• Solarsys
• December 22, 2009

Does the outsource bookkeeper has the rights not to release the accounting data file to you?

A client of mine was using an outsource bookkeeper for the past two years, this outsource bookkeeper brought back their documents such as Invoices, Bills and Payment Voucher to their own office to do the data entry into QuickBooks Pro 2003 version.

Now, the business has grown to a size that they require real time information. They need the Book to be keep in-house so that they can check the information such as Accounts Receivable, Accounts Payable and Bank balances in real-time. Besides, they need this information to prepare their budget and to make business plan.

They recruited a new Account Assistant to record day-to-day transactions such as invoices, bills and payments. They still need the outsource accountant to be back monthly or quarterly basis to do the review of their accounts.

The easier way to start up the company file is to get the backup copy from their outsource bookkeeper, restore and migrate it to the current version of QuickBooks; then, they can continue doing the data entry immediately without wasting time to re-enter the past transactions or opening balances. So both the management and the outsource bookkeeper can work on one single data file.

When my client requested a backup copy of their QuickBooks company file from their outsource bookkeeper, the outsource bookkeeper refuse to release the information to my client. They told my client that the data file was their ‘property’ and could not be release and they can only provide the opening figure for the balance sheet (without breakdown).

Is it right that the company data was a ‘property’ of the outsource bookkeeper and not the business owner?

In legal point of view, I am not sure about it. I am not a lawyer; I could not answer this question.

However, in business point of view, If I am the outsource bookkeeper, I will release the data to my client. 

As an outsource bookkeeper, on an average, we may only keep the client for around 3 years. Usually, when the business is new, business owner does not need an in-house bookkeeper, outsource accounts is a good solution to reduce the operation cost. However, when business grows, they need real-time information; thus, they recruit a full time staff to do the job. Many small businesses, cannot afford to get an ‘Accountant’; usually, they will recruit an Account Assistant doing the daily entry and get an outsource Accountant to do monthly or quarterly review (passing all necessary journals and adjustment). As an outsource bookkeeper, we have to prepare to loss the client in a few years time or convert them from monthly bookkeeping client to a quarterly or yearly review type of customer.

Besides, as an outsource bookkeeper, client engage you to do the book, it does not matter if the data has to be in client’s server or your own server. In either case, the data rightfully is still belonging to the client. Am I right?

If the bookkeeping service ended, there is no point to keep the data (as the data has no ‘value’ to you, it is illegal to sell the data to others). So, for goodwill sake, pass the data to the client; build a good relationship with the client, maybe they can refer new business to you. I believe business owners do have friends and associates that requires bookkeeping services from time to time; this could be a good source to get new referral.

My client did post another question to the outsource bookkeeper which I think it make sense. My client asked, ‘what if the Tax Office (government) request for past year’s information and the hard copy printed out earlier was not sufficient? Where is he going to get this information if soft copy is not available to print out new required reports?’

If you are the outsource bookkeeper, do you think you will release the soft copy version of the company’s data to your client?

If all outsource bookkeeper were to behave this way; then, in future, who will be dare to engage an outsource bookkeeper? Are you terminating your career as an outsourcing professional? Be professional, when being engaged, you have to state the terms and condition clearly to the client. Whether at the end of service, will the data be return to the client or client need to purchase it back at an ‘x’ dollar. 

As a customer, I think you have to do your part to prevent case like this to happen on you. Before engaging an outsource bookkeeper, draft out an agreement (consult a lawyer on how to draft an agreement) and sign by both parties (you and your outsource bookkeeper). Should the bookkeeping service ended; a soft copy of the company data file need to be return to the business owner, purchase the data back at an ‘x’ dollar or any other form of arrangement that you can think of. With an agreement, you do not have a headache on requesting data as what my client has.

When selecting a service provider do not just look at the PRICE; look at the services covered and exit plan as well.