Who is the most organised person in an office? It’s probably going to be the auditor in the corner.

Meryl Johnson decided auditing wasn’t for her and set up a bookkeeping business, Bean Ninjas, instead. She brought her auditor’s mindset and set up processes for everything – not just for productivity and efficiency but to manage risk as well.

In this preview of his session at the Accounting Business Expo 2018 (click here to register for free), Johnson shares her ideas about how to organise the hell out of bookkeeping.

 

Digital First: Why did you quit auditing in the first place?

Meryl Johnston: I quit auditing as soon as I finished my CA and then left Melbourne to go travelling. I decided to live in Queensland for the sun and surf. Then I moved into corporate accounting for an airport but it was long hours and I realised I wasn’t getting the lifestyle I had moved up there for.

I did consulting for a while, realised consulting was a hard business to scale. Then I started Bean Ninjas because bookkeeping is a great biz to scale.

 

Digital First: Why did you know you wanted to build a biz to scale?

Johnston: As a consultant you’re paid for your expertise in something. Whereas if you build a business you have an asset that generates income for you. Bookkeeping is a great business as it is a task that happens regularly so it’s recurring revenue which gives you a stable basis to build a team. Especially if you’re doing fixed price billing so you know what’s coming in.

 

Digital First: Had you done any bookkeeping before?

Johnston: When I worked as a financial accountant I was overseeing a team of accounants in receivables and accounts payable, which is completely different to how things are as an auditor. I hadn’t used Xero – I picked it up a little when I was working as a consultant doing implementations. But I had to figure out a lot of actual bookkeeping on the way. And we hired smart bookkeepers really early so they were able to help with those processes.

We put in $500 at the beginning to get registered and to create a website and launched in seven days following the Lean methodology.  We had a customer in our first week. Our first six months was very slow because we didn’t have many customers. It was only later that we got some momentum and grew from there.

 

Digital First: How big are you now?

Johnston: We are a team of 10, Xero Gold partners, and we’re in Australia, the US and the UK. One employee is in the UK in Manchester and two are in the US. Another CA is from Chicago but she is living in Tokyo – she can do US and Australian bookkeeping.

 

Digital First: Why go into the US and the UK?

Johnston: They kind of chose us. Our client base is quite global. We got a lot of referrals for US based businesses in our first six months. It made sense to hire a US CPA because we had so many potential customers. Something similar happened in the UK – we had enough leads to hire someone in the UK to build that part of the business.

It wasn’t intentional. It would be very difficult to do that if you were doing tax accounting but bookkeeping skills is pretty universal.

 

Digital First: What does your training as an auditor bring to the bookkeeping process?

Johnston: As an auditor you are trained to look at workflows and processes from a risk point of view. Those skills can easily be translated to a process optimisation tool. We are always process mapping and looking at how we are doing things.

That’s been interesting for people who aren’t from an auditing background. We ask ourselves, “Where can this go wrong, or will one of our clients be exposed to fraud or data security breaches?” I think it manages our clients risk and our risk too.

If we’re doing accounts payable then the client needs to approve the invoice before uploading it to the client’s bank account. They sound like simple things but all those steps can help manage risk without too many trade-offs. If you have too many policies then it can be too slow which isn’t helpful for small businesses.

You don’t want business owners wasting time doing payments. Or if they are delegating authority they should have a delegation matrix showing whether operational managers can approve and how much they can approve. They may have a sales guy who is allowed to charge up to $300 a week because he’s out and about. They might have someone in charge of maintenance and they need to approve payments quickly so it’s not going to hold up the business.

 

Digital First: How do you record and share a delegation matrix?

Johnston: I would prepare that in Excel with the job title and the dollar value and description of what they can approve. There are two levels of approval – this invoice can be paid, or they could approve it to go through the bank account.

One of our clients has two directors who can approve payments and log into the bank account. Their operations systems manager can go into Xero and approve invoices up to a certain level but he can’t log into the bank account and release the payment.

 

Digital First: What tools do you use?

Johnston:  We use Sweet Process to document procedures and store process maps which are a big picture of everything we have to do. Then we group those procedures in bookkeeping, or other areas. The people who have access to that are different to our HR processes.

We can also assign tasks to work through the data security checklist and they tick off to delete things from their desktop, set up Lastpass, two-factor authentication, etc. And we track the date that staff do it. It’s mainly that we want someone to do it but every six months we want the team to go back and make sure they’re following best practice.

 

Digital First: What impact has Sweet Process had?

Johnston: Previously we used to use Google Docs to document procedures but it was hard to track who had read it and understood it. With Sweet Process you know that people have read and understood it and it has better access and makes it easier to group. It’s easy in Google Docs for people to have the wrong level of access.

 

Digital First: What’s your advice to bookkeepers? Where do they start?

Johnston: It can feel like an overwhelming task (to systematise your business). I would start your first procedure with how to record a procedure. You can use Loom and already doing it, and someone else can document the step by step. Having videos is helpful but written notes is also helpful because you can skip to a specific session.

And have an attitude that documenting processes is ongoing. Over time the procedures will change but there’s a culture in the team that things are updated as soon as they change. So update the processes that happen the most often because it’s going to take more than a week to do it.

It’s good to have a scheduled regular review – someone should own each process and procedure. For some it might be every three months and others every 12 months.

 

Digital First:  What makes a really good procedure and process map?

Johnston: You want to think about who you’re writing this procedure for and what level of assumed knowledge they have. We’re not expecting the accountant to have any knowledge about clients or other procedures. There’s no point writing a procedure for someone if they need to read other processes.

Also context is important. After we make a sale, this is the onboarding process and this is how it fits into the bigger picture. I also use a handover map – it can be difficult to distil a procedure into specific steps in a flow chart.

The important thing about a good process map is that it’s written for the right audience, doesn’t require assumed knowledge, and is simple as you can make it without missing out information. And with procedures, it’s important you don’t miss any steps because then someone will get stuck and they won’t be able to move forward.

We have a culture that we take procedures to 90% – document what you can, quickly check that you have all the steps, but don’t spend 15 hours creating a procedure otherwise you’re not going to get them all documented.

 

 

Meryl Johnson is talking in “The best ways to systemise bookkeeping: Lessons from an ex-auditor”  at 1.30 pm – 2.00 pm on 22 March 2018 at the Accounting Business Expo, Darling Harbour.

 

Image credit: @pachygram