What To Do When Your Bookkeeper Suddenly Quits

Welcome to Accountants Law Pod, where accounting professionals and law firms converge. Hosted by Lynda Artesani, Sarah Prevost, and Stephen Libhardt.

Hello everybody, and welcome back to the podcast. Hi Lynda and Sarah, how are you?

Good, good. Good to see you. Yeah, so yeah. Long time no see.

Yeah. What's that?

It's a long time no see.

A long time no see. We're recording two podcasts today, people, so if you wonder what we're talking about, but The subject for this podcast is pretty amazing. It is, what do you do when your bookkeeper or accountant suddenly quits without notice? So what happens inside the firm the day the bookkeeper quits without notice? Who actually knows how the trust account works when the one person running the books disappears? Payroll's due, the trust account's not reconciled, your bookkeeper walked out, now what? So that's what we're going to talk about today. So who wants to dive in first on this subject?

Oh.

The way you just described it, Steve, does that mean that there was a little bit of untowardness to the books? Like, did the— I don't know.

I know, that's why I was like, can I have a question?

That was my first thought as he's describing it. I'm like, oh, did she just, he or she just quit because—

You and I are on the same page, 'cause I'm like, can I ask a question before we start? Why did they quit?

Yeah, why did they quit?

All kinds of scenarios here on that, but they quit.

Well, you could say they died too, 'cause somebody could have died and then you're in the same boat, right? Somebody could have died, sure.

Yeah, which is awful, but it's actually— I, I ended up, um, myself helping take over a set of books because the person was terminal, so it wasn't as if they up and quit, but there were unfortunate circumstances behind it. And I was one of those individuals that answered the call to say, yeah, I'd be happy to meet with that individual and, and work this out. But that's not always the case for some, um, I think probably—

Well, we know of one that quit because the audit happened and they didn't want to deal with all that, and they just quit. Yeah, even the internet.

Yes.

Yeah, we found out.

Well, I've seen scenarios where somebody other than an accounting person is doing the books— the receptionist, the paralegal— and they've just burned out, walked out of the firm.

Yeah, it's a, it, you know, it's a lot to ask of someone to— yes, you're organized, yes, you can do this, but it's a lot to ask of someone who isn't that's not their nature. They might be intrigued or fascinated by it, but you can really, really screw someone's life up if you don't know what you're doing. And it's on your shingle as an owner. I mean, ultimately it goes back to you. So I just oftentimes when we meet with even the smallest of firms and they'll say, we just want to get it right from the beginning, I appreciate that. Mm-hmm. Yeah, exactly, because you're— I'm not coming in and you've just told me that, you know, what you want to— you know, the person in the, the other room was, oh, just showed me some good skills, and then you just thought, well, maybe they'll just take this on, and you dump this burden on them. That's not—

Hopefully you have your firm set up. I mean, we do, where you— if somebody leaves, we just had that happen recently, somebody left our firm to go someplace else. And we had the ability to like, we shut off all the access very simply because we have systems in place where the passwords could be stopped, changed, whatever, very easily. And we've got like a whole workflow in when somebody leaves.

Yeah.

And I think that the bookkeeper leaving is huge. I would hope this would not happen very often, but the thought of it just like, they just flat out quit 'cause maybe they weren't being treated well. I mean, I could envision that with, Some of the things I've seen at law firms where maybe the person was just so demanding or whatever, and they just said, I'm done, I don't need this anymore. And they walk out the door, maybe retiring or something, I don't know, but, or maybe for illness, whatever. But if they just walk out the door and they don't, you don't know where anything is or how the process works. Yeah, you can hire a firm that can help you through the process, but you need to have all the logins. Just think of the logins that are involved. With the work that we do.

Yeah.

And you do want to shut it off. But like, if you shut off QuickBooks Access, you want to get that control of that email because if you delete a user, now that user is going to show up as deleted. So you don't want to just delete users, but you do want to have access to that email that you provided that, you know, X, you know, Mary Smith at XYZ Law Firm. You want to have the ability to turn, you know, reset the password, but maintain control of it because there's a lot of things you want to see what's coming into the emails too, because you're going to need to shift all that somewhere. And I think first thing you want to look at, I would look at my trust.

Mm-hmm.

To see if there's a reason why they just up and quit. Look at my payables, look at my receivables. I mean, those are the big things that you kind of need to look at to figure out why it happened. I mean, I think you're going to be stunned at first and almost to the point of like deer in headlights. When that happens, because all of a sudden this person— and then I would imagine everybody would rally in to help support that position till it's refilled and try to figure out what stuff is. But you want to make sure that you have protected yourself in all, all sides with this, because if they quit and if there was a reason they— I mean, I had a guy I worked with for years, not an attorney, but the girl was just paying her own bills at the same time of paying the company bills. She just threw her Exxon bill in and she threw this one in and she, and we're just paying it.

Yeah.

Went on vacation and that was discovered and she was fired. But all of a sudden now you don't have the bookkeeper and then you don't know how you're peeling back the onion. You don't know how much damage there is. And this person was a tune of almost half a million dollars of damage that had been ongoing for a long time. They paid themselves some more— they paid themselves more money in their paycheck. They used the miscellaneous box. So you want to look at the payroll, examine the payroll, because if that's something that was happening and they figured they're going to get caught and then they quit on you, then that doesn't stop— you have to hire. I mean, they had to hire the Attorney General's office. This was in Rhode Island. Hired that person. They took it to court. I mean, the whole thing happened with it, and she had to pay them back. Yeah. So, and she went to jail. And when she went to jail, none of the payments came through when she was in jail, but she kept paying them back.

Yeah.

Going to jail. She'd stop, they put her in jail. It was a cycle. And she was, you know, this person came as a church bookkeeper to them. She worked at a church. So that doesn't always correlate with a good person, right?

Yeah, yeah.

This came, the church bookkeeper that came in to work in a company that was a contractor, right? It's crazy. And then you have to, if you follow into that job, you follow into a company that has had this experience. Now you're faced with, they don't trust anybody and rightfully so. And you have to make sure that you are setting up processes to implement that the stuff can never happen again. Like this owner never, ever, ever looked at the payroll. This bookkeeper called it in, did everything. She calculated the hours, she did everything. There was never any checks and balances. Bank statements used to be mailed back in this day. This is how long ago this story was.

Mailed. Oh boy.

Never opened them. They went to her desk and she opened them. So she knew what she was doing. She was writing herself checks under, you know, cash. It can be a bad big thing, you know, and you wanna make sure. And then the owner was such a nice person. I couldn't imagine that she was doing this for years and sat in the same room with the person she was ripping off. I don't know how in her mind she justified that. But then he was like, oh, I feel bad, she's got young kids. I said, she didn't feel bad that she did this, because he was like, oh, I feel bad when she went to jail the first time. And I said, she didn't feel bad. She never considered her children when she stole from you. So you have to remember that. Okay. I mean, I just, I was, I was as angry too, because nice people that they, she really screwed over.

You know, some of the things that we, you, you're building in on these workflows as you're talking is It's that level of transparency in the sense of the information is being provided to you. But if you ask, and we kind of do this analogy ourselves internally is, okay, if the practice management says the revenue's this and we see that the payments amount to this, where's the difference? How do we understand it? If you're an experienced individual that has done this work, you would be able to answer those questions and have the details. Or if you can't answer in a meeting because you need to bring the data with you or pull the data together because it's in pieces, that's another thing. But that level of— to your point, Lynda Artesani, that level of transparency and validation. And obviously an outside firm, it isn't in our position. These are your staff, this is your payroll. You confirm the timesheets, you confirm the information. Right. We've often asked— we had this come up with the law firm where they were going to have an individual who was going to be paying themselves through a platform that's meant for payroll, and they were going to pay themselves as well as process the entire company. And our biggest thing was like, why?

Don't do it.

Why are you doing that? Why do you expose yourself in that way? That is not okay to do. And It, it finally came down to somebody else kind of having a voice in this entire thing as well. But ultimately it's those SOPs, it's those workflows, it's understanding what's being presented to you at a, at a certain level, being able to ask the questions or us ask questions on our behalf to validate, hey, we see these expenses, is this actually right? Where should these be going? They could be this. I even say to people, it's the smallest expense. I know that you— everyone uses Amazon for this, that, and the other. I might randomly just start asking random questions because the dollar amount— not because I'm challenging you, I just want to make sure, am I doing this the way that your intention is? So I— Steve, you have also done this as well. You've picked up the pieces. Lynda and I have multiple times. We've rolled up our sleeves and done the weekend work ourselves, her and I, to help somebody out.

Sure.

But what, in your experience, what happens when somebody suddenly quits? What have you seen as like the first area of things that need to be done or dealt with or?

Well, there's so many things that have to be done right away, but one of the things that gets missed frequently is they don't offboard correctly. So if you have a 401(k) 401(k) plan and they have health insurance and all these different benefits, you know, you need to turn those off sooner than later because You know, Anthem is going to keep billing your insurance until you turn it off. And then if you try to get money back, that's just a nightmare in itself.

Number 2— If they're on salary and you're just going to keep getting paid even though they left.

Right.

That's a lot of lost money, cash flow. If you're worried about cash flow, I'm sorry, ding, ding, ding. That's the problem right there.

The other thing is, is bring in somebody from the outside to help guide you along immediately. Don't wait. And especially in today's job market, there's a lot of people looking for work. But the flip side of that coin is those lot of people don't want to be in the office anymore. So it's not as easy to find somebody to drive downtown and sit in your office and do that type of work as it used to be.

And if you're—

Not going to hop on—

You know, if your bookkeeper has been around a long time and they set you up on QuickBooks Online, but they were the primary admin, right? Go look right now. Run and look right now. If you're an attorney, look to see who's primary because you— they leave. It's like an act of like I mean, it's unbelievable all the steps you have to go through to get your file back. It's your file, but if they put their name on it, it's an unbelievable process.

Oh, you're talking about on the one side. Yeah, there's a lot of things. I mean, beyond that, I mean, there's just a lot of little steps though, like depending on how big you are of a firm, you might have this process in place. Great. If you are a firm size that's still evolving and still building your processes—

Good point.

This is where you're definitely not— this is not the first thing you're thinking of. You maybe have had somebody leave, but not at the scale that might be as important. I guess it's just an evaluation of where you're at with your products and services and the users that you're paying for, and does everything line up? All of those pieces. Um, and our biggest thing too is we, as an outside firm, we want to be able to access your bank account within reason. We don't want the ability unless we have bumpers in place to freely be able to log on and do X, Y, and Z. That is not okay for us. And that should not be okay with somebody inside the firm either, unless there's things in place that allow you to double-check that work.

Well, and to your point right there, you— many bar associations do allow an employee that is supervised by the person responsible for the trust account in the firm to actually transfer money and do those things.

Mm-hmm.

But, you know, you need to be aware right away, where's the trust account? Is it in balance? Turn that off. Have access, you know, give the new firm or new accountant, whatever, access to read-only access in the banks so that they can continue to reconcile and keep things in balance. Get ahold of your accounts receivable right away. You know, perhaps quite often the in-house bookkeeper/accounting person is responsible for client billing. So you don't want that train running down the track without any guidance over it. So, you know, get ahold of that to keep your cash flow going. There's so many things that you can do proactively, but don't just sit back and be scared. There are people here to help you through the process. And if you bring somebody from the outside, let them in, let them take a look at everything and listen to them when they're telling you, this is what I see. This is what I recommend. This is what you should do.

There's another thing too. The question is, is the person leaving that role, is that a replaceable role or is there another way to do this work?

Right.

In a positive way, meaning, you know, it depends because a lot of times when you're hiring inside, yes, there's other maybe tasks and roles. Is that really the job role that they should be doing?

That's why accounting should be outsourced, don't you think? Because you get outside the firm. We know less pays, and we know all that stuff that's confidential.

It's confidential.

We don't care. We're not involved in the minutia of the day-to-day in the law firm.

Right.

So I think that sometimes just that mindset shift of— I know a lot of people like to have that person. When we've had it, Sarah, they're like, well, you're in Portland. I called you so I could get somebody from Portland. Well, you get something from Portland, but I'm not going in your office and sitting at the desk. But it's better to be out of there. Now we have to kind of mask our screens because people are trying to look. Right. Able to stay and work on our own space. We're not tied to the firm. I think you're, you know, better off with something like that than having that in-house person. Yeah, you're going to need an in-house person to maybe make the deposits and send us the details that we need, but I think sometimes that little bit of security of being outsourced— because if we're going to come in after someone up and quit, we're going to look at the status. Where did they leave off? Where were they reconciled to? What's missing? And we'll try to figure it out. Maybe they just couldn't take it anymore and they just quit. And maybe everything was up to date and they just didn't want to do it. Yeah. I don't know what makes somebody snap, but then you're coming in post-op basically figuring out what happened, where did they leave off, where was the issue? Because there had to be something, whether it's personal or professional, something that was going on and you need to figure out where things are Sometimes files aren't kept in a way, so have a process for how your firm keeps their data. So that way everything's, you know, we've got files on all our clients and there's a specific data set that they're all in a certain place and they're connected to our PM, our practice management tool, and we keep confidential records in a place that way. So you want to at least have all of those things in place. Really comes down to SOPs and workflow. Have that documented so that if somebody leaves, somebody can come in and follow the steps. That might tell you a lot as you go through this. If you have the SOPs, you'll understand. And they might come in and change the processes, but that's okay.

Well, and at this rate, to be fair, the risk of where things are going as far as the red flags of AI tools, spams, spoofs, software, passwords, who's sharing what, how do you share information internally, what client information is at risk if you're not turning things off appropriately. There is so many levels of things that, I mean, it's getting, it's getting challenging as a, as a person, and then as a business owner, you guys, you got a lot to do. And This is a critical moment in your firm. This is a really critical piece, whether it's someone inside or someone on the outside. How does that transition? It's like any professional service. I feel like this role has been somewhat demeaned over the years because of the terminology bookkeeping.

Mm-hmm.

Correct.

It's way beyond that. There's so much technology that goes into this, so much brain support and ideas of things and thoughts and making sure it gets into the right bucket and that you, you know, your tax return is accurate and that you're paid what you should be paid as a business owner. You're taking on a lot of liability. And so when someone leaves that role, if they just up and leave, I mean, yeah, there's a lot of questions. We would probably want to ask the same questions. Why? What's going on?

And if they don't have access to your records because they you never had access to QuickBooks and they're the owner of the QuickBooks file or even Desktop. I mean, I know some—

That's just one software. There's many other software.

But if you're in that place, you can go back to your tax professional because they probably asked for a general ledger and you're going to get a balance sheet and start another file. Because if you're going to have to go through the process to try to get the data back, it might be a lengthy process. And at some point you might just start off fresh and just go forward. Attach the bank fees and just zip through it as best you can. And if you have your Clio or whatever your tech, legal tech is, you probably still have access to that because everybody logs into that. And it's just that, but we both, all three of us, when we heard the topic for today, we're all like, oh, it's a heavy topic, right?

It is.

And it does happen in the real world. It can happen. So if it hasn't happened to you and you have a system in place, everybody loves their bookkeeping everything's great. Make sure that you have, you know, you have a system in place, a process in place as a backup. Have your backup plan, because if this ever happens, you just don't want to have to deal with the whole situation of all of that.

We've, we've even seen it at the controller level where this has happened in a larger firm. And, and then it— it exposed itself to further damage unbeknownst to the partners and the founder. And it begged the question of, you know, was there staff that was supporting that role and what were they asking? What were, what were the questions? So sometimes when you are newly hiring an outside firm to come in and take a look, the recommendation we've had is have that extra pair of eyes before it's too late. Yeah. Before it gets to that point. I know, Steve, you do advisory work like that for a couple of your clients where you are basically that next set of eyes. But the thing is, is you're a professional and you're just looking at it for what it is.

You're not—

Exactly.

People that work within the firms, a lot of times, I'm not saying this true of everybody, but there are people that look at things not with the same granular viewpoint or not with the same objectives. And so I feel like when you're experiencing these heartaches or these moments or, you know, there's somebody's pregnant, they're gonna go on maternity leave and yes, yeah, yeah, they're gonna come back and they've met the best of intentions, but they fell in love with what they're doing in their everyday life or their life changes. It, it's having that clarity of understanding of what that, how key that role is. And I feel like it becomes more important. Mm-hmm. The bigger you get or the more you make, the less time you have, the sleepless nights that, you know, Lynda will ask, what keeps you up at night when we're talking to somebody? And it— you're teetering. And if you're teetering, or if it's a— if it feels so solid and you're like, yeah, it's gonna be fine, we always just ask ourselves, okay, what, what happens if this happens? We just have to ask, not because we think less of anyone, but you have the plan, the secondary plan to what needs to take place. I feel like that's one of the biggest things in prevention, in long-term ideas and thought processes. So yeah.

One of the things I'd like to caution on too is it's a great time to make changes you've wanted to make, but when you bring the new accounting people on, make sure they have a direct line to you as the owner of the firm. It's great to have the in-house operations manager, or, or whatever that position is called, as the point person for you, because you can get a lot of information from them quicker than chasing the owner down. But with that said, having a direct line of communication to the owner where that person feels comfortable calling you and, and discussing certain situations and things that you're seeing is very valuable and it doesn't cut out the office manager or anything like that. In fact, it's great to include them in that, but it just keeps communication open. And that could be one of the reasons I've seen this. It could be one of the reasons why the last person left, because, you know, they didn't— the owner would come in and say, well, why isn't this done? Or why isn't it done that way? Or whatever. And they were like, well, the operations manager said to do it this way or whatever. So having that synergy set up and understood upfront during this change, which is very crucial and very, very important, really can create a line of success through the whole stream of things, if you will, in the accounting process.

It's a valued role. Bottom line, accounting in this way is a valued role. It needs to be looked at that way. It needs to not be demeaned or it's just, you know, you just put a bunch of numbers in and just make— No, this is a valuable space that has huge impact to your personal life and your business life.

Right, right.

I mean, that's it. Bottom line, that the end of the day, how all of that comes together impacts you. Those financial decisions, whether you've thought about them or not, the person in that seat, if it's an outside firm, that's what they're doing is helping you see it for what that is. And you are a part of that component to your point, Steve. You're engaged, you're a business owner. I am a business owner. Lynda is. We are engaged. We ask the questions. We want to know. We may be thinking about something totally separate. We come together, we ask the questions. Same thing here. And I think people need to really— there's a lot of cheap stuff out there. Yep, we'll just do it for this much, this much, this much. Really? Is that what you want?

Well, that happened with Botkeeper. Remember that? All of a sudden it's like, we're close.

Yeah. All right.

Yeah. Not a lot of notice there. Yeah.

You're really going to put yourself in bench, software ledger.

Bench, same thing.

You want to put yourself into tools like this that are not tried and true. This is your financial, this is your business. This is your livelihood. So I guess we can end with that, but I'm just saying.

Scary topic for sure.

Yeah.

I'm passionate about this one.

I'm glad we got to share this though. You know, this has been a long time coming on this subject, and it's happening so much right now. I mean, there's a shift going on in everything, it seems like.

If you're shopping for price and it's transactional, okay, see you later. This is a relationship.

Don't come to us.

Yeah, this is a relationship, period.

Exactly, well put, well put. Well, thank you, you guys. This was a great discussion today. Wow.

If you liked what you heard today, don't forget to like, share, and leave a quick review. And while you're at it, hit subscribe so you never miss an episode. If you have a question or a topic you'd love us to cover, send us an email at info@accountantslawpod.com or message through our website accountantslawpod.com, or feel free to comment on any of our socials. Your idea might just make it into a future episode. And if you want to go beyond listening, consider sponsoring an episode and connect with our community of accounting and legal professionals. And as always, don't forget to join the conversation inside the Accountants Law Lab Mastermind Group. At accountantslawlab.com.

Really great topic. And if there's an attorney out there that, that's had this happen, would love to talk to us, we'd be more than welcome to, you know, come into the show and talk to us because this, it's embarrassing, but it happens.

Great idea.

You know, great idea.

I love that. I love it. Well, goodbye for now. Thank you all.

Bye.

Thank you.

Take care.