(800) 931-6557
(800) 931-6557
ASP
  • Home
  • Services
  • Recruiting
    • Recruiting Team
    • Recruiting Process
    • Recruiting FAQ
    • Resume
  • Positions
    • Current Openings
    • Recent Openings
  • Oregon
  • Washington
  • Colorado
  • About
    • Clients
    • Testimonials
    • Diversity, Equity and Inclusion
    • FAQ
    • Resources
    • Submit Resume
  • Contact
  • Payments
  • Blog
  • Home
  • Services
  • Recruiting
    • Recruiting Team
    • Recruiting Process
    • Recruiting FAQ
    • Resume
  • Positions
    • Current Openings
    • Recent Openings
  • Oregon
  • Washington
  • Colorado
  • About
    • Clients
    • Testimonials
    • Diversity, Equity and Inclusion
    • FAQ
    • Resources
    • Submit Resume
  • Contact
  • Payments
  • Blog

​In Pursuit of Profit

Read our expert article below or sign up to get articles sent to your inbox.​

2/23/2020

Comments

The Pros and Cons of Having a Bookkeeping Service Contract

 
The Pros and Cons of Having a Bookkeeping Service Contract
Business owners looking to outsource ongoing bookkeeping and accounting functions may not be prepared to sign a contract. However, in an increasingly litigious culture, contracts are becoming more prevalent across all professional services, especially in B2B settings. 

While freelance bookkeepers may or may not require a signed contract to perform their duties, a certified accountant or an accounting firm likely will.
In some instances, service providers may only require contracts for specific services or longer service durations. Furthermore, contracts will almost certainly be required for clients deemed high-risk from a credit rating perspective. While researching providers, inquire about whether a contract is required and what kinds of stipulations are included in a standard contract.

The question then becomes, “Should you sign a bookkeeping services contract?” To answer this question, it is important to evaluate the pros and cons of having a contract and determine whether the positives outweigh the negatives for your individual organization.

Cons of Forgoing a Contract

The most obvious downside to signing a contract is that it locks the client into a set service period. For companies that are new to outsourcing bookkeeping services, this can be intimidating because they may worry that they do not yet know what to look for in a quality provider. The risk, therefore, is that not doing enough research or asking the right questions beforehand can result in a situation where they feel stuck with their bookkeeping services provider until the contract duration is up.

Similarly, companies switching from a provider that they were unsatisfied with to a new bookkeeping company may be concerned that they will not have the flexibility to keep looking for a better option if this provider falls short of their expectations as well.

Contracts typically have a termination penalty, allowing the client to get out of the agreement early by paying a fee. While this technically offers the flexibility that business owners tend to prefer, it does so at a cost (often a steep one at that), making it a drawback to using contracted services.
Lastly, a contract limits the scope of the services to be provided. Therefore, if a company is highly satisfied with the services it is receiving and wants to expand the scope of the agreement, the contract will have to be amended and re-signed or an entirely new contract must be signed.

Pros of Signing a Contract

While anyone can claim to have bookkeeping proficiency, true experts will have the measures in place to protect themselves and the work that they are doing. In this way, a contract validates the legitimacy of a financial services provider, setting them apart from dubious “fly by night” operations.
The biggest benefit of signing a contract is that it protects both parties’ interests, giving rights to both sides and improving enforceability over a verbal agreement. Therefore, if the bookkeeping or accounting company does not provide services as promised, a written contract protects the client in the same way that it would protect the provider if the client refused to pay for services rendered.

Many business owners understand this basic principle of contracts, but what they fail to realize is that embedded in benefit is another positive. For freelance bookkeepers or smaller accounting companies signing a contract ensures that the provider will have the capacity to do the work that is promised. Month-to-month service providers may see their workload flux with year, peaking around tax season and receding later in the year. Without a contract, a provider can suddenly refuse to provide services if other, more lucrative, opportunities arise. However, a contract pre-books the time needed to complete financial projects, allowing service providers to manage their capacity in a way that is mutually beneficial for themselves and their clients. In this way, an agreement facilitates long-term planning, improving ongoing strategic financial decision-making.

A contract also clearly explains the scope of the services being provided, which ensures that nothing will be overlooked throughout the duration of the contract. Some contracts will not only outline specific services to be performed, but also important milestones and deadlines to be met throughout the agreement. This improved organization is the main reason that contracts tend to result in improved customer satisfaction.

Furthermore, a contract typically locks in an agreed upon rate, which can save an organization money if rates increase significantly during the contract period. Contracts will vary when it comes to payment amounts, timing, terms, and increases, making this an important area to examine before signing. If you disagree with the payment portion of the agreement, it may be negotiable depending on the service provider. Discuss any concerns that you have in order to find an equitable solution before signing.

What should be included in a bookkeeping contract?

As a legally binding document, a bookkeeping or accounting contract should include anything necessary to define the business relationship. For starters, a contract should include the service provider’s standard terms and conditions. It can then be customized with specific information pertaining to the individual agreement, such as:
​
  • Length of the contract
  • Project scope
  • Relevant milestones and deadlines
  • Cost
  • Payment timing and terms
  • Rate change policies
  • Additional costs to be expected that are not included
  • Any guarantees or warranties
  • Dispute litigation information and instructions

​A bookkeeping service contract will often span a year or less. Signing a contract for any longer typically does not make sense because so much can change in the daily operations of a business within a calendar or fiscal year, making it difficult to anticipate what kinds of future needs the organization will have. Signing a shorter contract allows the scope of work being performed by a service provider to evolve with the business, creating a better fit for both parties.

We free you from the burden of
​bookkeeping, accounting & finance.

Contact Eric or Todd here today!
Comments

    SUBSCRIBE:

    DOWNLOAD:

    The Ultimate New Business Formation Checklist

    DOWNLOAD:

    Accountant Evaluation

    Categories:

    All
    Accountant
    Accounting
    Accounting Systems
    Audit
    Bank Reconciliation
    Benefits
    Bookkeeper
    Bookkeeping
    Brand
    Budgeting
    Business Analysis
    Business Trends
    Cash Flow
    Change Management
    Checklist
    Closing The Books
    Colorado
    Community
    Contracts
    Controller
    Depreciation
    Ecommerce
    Economy
    Finance
    Fraud
    Government
    Hack
    Hiring
    HR
    Infographic
    Internal Controls
    IRS
    Laws
    Leadership
    Legal
    Local Economics
    Manuals
    Market Trends
    News
    Nonprofit
    Online Bookkeeping
    Oregon
    Outsource
    Payroll
    Payroll Taxes
    Planning
    Procedures
    QuickBooks
    Record Keeping
    Recruiting
    Recruiting Market Reports
    Remote Workforce
    Reporting
    Restaurants
    Risk
    Sales Tax
    Scam
    Security
    Small Business
    Social Media
    Software
    Startup
    Statistics
    Strategy
    Taxes
    Technology
    Time Management
    Washington State

    Archives:

    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    June 2015
    February 2013
    October 2012
    November 2011
    May 2011



    RSS Feed

Services

Accounting Services
Recruiting Services

​

Company

About
Oregon Team
​Washington Team
Colorado Team
Clients


Support

Contact
CC
FAQ
​Resources
​Blog
​

ASP

Your resource for accounting & recruiting services. Serving Seattle, Bellevue, Redmond, Kirkland, Portland, Beaverton, Hillsboro, Lake Oswego, Denver, Lakewood, Aurora and more.
Contact us today for a free,
no-obligation consultation:
Toll Free (800) 931-6557
WA (425) 492-1901
OR (503) 473-0122
​CO
(720) 572-8211
info@asp-nw.com
© COPYRIGHT ASP - ALL RIGHTS RESERVED 
 A CFO Selections Company
Privacy Policy