$20,000
Previous Annual Fee
for data entry and bank reconciliation only
$5,000
New Annual Fee
full service including payroll and automated workflows
$15,000
Annual Saving
returned to the practice every year going forward
-
INDUSTRY:
Dentist -
ISSUE:
The bookkeeper was spending time manually on tasks the software was designed to handle automatically, and charging accordingly for every hour of that unnecessary work. -
OUTCOME:
The practice saves $15,000 per year. Not from errors in the previous books, recovering funds from the ATO, or any forensic remediation work. It came entirely from switching to the tools and workflows
The Situation
A Melbourne dental practice owner came to Matthew with a straightforward concern: his annual bookkeeping bill had reached $20,000 and he was not certain it reflected the work being done. He was not being critical of the bookkeeper as a person. He simply had a growing sense that the fee and the service were not well matched, and he wanted an independent assessment.
After reviewing the arrangement in detail, that instinct proved correct. The scope of the bookkeeping service was narrower than the fee suggested. The tools in use were more expensive than they needed to be. And the Xero platform the practice was already paying for contained functionality that had never been configured, meaning the bookkeeper was spending time manually on tasks the software was designed to handle automatically, and charging accordingly for every hour of that unnecessary work.
A $20,000 annual bookkeeping fee for a dental practice is not inherently unreasonable. A $20,000 annual fee for transaction entry and bank reconciliation, with the practice owner still handling payroll himself and the software's automation features unused, is a different matter entirely.
1. The Practice Owner Was Still Managing His Own Payroll
The first question in any fee review is establishing precisely what is being delivered for the money paid. In this case, the bookkeeper’s scope covered two core tasks: entering transactions into Xero and reconciling the bank account. Both are necessary and both have genuine time requirements. But payroll was not included.
The practice owner was managing his own payroll alongside running a full clinical schedule. This is an arrangement that makes sense when a business is too small to justify a bookkeeper at all. It makes very little sense when the business is already paying $20,000 per year for bookkeeping services that do not include it. The time the practice owner was spending on payroll had a real cost, and it was a cost sitting on top of, not instead of, the bookkeeping fee.
2. Dext Was Being Used When Hubdoc Was Already Available for Free
The practice was managing its receipts and supplier documents through Dext, a paid third-party document capture application. Dext charges a monthly subscription fee and was being used to photograph receipts, extract the key data, and publish documents into Xero for coding. It is a capable product and has genuine use cases for businesses with complex document management requirements.
For a dental practice on Xero with a standard Australian operating profile, it is not necessary. Xero includes Hubdoc as a free add-on at no additional cost. Hubdoc does the same core job as Dext: it captures supplier documents, extracts the relevant data, and publishes them directly into Xero ready for review and coding. The integration is native, the workflow is clean, and for the vast majority of practices, the functionality is equivalent. The practice was paying a Dext subscription every month for a capability it already had.
3. Xero’s Automation Features Had Never Been Configured
A broader review of how the bookkeeper was working within Xero revealed that the platform’s built-in efficiency tools had not been set up. Xero is designed to reduce manual data entry through bank rules that automatically categorise recurring transactions, recurring bill templates for regular supplier invoices, and automated bank feed matching that processes standard transactions without manual intervention. When these features are configured from the start, the ongoing time required to maintain the books is substantially lower than when everything is entered manually.
In this case, a significant portion of the weekly bookkeeping time was being spent on manual data entry for transactions that Xero could have handled automatically. Bank rules had not been set up for recurring items. The bank feed matching was not being used to its capacity. The bookkeeper was, in effect, doing manually what the software was built to do automatically, and the fee reflected every hour of that manual process.
Dext charges a subscription. Hubdoc is included free with Xero. For a practice already on Xero, paying for Dext is paying for something you already own. Switching is a one-off setup task that eliminates a recurring cost permanently.
What Matthew the bookkeeper did
The changes required were not complex. The practice’s books were broadly accurate and did not require significant remediation. What was needed was a complete review of the tools and workflows in use, and a rebuild of the system around the functionality already available within Xero rather than around manual processes and unnecessary paid add-ons.
- Matthew cancelled the Dext subscription and migrated receipt capture and document management to Hubdoc. The setup process involved connecting Hubdoc to Xero, configuring the publishing rules so that documents landed in the correct location for review, and walking the practice through the new workflow for submitting receipts.
From that point forward, receipts submitted through Hubdoc arrived in Xero pre-populated with the key data, ready for review and coding, at no additional software cost. - Bank rules were then configured in Xero for all recurring transactions, including regular supplier invoices, subscription payments, utilities, and other predictable expenses.
These rules automatically suggest the correct account coding when a matching transaction arrives through the bank feed, eliminating the need for manual entry on a large proportion of the weekly transaction volume. Automated matching was reviewed and configured to maximise the proportion of transactions resolved without manual intervention. - Payroll was assessed and brought into the bookkeeping scope as a standard included service. The practice owner no longer needed to manage payroll himself.
The full bookkeeping service, covering transaction entry, bank reconciliation, receipt management through Hubdoc, and payroll, was established at an annual cost of approximately $5,000.
The $15,000 saving did not come from cutting corners or reducing the quality of the bookkeeping. It came from doing the same job, and more of it, using the tools that were already available rather than the tools that generated the most billable time.
The outcome
$20,000 annual fee for transaction entry and bank reconciliation only | Full bookkeeping service including payroll established at approximately $5,000 per year — saving $15,000 annually |
Practice owner managing payroll himself despite paying for a bookkeeper | Payroll incorporated into the standard bookkeeping scope at no additional charge |
Dext being used for receipt capture at an ongoing monthly subscription cost | Migrated to Hubdoc — included free with the practice’s existing Xero plan — same functionality, zero additional cost |
Manual data entry for transactions Xero bank rules could handle automatically | Bank rules configured for all recurring transactions; automated matching set up; manual entry time reduced substantially |
Xero automation features not configured despite being available in the platform | Full review and configuration of Xero’s efficiency tools completed; ongoing maintenance time aligned with actual platform capability |
No transparency between fee charged and actual scope and time of service | Fee reset to reflect genuine scope; practice owner has a clear picture of what is being delivered and what it costs |
Key Takeaways for business owners
This case is not unusual among healthcare and professional practices. A practice owner who is fully occupied with clinical work has limited time to scrutinise bookkeeping fees or to ask whether the tools and workflows in use are appropriate. A fee that was set some time ago tends to remain in place until something prompts a review. This case was prompted by the practice owner’s own instinct that the fee and the service were not well aligned.
- If your bookkeeper is using a paid third-party tool for a function that your existing accounting software already performs for free, you are paying twice for the same capability. This is worth checking specifically for document capture and receipt management if you are on Xero or MYOB.
- If your accounting software’s automation features have not been configured, a significant proportion of the time being billed to you for manual data entry is avoidable. Bank rules and automated matching are standard Xero and MYOB features that any experienced bookkeeper should set up as a matter of course.
- Payroll should be included in a full bookkeeping service. If you are managing your own payroll alongside paying for a bookkeeper, either the scope of the service needs to be reviewed or the fee needs to reflect what is actually being excluded.
- A bookkeeping fee that has not been reviewed for several years may not reflect current platform capabilities. The tools available in Xero and MYOB today are significantly more powerful than they were three to five years ago, and a service scoped around the old way of doing things will cost more than it needs to.
- The right question to ask your bookkeeper is not only what they are doing but how they are doing it. A bookkeeper who can explain which Xero or MYOB features they are using to manage your accounts, and why, is a bookkeeper who is working efficiently on your behalf.
