Outsourced not “Out… Sorry”

There are certain tasks that no one in your winery wants to do.  Okay, maybe there is someone who gets a real thrill out of filing Form 5120.17 in your winery. But they are the exception and please, please, be kind to those people.

But for most people dealing with high volume, highly regulated or low reward transactions, automation is the answer. Sometimes you  automate  the transactional stuff (sales tax), but you just can’t stay on top of the rules (compliance), or the payment deadlines, or the darn form changes (payroll).  In other cases, there is an entire subject area, like bookkeeping, that you don’t have time for and so you decide to outsource it.

We are all for outsourcing.  We don’t want to file those darn payroll tax returns either.

But…outsourcing the responsibility for doing the work does not mean  you can outsource the liability for the tax or the payments or even collecting the right amounts.  You can’t outsource control over your winery’s financial results or your operating activities unless you have no interest in the outcome.  And you can not outsource your vision, your culture, your ethics or your morals. You have to stay connected enough to see that your business is running in the right direction.

When you hire a company like Payroll Masters for example, they beg you to stay connected. They want you to know that they are remitting your payroll tax deposits on time to the appropriate authorities and require all new clients to sign this Payroll Masters New Client form.  I wonder how many clients are regularly taking their advice.

And while automated sales tax and compliance providers offer tools and systems, they only automate the rules and rates that you specify. They are liable for mistakes in most cases only up to the amount of the transaction fees you pay them. Mistakes in these areas can be extremely costly not only in real dollars (including interest and penalties) but also in bad customer relationships.

And then there’s fraud. There seems to be one newspaper article a day about embezzlement in the wine industry. This happens to smart business people regularly. We hire a “trusted person” and they run off with our funds. How does this happen? Often it is the result of two things, being busy and being generous. By and large, we want to trust people. We expect the best. And part of it is the very nature of accounting. Most of it is complete gibberish to normal people – accrual? EBITDA? GAAP? Reconcile?Debit this and Credit that?  Some bookkeepers and accountants make it sound mysterious and hard and create a web of intimidation. Who are you to question the man or woman who has created order from chaos, who has lined up all of the paperwork in nice neat little typed folders? Who files the returns and mails the checks? And no busy owner enjoys dealing with constant knit picky interruptions to find out if some expenditure is okay to make. “Just do it.  Here, use the corporate credit card. Handle it.”  And then little by little, knit picky expenditure by knit picky expenditure your money goes out the door. That crafty trusted person has expanded their role and found ways to reach in to more and more pockets.

We are not advocating a complete lock down of every winery business. We don’t suggest lie detectors in every winery, metal detectors at the door, or specially trained money sniffing dogs in your tasting room. Although, hmm, there are a bunch of winery dogs who could be retrained for the task – check out Louisa Belle who can find TCA in corks. It could happen.

What we want to suggest is vigilance. We accountants call it trust but verify. Ultimately, the buck stops with the owner.

Create an atmosphere of checking and review, where people are held accountable on a regular basis. Where everyone knows that the owner is watching, that spot checks will be a part of the process. No one who joins your team should be offended if their work is reviewed by someone else, if they are given limited, but not full access to your accounting software, or if you ask them to show you the original receipt when they want reimbursement for a given expenditure.  Bank statements do not go to the person who is charged with reconciling them. They go to the owner or outside bookkeeper if that person is not the one writing the checks. Authority for adding vendors to your software should be tightly controlled, and new names should be reviewed regularly. Cross-train, swap seats and let someone else handle a mission critical task once in a while. Who knows what they might learn or what efficiencies they might bring to a job that has been done the same way for 10 years.

There are also automated tools from companies like Expensify.com that can help you keep track of expenditures on corporate credit cards.  They autoscan receipts that come right from your employees’ phone and match them with the credit card statement.  Any items that fall outside of your policies are rejected and would then require employee reimbursement.  But someone needs to take the time to setup policies, review the authorized users, and take a gander at those receipts that are being filed. Are they autoscanned? or did someone manually override the information?

Trust …

… but verify.


Image via Tharakorn on iStockPhoto.com

Comments (1)

One Response to “Outsourced not “Out… Sorry””

  1. These are great automation tips. I am going to share with my students.

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