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If you are running an accounting firm, you must be aware of the risks involved in your area of work. Here are 4 common trouble spots of bookkeeping you need to keep in mind and avoid:
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Own A Bookkeeping Firm? Beware Of These 4 Trouble Areas If you are running an accounting firm, you must be aware of the risks involved in your area of work. Carelessness is not an option when you are dealing with your client’s data. Accounting firms, thus, need to follow a strict risk management plan to minimize the possibility of a loss. In case you are planning to add bookkeeping to your scope, remember risks are still possible. So, it is clear that businesses and risks go hand in hand. Entrepreneurs often dodge a number of threats coming their way to keep the operations running. Accounting, too, is prone to many risks, such as frauds, errors, misstatements, etc. Bookkeeping being a part of accounting is also equally vulnerable. Bookkeeping firms, thus, need to guard themselves against the common vulnerabilities to avoid any major discrepancies later, or your clients may end up suing you. Here are 4 common trouble spots of bookkeeping you need to keep in mind and avoid: Inaccuracies in Processing Data Even though data entry is one of the most mundane tasks, the possibility of an error while updating information is fairly high. Most accounting and bookkeeping firms have made their switch to smart accounting software hosting such as Sage 50 hosting in recent years. The most prominent reason behind making the switch is that accounting software reduces the possibilities of a calculation error. But, what happens if the data is wrongly entered? Bookkeepers must try not to phase-out while entering data, review the details, and be careful while handling client’s data to avoid silly mistakes from occurring. The Cyber Security Liability Firms that deal with client’s data must invest in certain fool-proof cyber security measures. In case your system gets hacked or a miscreant gets hold of your email ID password, your most critical client information may be exposed. In case a data breach happens, firms need to be accountable to their customers. Bookkeeping firms primarily deal with piles of third-party data and it is their core responsibility to promise strong breach-protection methods such as antivirus program, a secure firewall, strong passwords, data encryption, and a response plan in case a breach occurs. Miscommunication with the Clients Does the contract between you and your customers clearly specify what you are offering or is there a scope for ambiguity? There are instances when confusions erupt about the services a firm is providing and what the customers are expecting. You may be charging your client only for processing their financial data, whereas your client has assumed that your team is also monitoring their data 24*7 to prevent fraudulent activities from happening. This may lead to trust issues between your firm and its customers. Policies that clearly specify the services are highly important to avoid making vague promises or causing miscommunication.
Damages to Client’s Property Bookkeepers often have to visit their client’s office for work. Although damages to property are rare and in case damage happens, your clients may understand enough, but you never know! Consider this- you are visiting a customer’s office to review some financial documents and you accidentally spilled coffee on the client’s computer. Now, this will qualify as property damage. So, what will you do? You may offer to pay for damage repair, but what if you cause some irreversible damage? The client may want to sue you. The Final Call Precautionary measures often take a backseat when firms are planning to expand but in reality, risk management and business growth must flow parallel to each other. If you are planning to start a bookkeeping firm or if your accounting firm is taking bookkeeping into practice, keep these four problem areas in mind to avoid getting a lawsuit from your customer.
