How To Interview A Bookkeeper

Managing a business is tough and there are a lot of demands on your attention. Who’s examining your financials? Is someone monitoring cashflow; discounts being achieved for early payment; bills being paid early robbing you of cashflow; premium renewals being reviewed? Are sales forecast being done in line with business expectations, in line with workforce planning?

Filing and archiving appropriate? End of year tax situation being considered? Your external Accountant kept in the loop?

Depending on the size of your business, chances are you’re relying on your Bookkeeper to do more than simple compliance. And yes, there are Bookkeepers who can do more than simply input the data!

PS MYOB is the brand – AccountRight is the name of software most of us are using.

If accounting software and/or the bookkeeping function aren’t your forte, interviewing a “professional Bookkeeper” may prove tricky.

We’ve developed some interview questions that will sort the applicants for you: those who focus on compliance only, and those who will think about their productivity, and what the numbers mean for your organisation.

Q: Talk me through how you would do a bank reconciliation if you worked here?
Bookkeepers do reconciliations all the time; and while the question may surprise them, it’s a comfortable place to start. Have them talk you through the process. The frequency of reconciling depends on the number of transactions on your account – have they given thought to your business and requirements – or do they stick with a routine regardless (remember the question was specifically about what they’d do here)?
You want them to tell you that they print a report of the reconciliation and file appropriately.
Accounting software can do automatic reconciliations: does your candidate even know this? Do they trust technology or will they insist on doing it manually – while you’re paying them by the hour?

Q: Tell me about what you learnt in the last training course you completed?
Have they attended recent training and interested in improving their skills? Are they forward thinkers? Are they interested in learning new things or will they always do it how they always did it? How they think about their own skill development is how they’ll approach their work – and your financials.

Q: What ratios would you monitor if you worked here?
Your business model will influence which ratios are critical. Current ratio, debtor days, creditor days, inventory turnover and Work in Progress.
Their answer will alert you whether they review the results of the data input… and if they’re not, how will you know what’s happening before there’s a critical issue?

Q: How do you calculate break-even point, and what would you do if the business wasn’t achieving that?
Surprisingly, many Bookkeepers aren’t across this one – or spend inordinate amounts of time creating fancy spreadsheets.
The formula is simple:
Break-even point = Fixed Costs / Gross Profit Margin
(Gross Profit Margin = Gross Profit / Sales).

At what point do they alert you there’s a problem? Telling you at the end of the month profit isn’t where it needs to be is not very helpful; but if you know the business is off-target mid-month, you have a chance to do something about it. Will this person communicate with you on the front foot; or will you have to play Detective?

Q: Tell me about how you monitor cashflow?
First of all; do they? Do they really?
Would they spend time (and your money) creating more fancy spreadsheets (and forget to update them), or would they use the software’s features to work for them? (MYOB’s latest version has a great tool for this!)

Q: When was the last time you completed a BAS?
It may seem a redundant question, but not all Bookkeepers do this! Recent legislative changes now mean subcontract Bookkeepers must meet certain criteria to lodge BAS.
Do they complete, lodge and pay online; or are they manual?

Q: What KPIs are you used to working to?
Their answer will again give insight into their awareness of the impact their role has on the organisation. How will they respond when you set some? We suggest:

1. X percentage of debts must remain within a certain timeframe (90% of receivables must be collected within 45 days)
2. Reduce debtor days from X to Y within a certain time frame (Reduce debtor days from 51 to 41 days within 60 days)
3. Percentage of bad debts/uncollected debts against invoice revenue to remain less than 2%
4. Invoicing errors to be less than 1%
5. System stock count to remain within a 5% variance against the physical stock count
6. Shrinkage to be kept to less than 2%
7. Percentage of aged/dead stock to be no more than 2% of stock on hand.
8. Inventory turnover to be kept below 40 days.

Ask questions around turnover, staff levels, administration support, frequency of communication with the Accountant, reporting mechanisms, BAS/IAS/PAYG, super funds, wages/time billing, bank accounts and similar.
Is their experience at the same level you need? Bookkeeping for a sole trader with $100K turnover doesn’t necessarily equip them for a $1M business with staff and monthly PAYG.

And finally, ask “Is there anything else you’d like to ask me or tell me before we finish?” (Candidates expect the opportunity to ask questions, though few prepare meaningfully. Their response here will not only give you a final impression of their preparedness for the interview, but also indicate what’s important to them. Favoured responses include: “What do you consider the priorities for the role?” and “Is there any reason you wouldn’t consider me suitable for the position?”)

When you know what your numbers are saying, you can make informed decisions and develop strategies for better financial management. Accounting for your business isn’t just about recording history; it can be about planning and management.

If your business currently lacks the talent to handle your financial management, you might consider talking to your recruitment partner about a way forward. When you can trust the financials are being monitored and problems brought to your attention while you can still do something about them … that’s proactive bookkeeping!