How to clean-up sloppy accounting records.
Sloppy bookkeeping and accounting records have major implications on the ability of a business to grow successfully. They result in costly mistakes, duplication of tasks, higher administration costs and lack of information to support decision making.
Here are three steps which will ensure that your accounting records are completely cleaned up.
STEP 1: MOVE ALL YOUR FINANCIAL DATA INTO ONE ACCOUNTING SOFTWARE PACKAGE
Every accounting transaction needs to be recorded and stored in one place. Orders in, orders out, delivery addresses, sales prices, customer details, management accounts, VAT, costs and so on, must be stored in one accounting software package.
The data must be recorded in a consistent and timely manner. The greater the time delay between a sale happening and an invoice and statement going out to a customer, the more of a strain this will put on cashflow. A good accounting system is like a well-run warehouse, where the financial data is consistently recorded in the same storage file for retrieval. This will allow you to run insightful reports at the click of a button which will support decisions at all levels in the business.
Many businesses run their accounts department using spreadsheets and hand-written notes. These bookkeeping methods are generally sloppy and there is much duplication, confusion and they offer no insights for the business owner. Accounts staff can be slow to let go of the spreadsheets and old ways of doing tasks, which is why training and support is required.
STEP 2: TRAINING OF BOOKKEEPING AND OTHER SUPPORT STAFF
Business owners are always surprised when I tell them that their stores and sales staff can create up to 40% of their accounting records as they record the movement of goods from suppliers to customers. Bookkeepers can add another 50% of the data to the completed accounts. This is not just generally bookkeeping, this is the year-end accounts, prepared to the highest standard with thousands of transactions supporting the final accounts and all with information can be sliced, diced and viewed in any way the business chooses.
Working with stores and other support staff about gathering and capturing financial information is always highly productive. They generally always instantly understand what is needed and are delighted to receive training. The training increases their productivity and removes mundane tasks like entering the same data repetitively.
The ability of a bookkeeper is often totally under-estimated in many businesses but with some training, they can often be as good as an accountant. Training will show them how to record information consistently and professionally and how to check their work to avoid errors and omissions.
STEP 3: PART-TIME FINANCIAL CONTROLLER SUPPORT
Once your business scales above €1m in turnover, you will need the support of a part-time financial controller.
When sales volumes increase, the cost of tiny mistakes can be significant and can often be multiples of the cost of employing such a person. Mistakes are often completely hidden and often go unnoticed such as failure to claim VAT on a purchase, incorrect treatment of loans and misleading information provided to business owners.
Employing the services of a part-time financial controller is always cheaper and more productive than employing a full-time person. Full-time financial controllers are often inclined to get involved in the bookkeepers role such as paying wages and colleting money. Why pay two and three times the labour cost when a bookkeeper will be perfectly capable of doing these tasks?
The financial controller needs to take an overview of the business and provide high quality guidance and insights. This is almost impossible to do if you spend a lot of the week doing a bookkeepers role. You need a financial controller who deals with multiple businesses yet understand your business model to provide great insights and advice.
The above 3 steps will ensure that you have complete control over your finances, lowers administration costs, less stress and great insights into your business’s performance.
If you would like to find out more about the services GLT have to offer or would like to sign up for our latest bookkeeper course commencing on the 31st of March, email ger@gltbusiness.ie today. Don’t forget to follow us on social media!
