A colleague commented “this is bookkeeping in the 21st century” and here’s why she said it.
We have a client that sells household goods, mainly online, and we noticed that money was coming in from a new online sales platform, which happens to be based in France.
We see this from time to time – businesses find new routes to market and new platforms to sell from.
And we need to understand what’s going on. Not least because you can be pretty sure that the money we see coming in to the bank does NOT constitute just one complete sale.
One thing you shouldn’t do at this stage is think:
“I know! let’s connect the online platform app to the cloud accounting software.”
The way through the woods
Here are some of the common steps to negotiate before you can do any bookkeeping.
Pro tip: make copious notes as you go
Step 1 – get access to the online platform and look around for reports which will tell you all you need to know about the sales made
Step 2 – download the report(s) you need
Step 3 – delete a lot of columns you won’t need
Step 4 – figure out the currency of each transaction and the GBP equivalent
Step 5 – figure out if the platform has deducted its transaction charges from the value of each sale
Step 6 – figure out if the platform retains any money on some or all transactions for a period before paying it over
Step 7 – determine which sales transactions comprise each pay-out you can see in the bank account
Step 8 – do the correct accounting. This will most likely be a sales invoice or sales receipt, with the correct VAT treatment and with a deduction for transaction costs.
Step 9 – match the money in the bank feed to sales invoice or receipt
(There may be more or fewer steps depending on the exact circumstances.)
Get the transactions correct manually before you automate anything
It might be that the platform has an app that talks to the accounting software and it does everything perfectly.
Reader, that’s unlikely.
You may well be able to automate the work you do when you download the reports you need – take a look at Microsoft PowerQuery and / or build a nifty workbook that has formulas and pivot tables that take you from what you start with to what you need for your bookkeeping.
Having created the exact output you need in the workbook you may be able to import it as a CSV or PDF into your accounting software
This is bookkeeping in the 21st century
Why the comment?
We live in an age of technological change where new products, platforms and services spring up all the time. Businesses will innovate, try new things, do things differently.
This will give rise to new transactions, coming from different sources, often with data that isn’t oven-ready for bookkeeping.
So bookkeepers, accountants, finance teams – they all need to be alive to new transaction streams. And when they come across them they need to:
- Go to the source of the transactions
- Collate and organise the data required for the correct accounting
- Do the accounting
- Make the process more efficient using appropriate data-manipulation and automation tools
A final word for CEOs
You shouldn’t let your business be held back by bookkeeping and accounting that can’t keep pace and this blog is all about helping finance teams to keep up.
Bookkeeping in the 21st century certainly requires a greater level of agility than was required in the past.
But – don’t be seduced by every shiny, new, bells & whistles bit of technology. Not everything is useful or necessary and you don’t want your business to collapse under the weight of all the apps that are hanging off it.
Can we help you find the right balance?
We meet a lot of CEOs who are frustrated by the lack of useful financial information flowing through their organisations and, consequently, we do a lot of work helping organisations with finance transformation.
Can we help you?
Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk
Michael – @bluedotmichael
Related links:
Technology is the servant not the master
You can’t run a £1m business and only have your bookkeeping updated every three months!
Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW