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Book-keeping should be simple. Something that, once set up with a professional partner, you barely need to think about. Why should you have to, when there are so many other business tasks demanding your valuable time and attention as you grow your SME? Too often, however, what should be a straightforward business service causes more problems than it solves. Here are some of the issues that SMEs and their accountants face – and a surprisingly achievable vision of the dream book-keeper…

Depending on what you do, the reason for your interest in quality book-keeping will probably vary. As an accountancy practice you need book-keepers to give you ‘the numbers’. If you’re a financial director it’s accurate, timely ‘quality data’ to support business-critical decisions. And as an SME owner-manager you need to be able to count on your book-keeper… Can you? Honestly?

Which book-keeping concerns do you recognise?
Here, taken directly from your world, the world of accountants, FDs and SME business owners, are some common concerns. Which can you identify with?

Will your book-keeping service always be wrong?
Have you ever worried that you’ll have to budget time and management expertise to check their output and ‘fix’ the numbers before they’re usable? Lots of SMEs and accountants do; are you among them?

What’s the real value added (or not) by your book-keeper?
At one end of the scale, they could even be costing you money, which should be unthinkable. Covering their own cost would be good enough, but adding measurable value to your business (and bottom line) really would be something. Does it happen? If your experience is the same as many SMEs, that would be a big fat ‘no’.

In many business areas, what were once mainly operational services are now business-critical strategic tools. For instance, in enlightened organisations, information and communications technology (ICT) has gone from being a hardware-focused operational tool to a strategically important unified-communications model where the roles of financial and IT management converge.

It’s the same for book-keeping and related services. Once, book-keepers were generally little more than clerks, secreted away in SMEs’ back offices, or working from home, to ‘count the beans’. Technology has changed, but for many businesses the role remains the same. That’s a shame when it could be so different, which for enlightened businesses with enlightened book-keeping partners it certainly is! Are you among them? If not, why not?

By the way, accountants may wish to imagine the value they could add for clients by providing reliable book-keeping service – and the efficiencies they’d enjoy from knowing data was spot-on, every time.

Is book-keeping data doing enough for your organisation?
For many SMEs, using accounting data has barely progressed beyond preparing VAT returns and basic annual accounts. MDs and FDs like you often know data could do more for their business; they just don’t seem to be able to get beyond the basics. And all the time, they probably suspect their closest competitors are harnessing data for competitive advantage… Ever had that feeling?

If you’re an accountant, look at the opportunity this way. Even if you don’t have the in-house resource or desire to do book-keeping, you could appoint a suitably experienced and reliable book-keeping and MI partner to deliver the service for you. Your client gets the business-empowering data they need. And you get the accurate raw data required for a profitable additional revenue stream. Everyone wins…

Does continuity keep you awake at night?
If there’s any business function that needs continuity it’s book-keeping. But when your latest book-keeper leaves suddenly after three months, or can’t do the hours you need, you may vow never to go down this route again. Yet those records must still be maintained and data prepared…
As an accountant, do any of your clients show signs of this? Imagine using a skilled book-keeper to solve their problem and make your offer even more irresistible…

Has the quality of your book-keeper ever been questioned?
As an SME owner or manager, have you ever had that conversation where you query your accountants’ bill – and they respond by criticising the quality of your book-keeper? To add insult to injury, it’s probably your fault for employing a book-keeper who isn’t up to the task.

These are just some of the concerns that users of book-keepers report. Imagine overcoming these; now add all the other things a professional, independent book-keeping service could do for you – not least if using a higher-calibre book-keeper would facilitate better management information and improved strategic decision-making. And if it would give you more time to focus on doing business…

Reality or unattainable dream?
If you’ve ever experienced less-than-perfect book-keeping, this may seem idealistic and unrealistic.

Please think again. And welcome to the world of dependable book-keepers, generating numbers you can trust and quality data that drives profitable business decisions. Your accountants will love the change too – it might even mean a lower bill next year (or more strategic input for the same fee).

We’re not on a unicorn hunt here! Such book-keepers really do exist. Best of all you don’t have to be a Unilever or Johnson Matthey (first and second in Management Today’s Britain’s Most Admired Company 2015) to enjoy dream book-keeping! Let’s see what one of these paragons look like?

You’ll know a dream book-keeper when you find one
Having identified some of the gripes associated with many book-keepers, let’s imagine what a perfect book-keeper looks like. Here are five key characteristics to look for:

They’re reliable and their data is super-accurate
Best of all, you don’t need to double-check their work. Instead, your team, from MD to junior staff, can get on with doing what they do best (dream book-keepers can always prove their capabilities with verifiable client references and testimonials).
And at risk of repeating ourselves, you’ll also be helping your accountants to do a better job for you.

They deliver more than just accurate numbers
The best book-keepers also add measurable value, generate data that supports tough strategic decisions and understand running an SME. Why? Because knowing this makes sure everything they do is relevant to SMEs like yours.

And if you’re an accountant? Having access to an amazing book-keeper enables you to offer their service (and the benefits we’ve identified) to clients. You may also be pleasantly surprised with the efficiencies and extra performance that a book-keeper’s super-users can drag out of standard and specialist accounting software alike.

They have the resources to meet your requirements
They’ll be able to meet your current and future book-keeping and MI requirements with ease. You can say goodbye to worries about them retiring, leaving for new pastures, or getting out of their depth as your book-keeping needs evolve. Instead, skilled, experienced professionals deliver your integrated book-keeping and management information service with all the capacity and capability to meet the needs of your growing business. That’s good for continuity when you have ambitious growth plans…

The quality of their work is consistently high
What’s more, that same quality contributes to the lowest possible accountancy fee in line with meeting your book-keeping requirements. Actually, it could be even better. That’s because practices like BookCheck can help with your management information too.

So, are you ready to benefit from a fully integrated bookkeeping-management and management-information service?

Dream book-keepers inspire confidence
They give you priceless peace of mind too. You know the feeling: that ‘Goldilocks moment’ when a supplier does everything just right without reminders – then delivers more than you expected. Or the ‘Eureka!’ moment when you realise how the right book-keeping partner could be the catalyst for much-needed growth in your accounting firm.

How can my perfect book-keeper help?
Although the services offered by an experienced book-keeping and MI specialist are similar for SMEs and accountancy firms, the way their expertise benefits clients varies.

Owners and managers of SMEs
SMEs typically want more accurate, reliable book-keeping that will make life simpler (and less costly at annual fee time), without the risks and vulnerabilities of traditional small-time book-keeping. Also important is access to more powerful strategic decision making, using sophisticated data is also important. Most expectations come down to peace of mind, enhancing competitive advantage and being able to get on with working on the business without constantly worrying about what’s happening in the business – with book-keeping for instance.

Accountants
For accountancy practices, the appeal of specialist book-keepers and management information experts lies in the ability to offer these services to their clients without having to run expensive in-house resource. By controlling the quality and sophistication of data from a reliable book-keeper, the accountants can work more efficiently – that’s in their interests as well as their clients’.

Either way, imagine the difference when you entrust your book-keeping to a partner with a pedigree like this:

• Well-established and experienced.
• FCA-qualified senior management.
• IS0 9001 Quality Assurance.
• Lots of highly-qualified staff in strategically-located offices.
• Specialists in SMEs turning over more than £500k.
• Proven reporting formats.
• Demonstrable Cloud-based expertise.
• Hundreds of clients facing similar challenges to you.
• Specialising in elevating clients from poor bookkeeping to quality MI.

Get more for your book-keeping budget
Whether your business is an SME or a progressive accountancy practice, hiring a book-keeper who ticks the relevant boxes is a sure way to get more out of book-keeping budget.

Imagine if, as a go-getting accountancy practice, you could offer book-keeping services with confidence – without worrying about trying to do so with limited internal resource. Or perhaps you have a vision of adding high-end value for clients. This includes the ones whose day-to-day accounts are so poor that adding real value is currently impossible.) In cases, long-established, forward-thinking book-keeping and MI specialists hold the answer.

And what about being able to recommend excellent book-keeping without concerns about continuity risks or damaging your reputation? Or putting the problems of policing standards, methodology and delivery speed of independent book-keepers behind you?

There’s more. As ambitious accountants, imagine  elevating mid-tier clients from ‘start-up style’ book-keeping to more strategically-valuable (and more profitable) high-end services, including sophisticated MI. Above all, imagine your new confidence and competitive advantage if you know you can rely on a consistent book-keeping ‘product’ every month.

This is real and achievable
This isn’t the stuff of utopian thinking around the water cooler, or text-book idealism. Whether you are an accountant or a user of accountants’ services, It’s time to turn your wildest book-keeping, accounting and management information fantasies into business-empowering strategic realities.

Accountants and SMEs of the UK, look closely and open your mind to the reality that your dream book-keeper may be closer than you ever imagined.

Since 1994, BookCheck Ltd, with 54 employees at several UK offices, has successfully serviced the needs of business owners and directors, and outsourced specialist services to the accounting profession. BookCheck is totally focused on two key services: Sage & Xero bookkeeping with management accounts and payroll-bureau services with auto enrolment. To learn more about solving your book-keeping niggles for ever, call 0800 883 0711 or email them.

I attended an auto enrolment presentation by Star Payroll on Monday. One of the speakers was Henry Tapper from Pension PlayPen whose analysis shows that the transfer of responsibilities from financial advisers to accountants and payroll bureaux intermediaries is happening far slower than expected.

But things could be about to change, drastically.

Of the intermediaries surveyed, Pension PlayPen reckons only 3% were accountants but 51% were financial advisers. This compares with NEST’s survey which showed that 49% of employers with 2016 staging dates said they expected to obtain their AE advice from accountants and payroll bureaux and only 14% from IFAs.

Arguably the reasons are a mixture of slow action by employers, worries about risk and lack of knowledge. Yet there is an avalanche of businesses scheduled to stage between now and May 2017. So there’s going to be a massive struggle to cope with the numbers – that’s inescapable. This is likely to lead to errors, increased costs, stress and possibly even fines.

Yet it’s not difficult if you know how – like most things in life. But working out how is probably difficult.

What is set to make the situation a lot worse is that IFAs are retreating from the marketplace as there is less and less to be earned as payroll sizes shrink.  A nasty shock is going to be the increased costs, especially as a percentage of current fees. For a small business fees could double, in addition to the actual pension deductions.

Of course the whole burden of extra costs falls on employers, not employees.

What seems only recently to have become clear is that intermediaries are in fact allowed to advise employers (but not employees) in a non regulated environment. Whether or not many actually do so remains to be seen as naturally there will be a reluctance to recommend a choice of pension provider as that would seem to be a commercial risk. Still that leaves scope for just plain advice.

The one big lesson so far is that it’s madness to use middleware – software between the payroll and the pension provider. It might have been a good idea at the time but it adds enormously to cost, time and hassle. AE must be an integral part of payroll, otherwise…

The good news is that by the middle of 2017 the dust will be settling. In the meantime our advice is to choose a payroll bureau that is fully up to speed and is positively keen to do it.

Anthony Pilkington

Managing Director

Payroll Services

BookCheck Ltd

www.bookcheck.co.uk

Put business people together and it won’t be long before someone mentions outsourcing. It might be in the context of freeing time for the other activities you’re told you must do to compete in the market place. Or to do with concerns about maintaining service quality. Or even the difference between outsourcing and offshoring. Whatever the reason, the consensus is increasingly likely to favour outsourcing. And with new research showing that 1 in 4 practitioners see excessive workload as their biggest tax-year-end worry, looking closely at outsourcing for your accountancy practice or SME is highly apposite…

Along with the immediate challenges facing accountants (and anyone responsible for year-end accounts in an SME) as another tax-year-end approaches, the factors that often restrain businesses make a good starting place for a few seasonal thoughts…

What’s holding your organisation back?
You probably won’t be surprised to hear that strategy issues, weak marketing, flawed pricing, underwhelming service delivery, poor people-management, lacklustre systems and measurement of the wrong things often hold ambitious accountancy practices (and many other SMEs) back. They’re all important. In an ideal world we’d all have plenty of resource available to respond. Unfortunately, you’re probably so busy with your day-to-day, and now with the added challenge of a fast-approaching tax-year end, that you haven’t the time and resource to spend more time on them.

Imagine working on your business more
Now imagine what you’d achieve, at any time of year, if you could only do more work on the business as well as in it. Maybe outsourcing would help, especially if it freed you and your team from some or all of the book-keeping, management accounting and payroll drudgery…

Even more immediately, as the year-end-tax season approaches, imagine outsourcing relieving your workload and staffing worries. If you’re an accountancy professional, this will be particularly relevant if you’re among the 1 in 4 practitioners who told Bankstream and AccountingWEB that this was their biggest concern. (See the Bankstream Accountants Confidence Index at accountingweb.co.uk/bankstream)

Do you feel pressured to do more?
As an accountancy practice or an SME in another field, the pressure to do more work on your business seems relentless when you read another business improvement article reminding you that increased focus on client service, technology integration, digital mobility, talent management and succession planning, and effective implementation of social media as a business tool are vital for your future success.

Where will the time come from?
This is all good stuff, but where will the time come from to make the most of these trends, at which point it makes sense to think about the increasing importance of outsourced professional services?

Whether you are an ambitious partner in an accountancy practice, or the owner manager or financial director of an SME, arranging for (trusted) others to undertake duties such as book-keeping and payroll is an accepted way to free precious senior management time for other business tasks.

Concerns about containing employment costs
The options available include hiring more full-time staff, part timers or independent contractors. And then there’s the role of offshore or UK-based outsourcing.

As you consider the options, notice how the perennial management challenge of containing employment costs surfaces. So do opportunities to outsource as a way to get specific tasks done at a fraction of the cost of using staff and contractors. Not just for producing accounts, but for specialist bookkeeping with management-accounting and payroll-bureau services. And let’s not forget the currently ‘hot’ payroll-related topic of auto-enrolment.

We know outsourcing can be helpful
SMEs have a long tradition of outsourcing. Going outside for specialist services can be particularly attractive to smaller accountancy practices as well as SMEs. They’re the organisations where the cost of hiring more staff is particularly onerous – especially if those employees won’t be fully utilised throughout the year. This is even more important when, as is often the case, limited availability of staff to do the work is a greater issue than simple cost-cutting – the position many accountancy practices find themselves in as the start of 2016 approaches.

Of course, saving money (and therefore making money) is important to every professional practice and company. You only have to compare typical hourly rates for accountancy professionals or the equivalent for the MD and FD of an SME against those for outsourced bookkeeping or payroll services to appreciate the attraction.

The importance of the right outsourcing partner
When you work with the right outsourcing partner (note the emphasis, this must be a suitably experienced professional with proven ability to add value), there’s another bonus. You automatically get scalability to meet your evolving requirements, whether prompted by expansion or contraction of the practice. Suddenly, we’re back with the worries and responsibilities of hiring and firing staff in response to variations in workload – and outsourcing holds the simple-but-elegant answer….

When you hire new employees, one attraction of bringing them into your team should be the skills, expertise and experience they bring. It’s the same with your outsourcing partner. Imagine, for instance, the expertise you could access by outsourcing to a ‘battle-tested’ specialist who’s seen several decades on the accountancy, book-keeping and payroll front-line.

The double-focus benefit
Whether you’re the owner-manager of a small company, a practice partner or an interim FD, there’s even more to be excited about when you consider the extra focus that professional outsourcers can bring to specialised work. They’ll also help you focus better on building and running your practice or commercial organisation. It’s like using a specialist designer, copywriter or photographer to deliver focused services. Just because bookkeeping with management accounting, or payroll-bureau services, feel closer to home than other specialisms doesn’t lessen the potential for financial, operational and strategic benefit.

Enviably specialist tools and knowledge
It’s not just about specialist skills and focused professional minds concentrating on what they do best either. That’s because you can expect your specialist outsourcing partner to have a wider range of more up-to-date and more specialised accounting, bookkeeping and payroll tools than you.

Think about it. Are you really current with all the latest bookkeeping software? Or on top of every change in the already-complex laws and regulations that apply to

book-keeping and payroll? Because this should be part of what outsourcing practices can focus on, they can afford to (indeed, they must) keep current with the very latest Sage, Xero or other applications that they’ve built their services around.

Benefits beyond next April
By the end of today, the annual year-end accounting frenzy will be even closer. Whatever your ambitions for your commercial SME or professional practice, outsourcing could play a part in reducing worries like those identified in the Bankstream/AccountingWEB research.

Even more exciting, what if outsourcing enabled you to go beyond mere seasonal relief by underpinning a major step change in your performance and standing in the marketplace?

Now, that really would make a special year-end!

Founded in 1994, BookCheck Ltd, with 54 employees at several UK offices, successfully services the needs of business owners and directors. BookCheck is totally focussed on just two key services: Sage & Xero bookkeeping with management accounts and Payroll-bureau services with auto enrolment. To find out more about taking the hassle and worry out of your auto enrolment and payroll, call 0800 883 0711 or email them.

Yes – this headline is correct! With at least one industry observer reporting that SMEs are discovering more benefits than they previously imagined from auto enrolment, the time’s right to look at positive aspects of this fast-approaching requirement for SMEs like yours…

Auto enrolment, the biggest change in UK pensions for over a century, was launched on 1 October 2012. The change in law was largely brought about in response to research by the Department of Work & Pensions showing that some seven million UK employees weren’t saving enough to enjoy the retirement standard of living to which they aspired.

You don’t have to dig deep to find research showing that the attitude of SMEs often changes considerably after auto enrolment staging. This is particularly noticeable for areas such as employee engagement, attraction and retention of staff, and even productivity. More on that later, but first we can’t over-emphasise that the top priority of auto enrolment has to be compliance with the law.

Top priority: legal compliance
Specifically, this means the law on workplace pensions that changed with the Pensions Act 2008. The Act introduced a roll out of “staging dates” that will eventually see every employer in the UK required to put ‘eligible’ staff into a pension scheme and contribute to it.

Although tens of thousands of businesses have already complied, staging has yet to reach thousands more SMEs. But don’t get complacent, because it’s possibly closer than you think! In fact, if your business still has to be embraced by ‘AE’, it’s just around the corner. And with another day’s business, you’re even closer to your staging date.

Your staging date is approaching fast
The following table shows how, as of October 2015, the staging dates for businesses with 30 or more eligible employees had been reached. The dates for smaller workforces, maybe including yours, run from June 2015 to 1 April 2017. Time is of the essence so if you don’t know your staging date, look it up.

Avoidance isn’t an option
Avoidance isn’t an option. After three years, we know that auto enrolment compliance is being strictly policed and substantial fines are being issued to non-compliers. Indeed, a bulletin issued by the Pensions Regulator in January 2015, stated that by the end of 2014, 169 employers had already been fined for failing to comply with their workplace pensions duties.

Exciting opportunities ahead
Auto enrolment is undoubtedly complex and imposes a considerable responsibility on employers. It also has the potential to be a big distraction from your day-to-day operations. But that can be allayed with help from a specialist auto enrolment consultant. And with setup, consultation and administration taken care of, you have some exciting opportunities.

For a start, you may be able to mitigate some or all of the costs associated with changing your existing benefit schemes and pensions. This could be expensive, but if planned wisely (and in conjunction with that professional partner) auto enrolment and advanced planning may enable you to mitigate some of these costs. Better start soon though…

Show current employees that you care
As mentioned earlier, setting up your auto enrolment system is a great opportunity to show current employees that you care. Okay, so auto enrolment is mandatory and some might say that you have to do it anyway, so what’s the big deal? A more enlightened perspective is that enthusiastically embracing the imperative – and maybe even going a little further than strictly required – is a great way to demonstrate commitment to your most valuable business asset.

Auto enrolment involves compulsory workforce consultation and communication. So how about making an occasion of these necessary administrative events, and laying on some refreshments for your employees? What a great opportunity to get everyone together and demonstrate how auto enrolment represents a positive change to their benefits package.

Attract the best talent in future
The same applies for new employees. Imagine what a solid foundation a well-implemented auto enrolment scheme could be for a broader benefits package. As a growing business, you want to attract the best employees in future, don’t you? The right choice of auto enrolment scheme now will set you up to attract and retain the talented people that will give you competitive advantage in future.

Auto enrolment help is available
Clouds and silver linings come to mind. Make no mistake; complying with auto enrolment is a major ‘life event’ for any SME. But help’s available, ranging from basic advice to specialists such as BookCheck who can take away the worry of compliance while you get on with running your business.

And while you’re doing that, how about making the commitment to turn a legal requirement into a tangible long-term benefit and competitive advantage for your SME?

Founded in 1994, BookCheck Ltd, with 54 employees at several UK offices, successfully services the needs of business owners and directors. BookCheck is totally focussed on just two key services: Sage & Xero bookkeeping with management accounts and Payroll-bureau services with auto enrolment. To find out more about taking the hassle and worry out of your auto enrolment and payroll, call 0800 883 0711 or email them.

I reckon we are now experiencing our greatest challenge in our 20 years history in finding more quality Sage and Xero staff as we expand. This is especially the case in London although Bristol is almost as bad. Recently we received 33 serious applications for a book-keeper position. We narrowed that down to four good enough for interview, then speaking on the phone reduced this to two. The best candidate took a position before our planned interview, leaving one who just wasn’t good enough. So we start again!

We’ve even had the same experience in recruiting a seventh qualified accountant for thoroughly checking of the work of the book-keepers at each month end – a unique feature of BookCheck. At least our clients are shielded from this task which is part of our attraction so this encourages us to succeed.

I have a feeling that this will be an ongoing challenge, probably becoming more difficult so we’ll have to find other methods. We’re so used to our standards, they’re imbedded in all we do. It’s clearly pointless compromising on quality as we’ll suffer down the road. It’s not even a pay issue, although wage rates are climbing steadily, that’s hardly surprising. It’s really a shortage of quality. We’ll just have to try harder.

Speaking to other professionals it seems this is a common problem. How is it for you?

Anthony Pilkington FCA      Managing Director, BookCheck Ltd

The Purchase Ledger

The most useful management report is the Aged Creditors – this shows the ageing of all your purchase ledger accounts. You should feel comfortable that this is in good order otherwise you may pay suppliers the wrong amounts and your management accounts will be incorrect.

Any negatives need a good explanation. This could indicate a missing invoice, in any event these should be checked carefully.

Wherever possible these balances should be reconciled or agreed with statements from your suppliers. Most businesses miss doing this and therefore risk errors. Not all suppliers produce statements, so ask for one, either occasionally or monthly. You can always say that you will only pay on receipt of such. It’s a really good way of picking up overpayments, such as paying an invoice twice or not picking up a credit note when you make payment.

For reconciling the purchase ledger see below re sales ledger.

The Sales Ledger

The most useful management report is the Aged Debtors – this shows the ageing of all your sales ledger accounts. You can print in summary or in detail showing every outstanding transaction. It’s sensible to review this monthly, especially the older columns and take action as required in chasing the debt.

Reconciling the sales ledger means checking that the total on the Aged Debtors report equals the balance in the Nominal Ledger i.e. your accounts. In case there are future dated transactions, use a reporting date that is forward so that everything is included. In theory this is self checking as a posting to the sales ledger must update the Nominal Ledger however it’s possible that a journal has been input directly to the Nominal Ledger, upsetting the agreement. If so then this posting must be reversed and this transaction handled directly through the sales ledger.

We’re well into this so what do we think so far? The first thing to say is that it really is a massive task, there is so much to learn and so much to get wrong. Compared with the previous biggest ever change to payroll, which was RTI Real Time Initiative, it has to be at least 20 times the effort and that’s for our professional staff who are used to such.

It’s also quite different as it involves deductions from pay, so requires employee liaison.

We have to use new additional (costly) software to handle the rules, not just to set up but for every payroll run ongoing. We’re using Sage for this and of course the software had teething problems, not too bad but enough to take a lot of extra time. One issue was that the title Ms was not an option so we were forced to use Mrs. When we submitted these for checking they were rejected as the person was registered as a Ms. Get out of that!

The main thing we’ve discovered is the substantial amount of extra time we require to run the auto enrolment. Roughly it doubles our time – there are a good number of manual tasks that are required, even for the smallest payroll. Employers are maybe in for a surprise when the servicing bills come in, apart from the 1% and rising to 5% contributions they have to pay. Just as long as we’re not blamed.

On a practical note we recommend first be sure of your staging date, unlike some of our clients who are at least a year late with the date they have in mind and second do get on and choose your pension provider. The rest can be achieved quite quickly – say a few months.

As regards choosing a pension provider we’re not allowed to advise. There are perhaps three ways of doing this 1) do it yourself 2) use your IFA or adviser 3) pay a specialist.

Our policy is to make it look easy but it’s not really. Don’t delay, check it today

Sounds boring but ignore at your peril otherwise you could be might embarrassed. Suspense accounts are a sort of cop out. If your book-keeper doesn’t know what to do with the input then it could well end up in a ‘temporary’ suspense which means it’s not reported properly.

The problem with a suspense is that it hides the true story and almost certainly distorts the accounts. We’ve just reviewed some company accounts from a prospective client. Right down at the bottom was a suspense account of some £352,781 and guess what, neither the owner nor the bookkeeper knew it was there. They didn’t have the foggiest idea what it was and why it was there. Ignorance may be bliss but it doesn’t help with producing quality information. It just might affect the year end accountancy bills as well…

The moral of the story is – don’t let amateurs get in the way of quality otherwise there’ll be consequences. It’s not difficult to deal with, the starting point is to speak to someone who knows what they are talking about, like everything else in life or business.

By the way, in the accounts just described, the Balance Sheet didn’t balance and not by the suspense account – another embarrassment.

Anthony Pilkington, Managing Director, BookCheck Ltd

With Tesco now revising its forecast profits down from the original £2.8bn to £1.4bn you might wonder. This is despite armies of accountants spending millions on this task. So how could it happen and why bother?

Part of the how it happened is the small amount of £263 million overstatement of profit which has been described as ‘dubious bookkeeping’ and ‘a bookkeeping scandal’. That’s an insult to the bookkeepers, although I’m not sure that’s the correct term for their computer systems behind everything. More like high level dodgy manipulation, judging by the Serious Fraud Office investigation.

Why bother? The only purpose of forecasting is to provide a benefit otherwise it really is a waste of time. Other than for the stock exchange the reasons are broadly as a target or as a control. If you don’t set targets then it’s a lot more difficult to judge results. The control part is relevant when you could be heading towards difficulty, especially cash flow problems.

It’s worth reviewing existing forecasting for cost benefit checking and where there’s no forecasting it’s worth an external person advising on its value. But don’t get it as wrong as Tesco because that really would be failure.

The best antidote to ‘misleading’ information is independence – that’s one of the key benefits of outsourcing. With Tesco that’s down to the auditors but that’s another story.

Anthony Pilkington, Managing Director, BookCheck Ltd

Recent years have not been kind for charities as donations and grants have been cut. Both charities and donors are wondering if their cash is being used effectively. So it’s even more important to keep a tight rein over financial matters, a responsibility that is becoming evermore a focus for trustees.

However finances are often the area that receives insufficient attention. If you’re a trustee, are you receiving prompt, sound, regular financial reports which you understand. If there’s a doubt here then there’s a risk.

So how can a charity improve its financial management – it has to start from the trustees, preferable with good finance and business skills on the board, demanding the information in the first place. Then it’s a matter of finding the quality and keeping to it, promptly. To succeed, it must pass the eyeball test – is it working and understood, simple really.

Here’s some more information

Anthony Pilkington FCA

Managing Director, BookCheck Ltd

Every business inbox is awash with this huge change to the pension system, not to mention the phone calls. It’s pretty intimidating and the more you look the more there is to worry about. Nearly all approaches are from the scary perspective which is unfortunate because life doesn’t have to be complicated. Indeed the sign of a true professional is someone who makes it look easy, even if it isn’t. So following KISS principles that’s all to say.

The First First

Last week I addressed a CIMA evening seminar in Bristol. It was my first ever presentation to a purely professional group and the subject was Management Accounting for Growth.

It was a beautiful evening so I was hoping that we would manage as many as half a dozen in the audience. Imagine my surprise to find 40 had turned out and just about everyone took a brochure home.

The Second First

I have to admit that this was my first ever PowerPoint presentation. We’ve all suffered ‘death by’ and we’ve all winched when there’s a technical hitch, as is so often the case. I cracked the first one by only having 17 slides for a 40 minute presentation and to cover the technical side I rehearsed until I was confident it worked. Then 15 minutes before the off, the organiser asked if he could run his PP intro on my computer! What should I do, I could see this messing up my careful arrangements but I allowed the sharing and fortunately all was well.

The Subject

Well that’s not the main point here but in essence: ensure quality, reconciled, prompt information and use it effectively otherwise it’s a waste of time and money. Produce Gross Margin information and split it by sector, project, contract, office etc..

In addition key factors are:

•Finance •Cash Flow Forecast •Stock/WIP Control •Credit Management

and model the • Worst case scenario

Contact me for the PP presentation:

Anthony Pilkington FCA

Managing Director, BookCheck Ltd

Years ago I attended a retirement party in London for the FD of a top company during which, after no doubt a few glasses of wine, he made this observation to me in terms of career advice. I was struggling with the words that evening but worked it out the next day.

More than twenty years later, a few months ago we re-branded to make really clear how very focussed we are. I hope we’ve succeeded. Over the twenty years we have aimed to follow his advice. Now we have two services but they don’t interfere with each other. Our Main Thing is bookkeeping with management accounts.

We look around at the closest we can find as our competitors and invariably they offer far more services. We’re very comfortable with this but perhaps I shouldn’t say so. Of course it goes beyond branding into doing, so that needs a check from time to time. What’s your Main Thing and is it the Main Thing?

Anthony Pilkington

MD, BookCheck Ltd

We’ve been working together with a Cloud IT provider on business development and have realised how very similar IT and bookkeeping departments are. They are both essential for the business but they can easily be: tricky, uncomfortable, problematic, a worry, costly if they go wrong and they both very definitely can suffer from staffing issues.

The moral is simple – choose very carefully otherwise on average you’ll suffer the same problems again but don’t be put off changing for the better. This is where outsourcing scores as it’s easier to define, control and achieve the required standards. It’s also a lot less worry.

Anthony Pilkington, BookCheck Ltd

The UK accounting watchdog, the Financial Reporting Council, is all set to review the bookkeeping of the big banks following the crisis of 2007 – 2009.

Last year I had a meeting with a very senior person in the Bank of England. I said that as an accountant who qualified with Coopers & Lybrand, now PWC, I was puzzled that no-one had yet sued the Big 4 accountants after they had signed off all the bank accounts with no qualifications – a totally clean bill of health. I suggested that the only sensible reason was that they were, like the banks, too big to fail.

This review will start in a few months and it’s conclusions will be interesting, to say the least.

At our end it’s no doubt a lot easier, nevertheless we still follow the cardinal principle of being able to understand and validate everything in the Balance Sheet. I do wonder how many auditors or indeed banks really did understand what the numbers represented?

Anthony Pilkington, Managing Director, BookCheck Ltd

Since we started BookCheck in 1994, so hey it’s our 20th birthday, we’ve always handled all the bookkeeping (apart from the sales side) as the basis for producing Management Accounts. But recently we realised that we haven’t properly described the two as combined, we’ve showed them as two distinct services on our menus, our email signatures, our cards – everywhere.

So at long last we have rebranded throughout BookCheck to “Bookkeeping with Management Accounts“. It’s subtle but important that we are clear.

So not just Bookkeeping and not just Management Accounts but the two together. What　differentiates us from a firm of bookkeepers or a firm of accountants is our guarantee　that all our Management Accounts are both thoroughly checked and issued personally by a qualified accountant.

So before you reach 20, or even if you have, it’s worth checking that you really do explain clearly what your business does. Being clear to you is not enough.

Take a peep at our website and see if you think we have ‘done the job’ – we would very much appreciate your comments.

Anthony Pilkington, Managing Director, BookCheck Ltd

Looking at our historical figures, January is usually a buoyant month for enquiries and this year is no exception. In one day alone we had three red hot prospects – in Derby, London and Bristol. So we wonder why, also whether it would apply to other businesses.

The reasons for the three enquires mentioned make a start in our review. The first is very poor quality bookkeeping and that from a firm quite well known by some. We were shocked by the lack of reconciliations and whole bits missing. The part time FD quite rightly demanded quality, hence a change. The second is a care home under bank ‘scrutiny’ having reverted some years ago to handling the bookkeeping themselves, now of course without any Management Accounts. The third is a children’s nursery, expanding to more sites, needing essential Management Accounts for control.

So where might January fit? Perhaps because it gives a bit of quiet time to think, to review, to consider a change. Now how do we replicate that every month?

In our ‘quiet’ time we have revamped our website. At last after 20 years we clearly explain, we hope you agree, what we do and where we fit. Take a peep here to see how we integrate Bookkeeping with Management Accounts in both Sage and Xero www.bookcheck.co.uk

Have a great 2014 in your business

Why outsource or more positively why not? Outsourcing used to be something that was just for very large organisations. Increasingly though, small and medium sized businesses are realising the benefits of outsourcing some of their functions to reduce costs, increase resilience and allow them to do what they do best, run their own business.

A great example of this for BookCheck recently was our online Sage service. In short it was a huge responsibility and a big worry. Computer ‘problems’ just seemed to become more serious each year. We had been proudly providing a service for 9 years which made us way ahead of the field. Nine years ago most businesses would not have risked this novel way of holding data – now it’s called ”The Cloud”.

We woke up one day to realise that our core business is book-keeping with Management Accounts, not providing hosted Sage online. So we outsourced the whole task and boy do we feel so much better. We’re also saving many £’000s which makes us smile and on top of that our quality of hosted service is considerably better. I call that a win, win, win.

Arguably a business should get on with what it does best and find someone else to handle as much as possible of everything else. Payroll is common with the vast majority outsourced but there are plenty of other areas. Website, HR, IT are the most obvious but there’s also our own service book-keeping with Management Accounts for example. We outsourced our whole telephone answering system 15 years ago and that was one of our best ever decisions.

One of the reasons why outsourcing is become more the norm is the huge rise in the availability of data and support online – everything from i-Phone apps to social media. It’s a fact that data is moving from the floor to the Cloud, in the process transforming the ways in which businesses are run – that in itself is a form of outsourcing.

We’re running a free Outsourcing Seminar at Gloucester Rugby Club on the 22nd November at 8am - I hope to see you there for a valuable hour and a half.

Anthony Pilkington

MD, BookCheck Ltd

What’s the biggest challenge in expanding your business? Is it resources or is it winning orders? Is it IT? In fact your most likely challenge, even if you don’t realise it, is going to be funding. Yet that seems counter intuitive because more sales equals more income – so what’s the problem? It’s simple to explain – it’s a timing difference, in short the money goes out before more money comes in. That’s the bit that needs financing. where’s it coming from and how much do you need?

If you’ve got a cash pile then maybe you’ve no problem, at least until it runs out, otherwise you’ll need to do what most expanding businesses don’t do and that is plan. A Cash Flow Forecast is the basic tool but for most businesses that’s a challenge. Who is going to produce it and how? What’s the basis – are there any sound up to date Management Accounts from your Sage, Xero or other system?

This applies most directly to businesses that sell on credit to customers however even those which are paid at point of sale still have to finance the extra stock, selling and admin resources in advance.

There’s nothing more sad in business than seeing a ‘successful’ rapidly expanding company go bust and the most likely time for this is when coming out of a recession, just like now.

On the positive side good cash planning will enable you to expand without this restriction and boost your profits.

A short Action Plan:

1) Make Cash Flow top of the agenda

2) Review, tighten and implement your Credit Control system

3) Check and chase your debtors

4) Plan your cash flow for at least a year

5) Ensure you have sound, up to date accounts as a basis for planning

Take 5 minutes to think this through – it could save your bacon

Anthony Pilkington,  MD BookCheck Ltd

Talking about “The Cloud” is becoming common nowadays but nine years ago when we first hosted Sage, I was the man from Mars. No one would risk it, mainly because it was simply ‘too new’. We used it for clients who didn’t need to know! With the advent of new forms of accounting software such as Xero, naturally in the Cloud, with massive marketing budgets it’s become normal and indeed arguably preferable to the old fashioned software on the local pc.

Is it here to stay – no question! We reckon it’s so important that we have embraced Xero alongside Sage as the two online systems we offer. The days of locally installed and supported software are numbered. The benefits of The Cloud are considerable – far less cost is the most obvious, to buy, to maintain and to use. IT department costs are usually an accepted overhead but why not challenge that cost.

As to security I know where I would put my money, the Cloud every time compared with the average client backup. OK one has to be realistic and reckon that there is a risk of downtime but unless you’re running a mission critical or time sensitive system then this should be manageable.

Speaking to accountants, as I do a lot, what’s become very common is the enthusiasm for sharing accounting systems live with clients (as if BookCheck hasn’t been doing that for nine years!) so I smile a bit – the new world has arrived. It’s a great advantage to share – it helps, it binds, it supports and it develops a client relationship and so easily.

Anthony Pilkington, Managing Director, BookCheck Ltd