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Book keepers don’t have crystal balls………

…..and other little known facts to help with your book keeping processes.

This may seem like a slightly odd title for a blog post, and to be fair it was actually a short presentation that I gave at a networking group recently so I’m not sure entirely how well it translates, but we’ll give it a go!

One thing that I’ve realised in over 17 year of helping people to resolve problems in their Sage systems, is that many of the issues encountered are not so much about knowledge of the system as about the processes going on in the background – the information that’s getting (or not getting) to the person who’s processing. With that in mind I’ve put together a few facts (clearly little known based on the queries I regularly encounter) that I hope will help business owners & managers to stay on the good side of their book keeper – or if they look after their own day to day accounting to learn to make that an easy process!

1. Book keepers don’t have crystal balls

If you pay John Smith some money from your business bank then you might know who that is, what the money was for, & whether you have an invoice already entered on the system under his company name, but your book keeper quite probably will not (unless you tell them). Whilst Google is a marvellous source of information, & you would probably be shocked at quite how frequently it is used during a bank reconciliation process (even by people who made the payment themselves), it’s not magic and can’t always help with that kind of thing. You might have an on the ball book keeper who manages to match up the outstanding invoice with the unknown payment but that will very much depend on the number of transactions, the number of queries there are with your information, and the time frame involved (those of you who dump a bag of receipts at the accountancy reception 3 days before a deadline know who you are….)

Now there are probably a fair number of you sitting there thinking ‘well I do my own book keeping I know exactly what I’ve spent money on’ , so, for those people I’ll move on to little known fact number 2.

2. Your memory is not as good as you think it is

I could give you all kinds of examples ranging from mildly amusing to downright scary to demonstrate this one, but in a blog post I think suffice to say that unless you’re one of the talented few you know deep down it’s true. Bottom line (& top tip to take away) is that if you don’t remember what you’ve spent your money on & can’t tell your book keeper, it will cost you money (‘God only Knows’ not being a tax deductible item), time, or both. Which leads me on to top tip / little known fact number 2.

3. Filing Systems Include:

  • Files

  • Filing Cabinets

  • In Trays (for temporary filing of unprocessed paperwork only, they are notorious for spontaneously throwing out bits of paper filed there when nobody is looking)

This is far from an exhaustive list but does give you some (perhaps to some of you quite novel) ideas to consider, although what you also need to remember alongside this is that

Filing Systems do NOT include:

  • Your pocket

  • The dining room table (at some point you might want to use it to eat at)

  • The glove box in your car (a very common mistake amongst those who put in a lot of business miles)

  • The drawer in the kitchen where old phone chargers go to die (the chances of a receipt ever escaping from here are too miniscule to be on record)

Top Tip: Invest in an in tray, some files (maybe even some of those handy poly pockets) & a pen / pencil, & file your receipts & invoices & make a little note on there if you’ve paid a name / amount different to the invoice, or if the receipt isn’t clear.

It’s an obvious one & I will never understand why people don’t do it, but just to hammer home the point would you believe there are actually a couple more very little known facts that once you become aware of them, might in some small way help incentivise you to sort out that filing system? So onto number 4 -

4. 86% *of all emailed receipts from Amazon (other online stores are available) delete themselves before you print them out & log them in your accounts

*This figure was made up on the spot for illustrative purposes and should not under any circumstances be taken as factual - but based on the number of times I see Amazon (or other online store) on a bank / credit card statement & the receipt, order acknowledgement, or any way of identifying the purchase (fact number 2 often comes into play here) is nowhere to be found then I do believe there is at least some truth in it. And it leads nicely into my next point -

5. The VAT man will not take your word for it

This one is definitely true. If you say that that amazon purchase was for office stationery from a VAT registered UK supplier & you’ve claimed it as a legitimate tax deductible expense and reclaimed VAT - but all you‘ve got is a line on your card statement saying ‘Amazon - £112.94’ or something similar then you’ll want to be hoping that nobody inspects your books, as your word just won’t wash. Even with the most truthful of people we come back to fact number 2 – the VAT man doesn’t trust your memory any more than I do!………and if it really was office stationery but you didn’t have any proof so you put it down as personal expenses then you’ve lost the then you’ve lost out on any VAT or tax relief you could have claimed. I know this might in each individual case be small but as my Mam always used to tell me, look after the pennies & the pounds will look after themselves! Point being, don’t forget about your emailed invoices & receipts when you’re filing everything in your appropriate system (see point 3….)

I have just one more point to make on that note, which I don’t think I need to go into any real detail about but please remember:

6. Cash is real money too

So it has to be accounted for…..and what I’m talking about here is the time you take money out of your business bank account and then spend it (for example) on networking meetings & stationery. Your books will show that money coming out of the bank. If you have all of your receipts to show how the cash has been spent that’s perfect. If you take £100 out the bank & have £42.37 of receipts then without a crystal ball (see point 1) your book keeper has no idea what it was for & it’ll probably end up classed as personal drawings or reducing a director loan account.

7. If your books take one hour every week they will take far more than 4 hours at the end of a month or 52 hours at the end of a year.

Think about it. It’s not so hard to find an hour every week. You could have one early start or late finish, or set aside last thing on a Friday afternoon so you feel you’ve earned your glass of wine or pint of lager. You can force an hour into your timetable every week.

If you wait till the end of the quarter, or even year if you don’t have a VAT return to worry about, it will take far more time. Because your book keeper doesn’t have a crystal ball, your memory is not as good as you think it is, your filing systems are inappropriate, you didn’t print your amazon receipts, you forgot about the cash – or some combination of all of these!

So all joking aside, here are my top tips to keep things simple when it comes to your book keeping.

  • Keep a note of things. Write on till receipts / invoices / keep emails – your memory is rubbish & so is your book keeper’s ESP.

  • Keep those cash receipts somewhere safe, you’re only lining the tax man’s pocket if you don’t.

  • Request VAT receipts for online purchases

  • Print & file emailed invoices / receipts OR create an email folder for them & move them as soon as you get them. You can even create a rule to automatically move the ones you know you’ll get regularly.

  • Buy some files. And use them.

  • Little & often – if you ignore all of the above points it’s far easier to remember what you did / find a cash receipt / request a VAT receipt / find an emailed invoice AND file your bits of paperwork if you’ve only got a week’s worth to go through not a quarter.

And if you get to the end of next tax year and are frantically looking for receipts with 2 days till filing deadline just remember – try the glovebox. (Oh, and I did tell you…)

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