Then and Now

When we first started our IT business and my husband said “do you want to do the invoices?” I had no experience of bookkeeping whatsoever so obviously I said “yes”. During the first 4 or 5 years with the help of our very patient accountant I cobbled some kind of system together. With no set hours of work or job description I fitted the bookkeeping around our 4 small children. One of my VAT returns was completed whilst I was in labour with our third child, I’m not sure how accurate that one was!  During that time to say my bookkeeping was sporadic would be an understatement. The typical run of things was:-

  • Invoices would possibly make it out by the 3rd week of the month
  • Statements went out every now and again if the bank balance got low
  • The bank balance was checked monthly when the statement arrived
  • Expenses were recorded when my husbands car/wallet/pockets were cleaned out
  • Suppliers would get paid when I received a statement
  • At the end of a VAT quarter you would find me hiding out in the office for 3 days in a state of panic
  • When the accountant asked for last years accounts ready for them to do year end that could involve a week or two of grappling around for the information and tidying up the loose ends that I had been putting off for a couple of months
  • A cash-flow forecast was something I hadn’t even heard of
  • Month end reports were me sitting with my husband over a glass of wine and announcing everyone got paid and whether there was enough left/or not for us

Following a meeting with our accountant about 5 years ago I came away thinking that next year I wanted to understand everything he said without having to ask for an explanation or just nodding my head. This is where my real bookkeeping journey began, I have spent the last 5 years becoming fully qualified and also realising that “you don’t know what you don’t know”. I know that sounds obvious but when you are doing a job that you are capable of but not qualified for there is a remarkable amount you don’t know. I didn’t know that if you don’t reconcile your bank, credit card, PAYE &NI account, Wages Control Account, Supplier Accounts etc then your numbers may be meaningless because you have to make sure your numbers are in touch with reality. I didn’t know that some customers only pay when you send them a statement as part of their cash-flow management. I also had no idea that a cashflow projection was possibly one of the key management accounting reports you can produce,  I could keep going but you get the picture,

I am now a complete advocate of daily bookkeeping and of having checklists, bookkeeping by it’s nature is fairly repetitive so checklists are a great way to maintain accuracy and consistency.

  • By looking at the numbers every day you can very quickly spot potential cash-flow challenges and manage them before they cause issues in your business
  • You will pick up customer payment patterns so can manage those relationships in a way that works for your business
  • You know when supplier payments are due and can either pay or communicate with them on when they can expect the payment
  • No more working until 3am to get the VAT return submitted on time

Above all being in control of your business finances will put you in the driving seat of your business providing you with real time information on it’s performance and enabling you to make informed strategic decisions.

DilbertMadeUpNumbers

If  you would like help to put a structure in place and put you in a position of control over your business finances e-mail us today to book a free consultation sue@virtualbalance.co.uk