Every business owner knows that disorganised bookkeeping can make tax returns, payroll, year-end accounts preparation, and other submissions stressful. Whether you allocate time to sorting through your accounting records every day, week or month, it’s all too easy for administrative tasks to slide down the to-do list for busy companies.
However, running reliable, real-time reports and understanding your financial picture is also essential. For example, the information within your management accounts can tell you how much cash you have available to purchase new inventory or indicate whether you are making money on a particular product line or service.
Businesses also depend on their financial records to comply with legal requirements such as preparing VAT returns. Let’s look at the indications that your bookkeeping is getting out of control – and why it may be time to consider working with a professional bookkeeping service.
How Can Businesses Evaluate Whether Their Bookkeeping Is in Good Order?
The complication may be that businesses assume their financial and accounting records are in a reasonable state of organisation – until they come to running a set of management accounts or preparing a return and find that something doesn’t look quite right or that their profit margins appear significantly lower than expected.
Bookkeeping isn’t ideally a job left to the last minute, either, ensuring you have ample time to investigate inconsistencies, run reconciliations and verify that your asset figures are correct.
Let’s look at some of the primary concerns businesses have when they approach the James Todd & Co team to discuss our professional bookkeeping services.
1. Being Unsure of Your Cash Flow Position
Cash flow is a crucial piece of information companies use for budgeting and forecasting, ensuring they are always aware of the reserves available and the income owed to the business. An obvious sign that you would benefit from an experienced bookkeeper’s assistance is that you cannot cover important expenses due to a lack of cash availability.
Most businesses have seasonal trends, where they achieve the bulk of their revenue during a particular period. That means they must understand how that inflowing cash corresponds with outgoing liabilities and when they may potentially have gaps.
Poorly managed cash flow is a core reason some successful organisations face insolvency – not because the business model isn’t profitable, but because there hasn’t been the right planning to ensure the company has the cash assets to meet its obligations.
If you feel a slight panic at the thought of your upcoming tax bill or aren’t 100% certain your business bank balance can cover all your payroll and invoice expenses due at month-end, your bookkeeping may need attention.
2. Having a Lack of Time or Capacity to Focus on Bookkeeping
It’s no secret that many business owners are spinning plates and may be focusing their time and attention on numerous areas of the company, from dealing with customers and new enquiries, developing new products and ensuring they have a solid foundation to help the business grow.
As a company scales and gets larger, the importance of bookkeeping also increases, where the bigger the business, the more you’ll need to keep on top of, including higher:
- Payroll costs
- Sales transactions
- Expense invoices
- Incoming payments
- Reporting obligations
Outsourcing your bookkeeping to an experienced bookkeeper provides the assurance that you will stay on top of your accounting, will receive automatic reminders when you need to file tax returns, and never need to allocate your valuable time to clerical tasks you may find a hassle to complete.
Expert bookkeepers can manage your finances in minimal time, working efficiently and using their professional knowledge to raise an alert if they have any queries or need to question whether a transaction is correct.
3. An Absence of In-House Bookkeeping Expertise
A large majority of small business owners do not have any accounting know-how and launch their businesses based on ideas, skills and experiences far removed from the world of financial returns and tax management.
While an advanced accounting software suite can make most basic bookkeeping tasks easier to manage, it remains inevitable that many small businesses may be unaware of which expenses are tax deductible, when returns are due, or how to ensure they record transactions in the most tax-efficient way.
Working with a professional bookkeeping service provided by a team of local accountants is the ideal solution, where you have the expertise on hand to advise if there is a better way to manage your tax obligations and avoid eroding your cash reserves when there is a more favourable financing opportunity you may wish to consider.
This level of guidance can also be invaluable when making financial decisions, comparing borrowing options, or deciding whether a new product launch is financially feasible and appropriately timed.
4. Repeated Late Payments or Incoming Remittances
We mentioned cash flow earlier and would recommend booking a consultation with our capable bookkeeping service if you keep coming up against chases for late payments or find it difficult to assess which clients have paid their accounts on time – and which invoices are well overdue.
Keeping track of accounts receivable and payable is hugely important and can make a significant impact on various aspects of business finances, including:
- Applying for borrowing or investment.
- Forecasting your cash reserves.
- Making purchasing decisions.
- Paying staff and creditors on time.
- Remitting tax and VAT payments promptly.
Outdated bookkeeping records make it impossible to budget accurately and to analyse whether the business is in a good overall financial position to achieve its aspirations.
5. You’re Not Confident in Your Bookkeeping Skills
If you spend plenty of time keeping your accounting software up to date with your latest transactions but remain unsure whether your small business accounts are accurate, a bookkeeper can remove this element of uncertainty.
Bookkeeping itself can be straightforward, but working through a backlog of data entry requirements, reconciling multiple bank accounts or business credit cards and running reports that you are absolutely confident are correct requires a certain amount of skill.
Accountants provide business-specific bookkeeping services that can remove the worry from managing your financial affairs by taking care of daily, weekly, monthly and annual tasks to ensure your records and reports are always on time and error-free
Types of Business Bookkeeping Services
Getting the right assistance for your business can make such a difference in how you manage your time. Rather than struggling to keep pace with bookkeeping or scrambling to prepare tax returns the day before the deadline, your bookkeeper will manage all aspects of your record-keeping while ensuring you have the capacity to focus on what you do best.
There are also several services you may wish to consider, depending on whether you have an in-house bookkeeper who needs some additional training and assistance or require an initial tidy-up of your records and reporting to deal with backlogs.
The James Todd & Co Accounting Clean-Up service is a great place to begin; we assign expert bookkeeping teams to work through all your ledgers, reconciliations, and entries and provide a fresh, up-to-date start.
From there, our experienced teams can provide ongoing bookkeeping and management services, professional staff training, and quarterly account reviews. Let’s look at each of these options in a little more detail to explain how they work and ensure you select the right services for your business.
Bookkeeping Training and Support
One of the reasons many clients come to us is that they understand the importance of bookkeeping but find the reporting aspects of running a business difficult to keep up with.
Bookkeepers may, for example, be up to speed with entering transactions and reconciling bank accounts but not have the knowledge or the right software to produce insightful reports that show decision-makers exactly how the company is performing.
Regular reporting is key to business growth since it can highlight the following:
- Areas where the business is doing well and aspects of its operations that are less profitable or falling behind targets.
- Cash flow bottlenecks, allowing owners to plan for upcoming expenses, tax obligations, and payments owing.
- Surplus cash reserves, which the business can use to reinvest in additional staffing or services or transfer to a higher-interest account to ensure their reserves continue to grow.
- Trends and changing customer behaviours, identifying ways to diversify or expand.
In this scenario, much of the baseline work has already been completed, but the business may not have the reporting structures in place to extract meaningful value from its accounting records.
We work with bookkeepers to expand their knowledge, discuss the right ways to produce reports and management accounts from their system, and how to organise that reporting to ensure it provides clarity and allows for informed decision-making.
It is not uncommon for a business and its bookkeeper to be working harder than ever as transaction volumes grow but find that profit margins hit a plateau – making accurate, real-time reporting essential to unpicking any barriers to growth that may exist.
Accounting Clean-Up Services
The Accounting Clean-Up Service is ideal for businesses that have grown rapidly and have not found the time or capacity to keep their bookkeeping up to date. Working through piles of receipts and expense claims, having months of bank accounting transactions to reconcile, and trying to catch up with a backlog of invoices can be stressful, and rushing inevitably makes errors more likely.
During an accounting clean-up project, our teams will work through each element of your accounts in detail, eliminating mistakes, catching up with transaction entries, and helping you refocus. This service includes:
- Checking nominal ledgers, bank reconciliations, sales and purchase ledgers and cash and credit card reconciliations.
- Reviewing your chart of accounts, ensuring payroll entries are correct and reconciling VAT and balance sheet accounts.
- Comparing your opening balances against your last set of financial statements and making the necessary adjustments to record prepayments and accruals.
- Liaising with HMRC, where necessary, and submitting corrected information as applicable.
Once your accounts are back in good order, we produce a full set of management accounts, advise on any aspects of your accounting systems that you might wish to change, and detail all the corrective actions taken. After the debrief meeting, you can either take back control over your bookkeeping, delegate this responsibility to a team member, or outsource your regular bookkeeping to our experienced teams.
Another solution, which works well for businesses with in-house bookkeepers but that require a little additional guidance, is to consider a quarterly review.
Quarterly Accounts Reviews
This service helps business clients get more from their financials, verify that bank and VAT reconciliations at quarter-end are correct, make adjustments for prepayments and accruals, and produce a full set of quarterly management accounts.
Producing a reconciled profit and loss account and balance sheet every quarter offers business owners the data and insights they need, rather than waiting until year-end to identify issues, areas of the business that aren’t performing as expected, or cash flow shortages.
Performance insights can be invaluable and assist with forecasting, strategic planning and money management. While quarterly reviews are a popular service and a middle-ground between fully outsourced bookkeeping and managing all aspects of your accounting in-house, we can also provide more regular reviews as required.
Fully Outsourced Professional Bookkeeping Service
Our final option is to consider outsourcing all of your bookkeeping – an excellent solution if you aren’t yet in a position to hire a full-time bookkeeper or finance manager but don’t have the time or skills needed to ensure your reports and accounts are in good order.
We work with each client to understand how best to meet their needs and utilise cloud-based accounting to ensure we can access financial records remotely and perform regular bookkeeping tasks without interrupting your workflows.
An experienced bookkeeping team provides added benefits, such as ensuring you are compliant with regulations and reporting requirements, providing support to ensure you maximise tax efficiencies available to you, and offering recommendations where we can see an improvement opportunity we think would be of interest.
Whichever bookkeeping services you choose and that align best with the lifecycle and needs of your business, our professional, experienced accountants and bookkeepers aim to be flexible and supportive, offering the breadth of our knowledge and guidance as your business grows and evolves.