Everything seems a little surreal at the moment, doesn’t it? And for business owners it’s more of a worrying time than most. Putting contingency plans into place, making difficult decisions regarding staff and, assessing how their business will fair in these uncertain times.
To assist with any business decisions, and form a stable basis for their development, it is important to verify the accuracy of your financial records. If your record keeping, or your accounting procedures, are falling short ultimately, you won’t have a reliable basis from which to make any projections. And accurate projections are what your business, and any potential finance facility, will need at this time.
Some of the key areas to review are:
- Debtors list – any prediction of being able to collect an estimated proportion of your debtors will be skewed if your list contains ‘old’ items. If your sales invoices are not processed, or up-to-date, then you won’t have an accurate listing of who owes you money and what cash you are able to collect.
- Creditors list – keeping this up-to-date will ensure that your creditors report provides a true reflection of what money is owed. If you have payments on account posted and invoices missing, the true value of the money you owe to suppliers could be understated. And, of course, if you haven’t kept your ledgers in order then the amount of money you owe could be overstated.
- VAT balance – it is important to be able to see what your live VAT balance is and good record keeping will ensure this. You will be able to identify what money is owed by you (or owed back to you) with perfect clarity. And this may have a big impact on any cash projections you are forming.
- Payroll – posting payroll journals and running payroll control accounts in your nominal ledger will enable you to identify the amount of PAYE/NI you owe. In addition, any Pension liabilities will be captured in your liabilities.
- Balance Sheet – your company Balance Sheet is an essential tool for your accountant, and any potential financier, to assess your financial position and evaluate future cash inflows and outflows. By keeping your ledgers maintained will ensure that the Balance Sheet shows a correct picture of how your business currently stands. This could very well affect the outcome if you need to start applying for funding.
In these crazy times when there are so many unknowns, why not take control of what you can? Make sure the figures you are forming decisions on are factual. Ensure the basis from which you are making your decisions on is true.
Ultimately, this will ensure that your assessment of how your business will fare over the next few months is as detailed and considered as it possibly can be.
If you would like some guidance on the points above or, perhaps, a review of your financial records we have a team of bookkeepers, management accountants and accounting software specialists who could offer a virtual review of your records.
We would be more than happy to provide a 40 minute review free-of-charge, providing you with some pointers on what needs sorting out. Obviously, we can then help you straighten things out if you would like us to and would be happy to provide a quote.
We’re here to support you and your business.
Stay Safe. Stay Home. Get tidying!