Emily Coltman, chief accountant to Freeagent, explains how by spending 60 minutes a week on your bookkeeping, you can boost your business finances. This article is part of the BusinessZone.co.uk Finance Masterclass.
When was the last time you felt truly on top of your business books? Are there any receipts crammed into your wallet, lonely and forgotten? We all have them but keeping on top of them can be difficult; after all you have a business to run!
As the new tax year appears over the horizon, now is a great time to adopt a new system to make the process of managing your books more efficient, and to start the year ahead afresh.
If you dedicate just one hour a week to your business ﬁnances, you won’t just save time on the admin work, but will have a chance to work through all those bigger-picture ﬁnancial questions
Here’s a simple three-point checklist:
1. Schedule one hour a week for your business finances
If you devote just one hour a week to your business books, you’re less likely to leave them for weeks on end. To make sure you stick it, trying blocking off this time in your diary, setting reminders so that you don’t forget it, and switching off your e-mail and putting your phone on silent.
2. Complete your weekly bookkeeping checklist
Go through these five steps in your weekly hour.
1. Keep up to date with your invoicing
Scheduling time to invoice every week is a great way to keep your cash flowing in and help your customers to pay promptly. If you don’t send an invoice, your customers won’t pay you!
Why not make the process even quicker by using online accounting software to create and send invoices, Many systems let you send recurring invoices automatically each month if you’re invoicing the same customers for the same amounts.
You can also save time and avoid having to make awkward credit control phone calls by setting up automatic e-mails to chase customers who haven’t paid yet.
2. Manage your bills
Keep track of the costs you’re incurring, and pay your bills in good time to help build relationships with your suppliers. Take some time during your bookkeeping hour to enter bills into your accounts, and to go into your online banking site and pay any bills that are due for payment.
3. Manage your bank transactions
Do you know what you spent your money on in the last week? The last month? Who hasn’t paid you yet?
If you don’t keep track of what’s going in and out of your bank accounts, you’ll forget what you bought, and when your accountant asks you 10 months later as he or she goes through your bank statements, you haven’t a hope of remembering what each cost was for. Use part of your hour a week to stay on top of your bank transactions to save yourself a last-minute scramble.
Some online accounting software solutionscan actually talk to your bank account, so that you don’t even have to remember to post your transactions. As it learns what your historic transactions were, it guesses what new entries are, again saving you time and effort.
4. Check profit for each project
When you create invoices and explain costs, ask yourself which project do they belong to? How much profit did you make on that project, allowing for costs such as admin time, travel, and special delivery postage charges?
You may well find that you haven’t made as much profit on a particular project as you’d hoped to. Is it time to put your prices up for that customer?
Or you could have made more profit than you’d thought. Could you get more work from that customer, or in that field?
Use part of your hour a week to tie costs back to any projects that you’re running to make sure that you have a true view of how much profit you’re making on each project. Once you have the full picture, you can make even smarter decisions about where to spend your time.
5. Learn one new thing about your business
What secrets is your business hiding from you? What could you discover? For example, have a look at your profit and loss account for this year and compare it to last year. If your rent costs have suddenly gone up, is it time to negotiate a new lease agreement with your landlord, or to give your office up and work from home?
3. Complete two-minute tasks every day
If you only have two minutes to spare while you're waiting for the train, whip your smartphone out and take a picture of your train ticket, then attach it to the expense record in your online accounting software.
You don’t then have to worry if the exit barrier eats your ticket when you leave the train. You’ve got it safely recorded in a way that HMRC will accept, and you don’t risk missing out on tax relief on that travel cost.
You can also track all your expenses on the go by using accounting software.
Dedicating time to your regular bookkeeping every week puts you in a better position when it comes to tackling bigger tasks for your business, like paying taxes and planning for growth.
For more expert advice on business finance, click here for the BusinessZone.co.uk Finance Masterclass.
27th Mar 2013