If you are a regular reader of our blogs, you’ll be under no illusions about the importance of accurate business bookkeeping. Without these fundamental building blocks in place, no business, however good at selling a product or service, will maintain a consistent growth trajectory. However, even if your bookkeeping process appears to be running smoothly, there may well be improvements and alterations which could streamline it further. Check out our list of five suggestions below to see if your system could do with an upgrade.
Go automatic
Whether you’re a sole trader or a larger business, automating your bookkeeping is a must these days. It’s convenient, efficient and will save hours of time. There’s a wide choice of bookkeeping software available, such as Xero which, among other functions, can computerise your invoicing and reporting, assist in preparing your tax return, instantly show you your cash flow position, collate payroll information and allow employees to submit expenses.
It makes sense to ensure any software you purchase will integrate with other platforms. For example, you may need it to interact with sales information from your website and connect with your bank account. Programmes which communicate with each other are faster and less likely to register errors.
Automation can also help your business towards becoming paperless, which is not only good for the environment but also for productivity and ease of record-keeping. Bookkeeping software will enable you to record receipts on the go, meaning they are less likely to end up in a messy pile in the glove compartment. You can generate electronic invoices and file documents automatically in date order, which makes accessing them much easier than trawling through an overflowing filing cabinet.
Keep a diary for important dates
It may seem a rather basic point, but a planner for important dates is one of the most useful tools you can maintain for a well-organised bookkeeping process. Most business owners can recall a mad rush to meet a tax deadline which has crept up unnoticed. A good planner lists tasks needing to be done daily, such as invoice recording; monthly, such as sending out payment reminder letters; and annually, which includes the preparation of annual accounts and the dreaded tax return. Reminders which allow plenty of time to complete the task are crucial; there’s no point diarising a monthly report the day before it’s due. A carefully-planned diary will save a great deal of time, avoid unnecessary panic – and you can incorporate it into your accounting software!
Stick to payment deadlines
It’s tempting to let deadlines slide if you’re busy, but ensuring your customers adhere to a payment time limit is essential to keep your cash flow healthy and avoid timewasting credit control. If you have regular late payers, take stock of how necessary the resulting hassle is to your business, and consider whether early payment discounts and other rewards might encourage customers to pay up. While we’re on the subject of payment deadlines, this obviously includes the payments you make to your suppliers and to HMRC! Prompt payment works both ways and makes for orderly bookkeeping.
Keep an audit trail
An audit trail gives you a detailed chronological record by which accounting and other financial data can be traced back to source, providing important verification if required by HMRC or other regulatory bodies. It can be enormously time-consuming if it has to be pieced together from scratch, and may not be entirely accurate, so meticulous record-keeping from the outset is well worth doing. If your bookkeeping is automated this is easy to extract.
Get professional input
When you start up a business it may seem as though the bookkeeping is something you can whip through every week without too much of a problem. However, doing the accounts can easily get pushed to one side, and, before you know it, you’re buried under a mountain of receipts, late invoices and tax demands. The longer you leave it, the more difficult it is to get straight, and the more likely you are to experience cash flow problems or incur penalties from HMRC for late payment. How much is your time worth to your business? You may find that passing the bookkeeping over to an experienced professional makes sound financial sense.
Here at AMR Bookkeeping Solutions streamlining bookkeeping is our business. We provide entrepreneurs with all the support they need to enable them to get on with running their businesses. Call us on 01892 559480 or get in touch through our website.
