Archive For: Accounting and Bookkeeping

Your numbers need maintenance

Once you’ve cleaned up your act and have your business numbers organised, you need a method of keeping it organised ALL OF THE TIME. In other words, ‘maintenance’. Just like you go on a maintenance program after losing weight in order to keep the weight off, so you need a maintenance program to keep your numbers organised.

Maintenance needs to happen on a weekly basis regardless of who is doing it. The first step is to pick a day. You need a regular appointment with yourself (or your bookkeeper) to keep up with the paperwork, so pick a day. Let’s say that day is Tuesday. Tuesday is selected because you have to pay your employees anyway so you may as well do everything in one hit!

So what tasks are required to stay on top of all of this paperwork?

1. Your paperwork needs a home before you enter it into your accounting software. For this example we’ll assume that you enter all supplier invoices before being paid.

2. This means you need a home for:

a. Supplier invoices to be entered
b. Supplier invoices paid
c. Supplier statements
d. Customer invoicing information (if invoiced after the fact) OR
e. Daily register and EFTPOS receipts (for retail)
f. Bank statements (I recommend Bookzkeeper)

3. I have always found that manilla files work well for a, b, c and d above. Using this system you would only have 1 weeks’ worth of information in the files at any one time.

4. With daily register and EFTPOS receipts I recommend an envelope to keep them in one place. Just write the date on the top left hand corner. This can usually be kept near your register so that at the end of each week, that week’s envelopes can be transferred to your office after doing the reconciling process.

5. If you keep the manilla files near the recycling bin, you can sort your paperwork into the appropriate manilla file as you open the mail and get rid of the junk (to be paper recycled) When Tuesday comes around take your manilla files and:

a. Enter your supplier invoices
b. Apply payments made to supplier invoices
c. Process customer invoices or cash register sales information
d. Reconcile bank and credit card statements
e. Make payments to suppliers – you should always have a day that you pay them
f. Pay your employees (if you have any)

6. Now that feels good doesn’t it? All sorted and empty manilla files! Of course, you have to do it again next week but if you follow this method it is much easier to keep on top of your paperwork.

7. On a monthly basis you will need to check your supplier statements against your system. I’ll be honest -this is not something I enjoy doing. I used to put it off and get in a mess with missing invoices and incorrectly applied payments etc, so I got someone else to do it.

8. The maintenance program above will only work if you’re willing to commit to the process. If you’re not willing to do it then look around for someone to do this for you and get them to commit to this weekly process. Really be honest with yourself here – let’s face it, you can probably earn a lot more money doing what you do best than spending your time doing a job that a bookkeeper can do much quicker and probably much cheaper than your hourly rate.

Are you in control of your Numbers?

It goes back to that old adage – you must be organised. It sucks but unfortunately it’s the only way that you can feel no stress about your numbers. It’s the ‘not knowing” that stresses everyone out. What do I mean by “not knowing”?

Well, do you know how much revenue you made last month? Are you aware of all your expenses that were incurred? Are you aware of the money you owe and what is owed to you? If you are not aware of these things, you are not running a business, you are living in a fantasy world. Harsh I know but the truth hurts!

If a feeling of dread overcame you when you read the above, you’re probably thinking, what do I do now? Simple, follow the steps below.

1. Collect all your paperwork together and sort into piles that relate to:

a. Supplier invoices and payments
b. Customer invoices and payments
c. Employee payments
d. Bank & credit card statements, BAS, ATO correspondence

2. Make the decision to either sort the mess out yourself or hire a bookkeeper / Virtual Assistant that can sort it all out for you. Unsure what to look for in a bookkeeper? Click here and subscribe to receive a special report on what to look for.

3. Do you have a computerised accounting software package? You need to have access to this (or give your bookkeeper access to it) to get yourself up to date.

4. Enter all relevant information from a, b & c above.

5. Take your bank and credit card statements, and check (reconcile) that all transactions are accounted for in your accounting software program.

Even if you do not feel comfortable with reconciling as a process you can simply use a bank register (or credit card register) within your accounting software to check that each item that is on your bank statement (and/or credit card statement) also appears in your bank register. Then you can hand over to someone else to complete the reconciliation process (knowing that as far as you can tell all of the transactions are entered). Remember that the bank (or credit card) statement is considered the holy grail (except of course if there are cash transactions involved). All of your statements must be checked (reconciled) in order for your records to be accurate and to complete accurate BAS returns.

6. Okay, so if you have completed this yourself give yourself a huge pat on the back (insert glass of wine, beer or chocolate, whatever is your congratulatory gift to yourself! – I like chocolate myself!) If you have handed this task over to anyone else and it is now completed, congratulate yourself (as above) and them , pay their bill promptly and look forward to maintenance mode, because you do not want to be in this position again, do you?

7. Maintenance mode, well this needs an entire article so stay tuned for this. But, the important thing to remember is that it is much better for you and your business to “KNOW” your numbers then go into a cold sweat and have no idea!