Ineffective use of your bookkeeper!

As a part qualified bookkeeper and owner of my own business I see many different variations on how people think they should keep their accounts.

There are those who keep immaculate records and, like the old joke, there are still those that put everything in a carrier bag and hope you have psychic abilities!

It's no laughing matter though, if you aren't on top of your books how can you possibly understand how your business is performing.

I therefore thought I would share with you just some of my observations from the last few months:

• keep your personal and business transactions separate -you may feel you don't have enough transactions to bother, but is scrutinising receipts for personal transactions really an effective use of your bookkeepers time, particularly if they are paid by the hour

• keep your paperwork in a reasonable order, again time spent sorting it out into date order or transaction type is not an effective use of time, and unscrewing receipts and sorting invoices from a pile dumped in a bag will not endear you to your bookkeeper

• do you know what you owe and what is owed to you?

• do you review your outgoings to make sure you are still getting value for money

• do you do a cashflow forecast so you know what is coming up and how change will affect your business

• if your bank charges you by transaction type look at how you pay people, is that cheque really easier than banking online, as it could cost you a lot more, switch to paying by bacs and it could save you money

• send your invoices out in a timely manner, if you don't issue them you can't chase them for payment, consider issuing them by email to speed up the process

• if you want to get money in your account more quickly make sure your bank details are easily available, again I often have to phone for this information in order to pay people

• make sure you chase your debtors regularly and enforce your credit terms, make sure your credit terms are made clear at the start of the contract

• if you are not sure what information you should show on an invoice check out the business link website, it is surprising how many people fail to show the necessary information

• if you are issuing an invoice under CIS remember to deduct the tax not add it back on!

• when you get receipts for goods or services if it isn't clear what it is for then write it on the receipt, you may not remember by the time you come to do your books

• if you do write cheques remember to fill out the cheque stub! Don't just write who to, write what for as well

• if you are not sure whether an expense is allowable ask your Accountant or phone the HMRC helpline

• do you hold management reviews with your Accountant? Do you discuss where you want your business to go and how you can get there

• even if you have an Accountant or Bookkeeper you should understand the processes, at the end of the day you are the person liable in a tax investigation

• check your bank and credit card statements when they arrive, mistakes do happen

• keep an eye on payment due dates and ensure payment arrives in sufficient time as penalties or charges may become due

• check out the free training courses available from both Business Link and HMRC

And most important of all remember that your Accountant or Bookkeeper doesn't have a crystal ball!!

- Posted using BlogPress from my iPhone

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