But if you’re one of the many people who have left their business books languishing in a corner for months on end, isn’t it time you gave them some some love and attention too?
Emily Coltman FCA, Chief Accountant to FreeAgent – who provide the UK’s market-leading online accounting system for freelancers and small businesses – explains how investing some time in your business accounts can help rekindle your affection for them. And, once you’ve brought them up to date, what you should do to maintain them – so they remain timely and accurate, and give you the information you need to make informed decisions about your business.
Have you sent invoices to your customers for all the work you’ve done? Or chased up any outstanding invoices that you have already sent out?
Remember that if you don’t send invoices promptly, your customers can’t pay you, and this could bring your business to a halt for lack of cash. Even waiting just a week to send out an invoice can double the time that you’ll wait for payment.
Issue invoices every week as part of the hour you dedicate to working on the books. This will help you collect the cash you have earned and keep your business running smoothly.
Do you have a big bundle of receipts for business costs you’ve paid for yourself? Make time now to go through all of these and enter them into your accounts. Or better yet, use a receipt scanning service like ReceiptBank, who offer a “backlog” function to help you get through those massive piles of paper, turning them into expense transactions which you can then pull through into your online accounting system.
If you’re the type of person who hoards receipts until the last minute, try blocking out some bookkeeping time every week just to go through your recent expenses and file them correctly into your accounts.
Alternatively, if you use an online accounting system, you may be able to photograph your receipts on the go using your mobile phone and upload them directly into your accounts. If so, make sure you do this as soon as you have the receipt – for example as soon as you buy a train ticket using your own cash – so you don’t risk missing out on tax relief by not including costs in your accounts!
When was the last time you checked to make sure that all your bank transactions have been included in your accounts? If your actual bank balance doesn’t match what’s shown in your accounts, then not only is your information unreliable, but in the event of a visit from HMRC they could suspect you of concealing income, and charge you extra tax.
Catch up by downloading your historic statements from online banking and check them to make sure you’ve included everything important in your accounts. If you’re using an online system, you may also be able to import your statements directly into your accounts which will save you time.
Set aside a regular time every week to check your bank data against your accounts. If you’re using accounting software, check whether you can set up automatic bank feeds that would directly pull in your bank transactions in future, without you needing to download or upload anything!
Now that your invoices and your banking are up-to-date, check your invoice list and filter it by open and overdue invoices. Is there anyone who hasn’t paid you? And how long has that invoice been unpaid for?
Remember it’s important to chase up outstanding invoices as soon as you can. You may hate having awkward conversations with your clients about money, but this won’t get any easier the longer you leave it – so don’t delay!
Review all of your outstanding invoices every week to see if anyone still owes you money and chase them for payment. If you don’t like doing the dirty work yourself, why not invest in an invoicing system that sends automatic reminders to clients when their payment deadlines have passed?
Remember that you need to make sure you have filed your VAT returns on time and paid the right amount of VAT to HMRC. If you don’t, then you could find yourself paying surcharges, interest and penalties.
Keep your books up to date and check your VAT return reports before you file them, to make sure that everything is in order. If you’re not sure about anything, talk to your accountant.
Check out whether there is any technology that can help with your VAT returns too. Some online accounting systems like FreeAgent enable you to file your VAT returns online directly through them, so could this be an investment that will save you valuable time for your business?
Maintain your books
Take some time now to show your books some love and attention, then put a little time aside regularly to keep them well cared for. At FreeAgent, we believe that it should take no more than an hour a week to maintain and stay on top of your bookkeeping – but you won’t see any positive results unless you keep it up.
Like any relationship, the more you put in, the more you’ll get out. So, if you’re looking for timely, accurate information that will help you to make the right decisions about your business’s future, give yourself a weekly date with your books and you’ll soon see the sparks fly!
Emily Coltman FCA is Chief Accountant to FreeAgent, who provide an award-winning online accounting system for small businesses and freelancers. Try it for free at www.freeagent.com or follow the hour a week plan