Numbers don’t lie, but they can deceive.

I’ve started a series on LinkedIn that I’m calling What Music Can Teach Us About Bookkeeping. On one hand, it’s a way to find a way to talk about music that doesn’t mess up the algorithm. On the other hand, I love finding new ways to approach the topic of bookkeeping, business, and life.

One of the recent lyrics was from a Jay-Z song called Reminder. The lyrics are simple.

“Men lie, women lie, numbers don’t.”

For someone who spends so much of his day working with numbers, this can be oddly comforting. People can say and do terrible things. It’s not always easy to know who to trust. But, despite what my pal Thom Yorke would tell you, 2+2 always equals 4.

But that’s not the whole story.

You see, just because numbers don’t lie, it doesn’t mean they can be believed. Let me explain.

Mathematics is objective. It doesn’t care which side you’re on. If you give it two numbers, the sum will always be the same.

The problem is the story behind the numbers.

It’s simple when you’re being taught math in school. I have one apple, and Sally gives me two more apples. Now I have three apples.

In business, things can get messy when the subject gets more complex.

For our clients, this can be topics like sales and bank balances.

How many times do you hear someone online talking about their 7, 8, or even 9-figure business?

We know that just means their sales.

But business owners can get too focussed on those simple metrics and miss the big picture.

I can run a 9-figure business and be broke. And I can run a 6-figure business and be a millionaire.

The same is true for bank balances.

How often do business owners make decisions today based on what they see in the bank?

There could be $1M in the account today, but they’re not considering the upcoming vendor payments, payroll, and taxes that add up to $1.1M.

Bookkeepers: Bridging the Gap

Our most critical role is that of a bridge.

On one side we have the financial data. All of the numbers that can be easily misunderstood.

On the other is our client.

Every day, we work with clients to help them understand their businesses.

We collect and record every bit of financial data that comes through their doors.

We organize it according to strict rules and we create reports to summarize our work.

On its own, these reports aren’t useful to our clients. They don’t have experience reading a financial statement. It would be like handing an english speaker a copy of War and Peace in its original Russian text.

It’s our job to walk them through the reports.

To explain what story they are telling about their business.

Make sure you know the right story to tell

This is a big responsibility.

It’s easy to get lazy here. I could send out the monthly financials and let my clients know that they’re:

• doing great!
• down a bit from last month.
• in worse shape than this time last year.

Not very helpful, is it?

This is why it’s important to share the right insights with each client.

I have a client who is deciding on a hiring plan for 2024. They had a good year, and they want to know if it’s time to add more people to the team. It’s a big decision, and their primary focus in Q4.

My financial reports shouldn’t come with an extensive review of how Office Supplies are up 10% from this time last year.

It may be true, but it’s not relevant right now.

I need to frame our discussion around how adding staff will affect the business.

Make the advice actionable

Our job is not to tell the business owner what to do.

And, actually, we can complicate the bridge metaphor if your client also works with a CFO.

Now we might be sharing information between the client and the CFO, and those two will be making strategic decisions.

But if there’s no CFO, we need to give the client options and let them make the final decision.

Don’t just tell them “yes, you can hire next year”.

Show them the impact hiring will have on the business. And, if possible, give multiple scenarios.

• Here’s what it will look like if you hire 3 new full-time employees in January.
• Here’s what it will look like if you use contractors to cover the extra workload.
• Here’s what it will look like if you also need to promote a current employee so they can manage the new hires.

This should start a good conversation and will probably result in requests for further analysis.

This is how we become trusted advisors.

In the eyes of a typical client, they will pay a bookkeeper $20/hr to handle the compliance work.

It’s a task they need done, but they don’t see much value in it.

A trusted advisor is a different story.

If you are helping them make strategic decisions about the health of their business, they see you in a much different light.

You’re not making the decisions. This is a job for the owner and/or their accountant/CPA/CFO.

But by being the goto person who always has the information they need, your work is absolutely worth $50, $70, or even $100/hr.

All of this comes with practice.

If you’re just getting started on your bookkeeping path, don’t worry about all of this yet.

Focus on the fundamentals first. But stay curious.

Honestly, most of this isn’t a class you can take.

If you are naturally interested in how a small business works, you’ll just start to see patterns.

You’ll actually know the business better than most of your clients.

What about you?

What advice would you give to new bookkeepers? What’s the best way to start sharing this advice?

Hit reply and let me know how you approach this with your clients.

Until then, I hope you have an amazing week!

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