$1,400
Previous monthly fee
for books that were never reconciled
$150
New Monthly Fee
full bookkeeping service, all accounts current
$15,000
Annual Saving
achieved by connecting two bank feeds
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INDUSTRY:
IT Consultant -
ISSUE:
The combination of the unresolved PayPal transactions and the resulting backlog in the bank reconciliation meant that BAS returns had not been lodged on time while paying huge fees -
OUTCOME:
The entire onboarding and catch-up process was completed, and the ongoing bookkeeping was established at $150 per month, covering bank reconciliation, transaction coding, and BAS preparation and lodgment as a registered BAS agent.
The Situation
An IT consultant came to Matthew having already engaged a larger bookkeeping company and paid a monthly retainer of $1,400 to get his accounts back on track. The business was behind on its records, BAS returns and tax obligations, and the arrangement was supposed to resolve all of that. What it delivered instead was something quite different from what was promised.
The bank reconciliation was consistently behind. BAS returns were not being lodged on time. And rather than the bookkeeper resolving the complexity within the accounts, the complexity was being passed back to the client in the form of a constant stream of questions about individual transactions. The client was doing more administrative work than he should have been while paying a premium price for a professional to manage it on his behalf.
After months of this pattern without improvement, he reached out to Clients Needs Bookkeeping.
A bookkeeping retainer of $1,400 per month should produce a set of accounts that is current, reconciled, and requires minimal client involvement. When a client is being asked constantly to explain individual transactions, the problem is not the client's records. It is the bookkeeper's configuration.
What We Found
1. The PayPal bank feeds had never been connected
The IT consultancy processed a significant volume of PayPal transactions in both Australian dollars and US dollars. These transactions were the primary source of the ongoing questions and the inability to keep the reconciliation current. When Matthew reviewed the file, the reason was immediately apparent: the PayPal accounts had never been connected to Xero via bank feeds.
Without the bank feeds, PayPal transactions were arriving in the accounting software without the full transaction descriptions that PayPal provides. The bookkeeper, encountering an unidentifiable transaction, would contact the client to find out what it was. Given the volume of PayPal activity in the business, this was happening constantly. It was consuming the client’s time, creating delays in the reconciliation process, and causing BAS returns to fall further behind as the backlog of unidentified transactions accumulated.
The solution was not complex. Connecting PayPal’s AUD and USD accounts to Xero via bank feeds is a configuration task that takes a matter of minutes and brings each PayPal transaction through to the accounting software complete with the transaction description PayPal attaches to it. Once that description is visible, the transaction can be coded without any client involvement. The previous bookkeeper had simply never done it.
2. The Bank Reconciliation was consistently behind
Because unidentifiable transactions were accumulating without resolution, the bank reconciliation had fallen significantly behind. A reconciliation that is behind is not simply an administrative inconvenience. It means that every financial report produced from the accounting software during that period, including the BAS figures, is built on an incomplete picture of the business’s actual transactions.
The ripple effect of an unreconciled bank account reaches every part of the financial records. Income figures are unreliable. Expense figures are unreliable. The GST position cannot be accurately determined. And BAS returns prepared under those conditions reflect an approximation of the business’s obligations rather than the actual position.
3. BAS Returns were overdue
The combination of the unresolved PayPal transactions and the resulting backlog in the bank reconciliation meant that BAS returns had not been lodged on time. For a business that was already behind when it engaged the previous bookkeeper and paying a substantial monthly fee specifically to get back on track, continuing to fall behind on BAS lodgments was the worst possible outcome of the arrangement.
Overdue BAS returns attract failure-to-lodge penalties from the ATO, and a pattern of late lodgment creates a compliance record that is difficult to rehabilitate once it is established. The client was paying to avoid exactly this outcome and experiencing it anyway.
What we did
The first action Matthew took on reviewing the file was to connect both PayPal accounts, the AUD account and the USD account, to Xero via bank feeds. From that point forward, every PayPal transaction arrived in the accounting software with its full description visible. The need to contact the client to identify transactions disappeared immediately.
With the PayPal feeds connected and the transaction descriptions available, Matthew was able to work through the backlog of unidentified and unreconciled transactions systematically. The bank reconciliation was brought current across all accounts. BAS returns that had fallen behind were prepared from the now-reconciled records and lodged. The accounts were brought to a state where every transaction was entered, every account was reconciled, and the financial records accurately reflected the business’s actual activity.
The entire onboarding and catch-up process was completed, and the ongoing bookkeeping was established at $150 per month, covering bank reconciliation, transaction coding, and BAS preparation and lodgment as a registered BAS agent.
The outcome
All bank accounts are current and reconciled. All BAS returns are up to date. The client is no longer being asked to identify transactions or to be involved in the bookkeeping process at the day-to-day level. The PayPal feeds bring transactions through automatically with descriptions that allow them to be coded without any client input. The bookkeeping costs $150 per month, which is less than eleven percent of what the previous arrangement was charging.
The $15,000 annual saving is a direct consequence of two bank feed connections that took a matter of minutes to establish and should have been in place from the first week of the previous engagement. The client’s books were not complicated. They were simply not configured correctly, and the cost of that failure was being passed to the client both in fees and in the time he was spending answering questions that should never have been asked.
|
Issue Identified |
Resolution & Outcome |
|
PayPal AUD and USD bank feeds never connected to Xero |
Both PayPal accounts connected via bank feeds; transaction descriptions now visible in Xero without client involvement |
|
Unidentifiable transactions causing constant client questions |
All PayPal transactions now arrive with descriptions; bookkeeper codes them without contacting the client |
|
Bank reconciliation consistently behind across all accounts |
All accounts brought current and reconciliation maintained as standard ongoing practice |
|
BAS returns overdue due to unreconciled records |
All outstanding BAS returns lodged from reconciled records; lodgment current as registered BAS agent with four-week extension |
|
Previous bookkeeper fee: $1,400 per month ($16,800 per year) |
New bookkeeping fee: $150 per month ($1,800 per year) — full service, all accounts current, zero late lodgments |
|
Annual cost of previous arrangement: $16,800 |
Annual saving after switching to Clients Needs Bookkeeping: $15,000 |
Key Takeaways for business owners
If your business uses PayPal for payments, the PayPal bank feed should be connected to your accounting software from the first week of any bookkeeping engagement. It is a basic configuration step that removes the most common source of transaction identification questions entirely.
• A bookkeeper who consistently asks you to identify transactions that should be visible in the records is not managing your accounts effectively — they are offloading work that is their responsibility onto you.
• A bank reconciliation that is behind means every financial report and every BAS produced during that period is built on incomplete information, regardless of how much you are paying for the service.
• BAS returns lodged late attract failure-to-lodge penalties and create an ATO compliance record. If you are paying for a bookkeeping service and your BAS returns are still being lodged late, the service is not delivering what it should.
• The monthly fee is not a reliable indicator of the quality of the bookkeeping. In this case, a fee reduction of more than ninety percent was accompanied by a significant improvement in the quality and currency of the accounts.
• As a registered BAS agent, Matthew’s clients receive the automatic four-week extension on their BAS lodgment and payment deadline every quarter — a benefit that was unavailable under the previous arrangement if the bookkeeper was not registered.
