Bookkeeper for Executive Protection Companies

How do I handle hourly, daily, and weekly billing for the same client?

Each engagement is a separate job, and each job has its own rate. The books need to track the engagement itself, not just the total amount you happen to bill that month. That means a separate line for every detail, every shift, and every service you deliver.

Production work rarely fits a single rate structure. A client may want hourly coverage for a short visit, a daily rate for an event, or a week rate for a longer detail. With some firms, a day rate includes a set number of hours, and anything over that is billed as overtime or extra time. Your bookkeeping needs to capture the rate, the actual hours, and any overage charges, so the numbers reflect what you really earned.

Set up a job or client project in your books for each engagement. That job holds all the revenue and all the costs for that engagement. At the end of the month you can run a profit and loss per client instead of seeing a single lump sum for the company.

What are the biggest costs that eat into my margin?

Labor is the dominant cost, and it's not close. Industry analyses put personnel and payroll at 40 to 60 percent of a security firm's total budget. That includes the guards' wages, their overtime, payroll taxes, and any benefits you provide.

Insurance is the next big one. Your liability premiums can run between $2,500 and $6,000 a year for lower-risk security work and between $10,000 and $25,000 for higher-risk assignments, according to a major insurance brokerage. Those are numbers you need to cover your own coverage before you see profit.

The example above also gives you the big insight: if you don't know what a job costs in wages and insurance, you can't know if it's actually profitable. That's why the per-client job costing matters.

Why is my monthly revenue so unpredictable?

The protection business is episodic. A client needs you and then doesn't. There is no recurring subscription they have to pay for. So one month can be full of details and the next may have almost nothing. The bookkeeping has to show you that cycle coming, not just record the history.

On top of the work rhythm, your clients often pay late. Even when you write terms of 15 days, you'll see some clients hold invoices for 30, 60, or even 90 days. That means you're financing their invoices from your tight pockets. Your cash flow is just as important as your profit.

Set up a cash flow forecast in your books that lists the invoices expected and the expenses coming due week by week. Look ahead two to three weeks so you can decide whether to hold a detail open or chase a slow-paying client before you miss your own commitments.

How do I know if a client is actually making me money?

You only know the client is profitable if you track all the costs directly against that client's revenue. For each client, you'll record the revenue, the hours, the wage cost for those hours, the insurance you attributed to that job, travel, and any extra equipment. Subtract those from revenue and you've got your gross profit for that client.

Industry numbers suggest a typical per-guard gross margin of about 20 to 30 percent before your operating costs. That's a rough floor. A client that lands below that, after billing surcharges, might not be worth the hassle. A client who lands above it might deserve more of your time.

If a client constantly adds extra hours, demands riskier assignments that push your insurance classification up, or turns in you the last minute, you'll see the impact on the job's margin. Only the books will show it clearly.

What do I need to write on an invoice so my client's accountant can use it?

Your client's accountant is thinking about IRS Code Section 132, which covers the treatment of a working-condition fringe benefit. When the service is directly related to the business, the client can often treat the cost as deductible business expense. If the invoice is vague or doesn't connect the service to the business activity, that deduction can be challenged.

So the invoice needs to do more than say "security detail". It should list the specific date, the principal that was protected, the event or reason for the protection, and possibly the hours or location. That detail shows it was a business necessity, not a personal perquisite. This isn't fantasy; it's what the client's tax advisers tell them to look for.

What three reports should I and my bookkeeper review every month?

Start with a monthly gross profit by client. That report shows you exactly where your money is made, and it shows which side of your book is selling for a small price.

Next is a cash flow forecast. Because protection is more lumpy than almost any other service, talking at least 30 days ahead keeps you from being caught off by a slow month.

Finally, keep an accounts receivable aging report. If a client is paying in 60 days when their terms are 15, that shows up right away and you can decide whether to keep them or ask for a deposit next time.

Those three reports, consistently reviewed, are the stuff that keeps a protection company from going under even in a quiet season. They give you the numbers to decide whether you can afford to hire another agent, whether you should raise a rate, and which clients you should call to chase.