These are the effects of bad bookkeeping for your business

ToddLay

December 29, 2020

I got a call today from a cabinet shop out in the Sacramento area, that was referred to us by a local CPA. And when I asked him a little bit about what was actually going on, he said “Todd, I’ve had a bookkeeper coming to the shop here for the last 12 years.” 

Now, this is a cabinet shop that they’ve been in business since the sixties, family-owned business, second generation, his father started it. He started carrying on the business since the early eighties. And they ended up doing a lot of kitchen design. They’ve got a couple of designers that go out there and do the layout of these various jobs and so forth for these like kitchen remodels that they’ll end up making and a couple of people on commission and things like that. 

So what’s interesting about this is the bookkeeper that he’s had for the last 12 years has become too comfortable.

Unfortunately, this bookkeeper has given them a terrible service. She comes to the shop and she seems to be a little bit more interested in selling thrift items, buying, packaging and reselling things. 

When I call or when I’ve got questions about our books, she doesn’t really answer. Also, she doesn’t really take care of things right away. Because of that, he’s had a few late deposits for payroll, which has caused some penalties. As a result, he’s had to pay out of pocket. Because of the lack of attentiveness he has suffered. 

The business did pretty big numbers this year. It is about $1.6 or $1.7 million in total sales and not a crew, roughly about five or six people or so on the payroll for the business.

One of the things I ended up asking him is how often you are getting their profit loss. I also asked if they are going through it.  More questions related to gross profit changed, and if they are actually losing money on the jobs because of the cost of materials that have gone up now, and maybe they’re not charging enough for the actual job itself and not even realizing they’re losing some of the money and profit on the job were asked.

And he just said, “Honestly, I don’t know. I haven’t really gotten regular financials for the last couple of years. It is what that’s been like.” 

In conclusion, don’t rest on your laurels. You guys got to stay out there, stay sharp, be engaged, love what you do, be passionate about it for the people you work in. And not only that be passionate about what it is that you do. If your passion is starting to dull a little bit, either watch out, it might be time for you to go ahead and shift jobs. 

So, if you know somebody with this situation, you may message me here. You can also email me at support@simplebackoffice.com

TODD LAY
Chief Experience Officer
SimpleBackOffice

“Know Your Numbers, Know Your Business”
916-520-8560E