Meryl Johnston runs Bean Ninjas, a bookkeeping service primarily for online businesses. She’s based in Australia. In this episode of The Next 100 Days Podcast she advises us about cloud accounting and how you can move to the cloud and sort your book keeping problems easily in the next 100 days.
Meryl had a traditional path – university and worked at a mid-tier firm where she became a chartered accountant. She questioned why she was working in a Melbourne firm and moved to a Gold Coast. To another firm. She repeated the same long nights etc, so decided to start her consultancy business.
Having thought about the frustrations of working a consultancy business, she started Bean Ninjas in July 2015 with a business partner.
- She wanted recurring revenue.
- Fixed cash flow that she could predict each month.
- Making it easier to hire a team.
- Concentrating on one defined task, to make it easier to systematise the business.
Bean Ninjas now have a team of 10 and 100 clients.
Who are Bean Ninjas?
Bean Ninjas offer a bookkeeping service. Requires a lower skill set. Make sure all information in accounting software is accurate. Day to day transactions, sales, expenses and payroll are all entered accurately.
Her clients include ex-accountants – it’s a task they realise they ought not to do, so they free time to grow their business. Some business owners are in a mess. Once the business gets to $100k they ought to be focusing on other areas rather than accounting.
Meryl has taken a service business – consultancy and created a systematised product business.
She learnt quickly to identify her market. A market that has a particular set of clients.
She has 3 fixed pricing tiers, fixed service products suited to different clients. Once she realised which clients saw value in the different aspects of her product, and where her unique skills were, she evolved her prices into the 3 pricing tiers.
She worked out there is a gap in the bookkeeping industry in understanding online businesses.
- They might be selling overseas
- They might have customers throughout the world
- Their business works online
- They might have a remote team
- They might pay their staff in different currencies
- The business might be selling on Shopify or Amazon
To do the bookkeeping for those types of business requires knowledge that traditional bookkeeping services don’t possess. Bean Ninjas now specialise in this area. They didn’t start with that niche, but their business evolved there.
What cloud accounting service do Bean Ninjas use?
Meryl’s team uses Xero as her accounting service and Shoeboxed for receipt processing She also uses Skype and Slack as tools to communicate as her clients are remote. Bean Ninjas are not the right fit for someone who wants a book keeper to visit their premises, Most of bookkeeping happens online now anyway.
Xero takes bank feeds. Xero has 500 add-ons. Bean Ninjas makes sure everything is setup correctly. Less about entering information but more about ensuring the system is setup correctly.
Kevin has experience of this too. He bought Shoeboxed, a plug in for Xero, taking photos of receipts and automatically enters the information. He admitted the image capture was a little wrong – it meant he had to correct the currency back to £ from $ on occasional receipts, but even with this issue the time saving is enormous. ReceiptBank is similar but excellent too.
Kevin also has T Sheets, to record consultancy time. T Sheets works with Xero to link timesheet and client billing. We featured another Xero add in in episode 72. Floatapp. Kevin also uses Floatapp with Xero to forecast and manage cashflow.
There are lots of plug-ins for all kinds of business. Think about what industry you are in to prevent yourself from getting overwhelmed.
What influenced the Bean Ninjas mindset?
Bean Ninjas has been going for 2 years. The effort that it took at the beginning to productise the service. How did you get to the mindset.
- The 7 Day Startup by Dan Norris – http://7daystartup.com (some excellent resources here)
- Productize by Brian Casel – https://casjam.com/productize/
They had information about how they’d cut out a lot of stuff to focus on particular clients. Meryl realised she needed to work with a range of customers to learn and adapt. What they valued, what they didn’t.
She tested and tested. In the first year, she reworked the pricing packages. It’s now about where a business is on their journey – getting started, growing etc
She contacted her clients regularly to understand their needs. Many conversations. They were often not charging full prices initially so she could ask for feedback.
Whilst the business was forming, Meryl had a few clients on retainers, so she had free time and enough income to cover her living costs. After a year, Bean Ninjas started to pay her.
- When you first start out, initial pain point is how they track receipts. Implementing Shoeboxed or receipt bank is a priority.The first package helps the online business create a bookkeeping system using cloud accounting.
- Once that system is working and transactions are coming into Xero, nd the receipts are being captured, the next pain point is reporting. Are they using their reports? Do they understand the reports? Are they using the information?
- The final stage, the pain point arises out of the difference between cash accounting and accrual accounting, doing the accounts with a different system.
The most common problem for online businesses is HOW THEY ARE PAID. Because they are selling in different currencies, they’ll need different payment methods. Often, they might use PayPal or Stripe. If they are using PayPal and they are using 5 currencies, a very common mistake is not to have all the different currencies set up in Xero. This leads to missed transactions from different currencies.
Stripe also requires a 3rd party plug in to integrate into Xero.
Meryl will take a couple of hours at lunch, or before she starts. 3 or 4 times a week. 500 metres from the beach, that sounds blissful!
She bought out her partner in 2016. She has 3 bookkeepers in driving distance, one in Manchester, one in the US, the Philippines.
Bean Ninjas recruit staff on a 3 months’ trial. The best staff are now working 4 or 5 days a week. A new feature can be applied to a lot of clients. The intention is to have people who can handle full time work and handle remote work effectively.
When a client starts what happens?
- Often, they have a pile of receipts
- Personal and business transactions mixed in.
If you are starting a business, setup a separate business bank account from the start.
Receipts: Different countries have different requirements. Australia, under $82 you don’t need to keep the receipt.
If you do need the receipt, they ask for the scanned receipts in DropBox or ShoeBoxed?
Are Bean Ninjas liable for false receipt reporting? They have a reasonableness obligation. If they know a client mixes personal and business, they have an obligation.
10 Questions to ask before you hire a bookkeeper?
- Scope of work. Bookkeeping is broad. Onsite, talking with suppliers. In other cases, outsource solution doing certain parts and doing them really well. Write out what the scope of work. How much do you outsource? How much internal?
- Skill level. Some with degrees, some chartered accountants.
- Experience with other clients in your industry. Do they know the tools for your industry?
- How frequently do you update my accounts? Quarterly, weekly? Where are you at in your business?
In the next 100 days, what should someone do?
We talked about making tax digital in episode 67. Cloud accounting is a must have to make sure you are ready for the new tax submission rules in the UK. Meryl gave us some great tips to help you implement cloud accounting in the next 100 days:
- Organise your business bank account
- Get a tool to track your receipts. A tool creates a habit (Shoeboxed, ReceiptBank)
- Set up cloud accounting software – like Xero, like QuickBooks Online – what you want the software to do. Freshbooks can be good when you first starting out. As a freelancer, but it is not a full accrual accounting software. Meryl says bite the bullet and skip Freshbooks.
- Decide whether you’ll integrate the receipt tool to match with bank transactions. Automate bank rules – % of costs etc
- You must make sure everything is set up correctly. You might need a bookkeeper to check this.
- Give yourself time to review reports. How to interpret them, you might need help.
What’s the next thing Meryl wants to do at Bean Ninjas?
Her goal is to be fully built out of the business. Have everything documented and systematised. Surf more and spend more with family.
Time to focus on where the industry moving, so Bean Ninjas can be at the forefront.
Is Xero and cloud accounting secure?
Is your data at risk? Will cloud accounting open it up to hackers? Xero put a lot of time into this. They have bank grade security. They have 2 step communication.
If people didn’t trust their software they wouldn’t have so many customers.
Equally, if your accounts on a pc, locally and you haven’t backed up, life could get difficult.
Meryl is focusing on writing out her processes. Her experience setting up Bean Ninjas could become a model for other industries.