff.
- Term of contract – It should be month-to-month or at will on your part. If you are not satisfied with the outsourced accounting and bookkeeping vendor’s service, why should you pay for it?
- What happens in a termination – the outsourced accounting and bookkeeping vendor must agree to hand over all files to you and provide reasonable assistance to the new vendor.
- Money-back policy – the outsourced accounting and bookkeeping vendor should have an unconditional money-back guarantee for defective work.
- Confidentiality clause.
Now that you have selected a vendor and arrived at a satisfactory contract, what is next?
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