“We don’t use any accounting software, our monthly sales are £150k, everything is done on spreadsheets. Can you help us?”
The answer was yes and this is how we did it.
Bookkeeping using accounting software
The first decision was which accounting software to use.
The client had been recommended Xero but we suggested QuickBooks as it’s far better for producing financial reports.
There’s very little point in doing any bookkeeping if you can’t produce financial information that helps you measure and improve financial performance.
Bookkeeping training
We ran a half-day QuickBooks training session for the MD to show him what QB looks like and in that session we covered:
- connecting the bank accounts to QuickBooks
- accounting for bank receipts and payments that appear in the bank feed
- bank reconciliations
- how to enter suppliers’ bills
- how to create sales invoices
- how to generate and customise financial reports
The MD wants a colleague to do most of the bookkeeping work going forwards and at the end of the training session he was confident he could show her how to do this new work.
We also looked at the company’s historical transactions – how and where they had created and stored their sales invoices and suppliers’ bills.
Fair play to the client – all of these transactions were saved in easily accessible places. Which made the next piece of work far easier than it might have been.
Bookkeeping tools and apps
We needed a document management app and we chose AutoEntry.
Working with the client, all of the 2024 sales invoices and suppliers’ bills were uploaded into AutoEntry and once there we could specify the correct accounting entries for each transaction and send the accounting data, plus the invoice document, straight to QB.
Hey Presto! – the accounting is done.
This may sound like a massive job but the point is that the software learns the right answers as you go, so by the time you’re looking at the third or fourth telephone invoice AutoEntry is suggesting the right bookkeeping treatment for it.
Which means you can select all of the telephone invoices, confident that the accounting is correct and send them straight to QB.
Hey Presto! – the accounting is done.
Financial reports
Organisations do bookkeeping so they can measure and improve financial performance.
There’s some compliance work, such as VAT and annual accounts, that falls out along the way, but the main reason is to measure, understand and improve results.
So, as the back-filling of the 2024 transactions was taking place, we were creating and customising financial reports so the MD can see at a glance:
- year-to-date profit
- P&L by month
- unpaid sales invoices
- unpaid suppliers’ bills
As we look to the future there maybe more reports to be created and, of course, when we get into 2025 we’ll be able to see year-on-year comparisons.
Ongoing bookkeeping and credit control
The bookkeeping is now up to date and the challenge is to keep it up to date. The software helps because it learns what the correct accounting should be for many transactions and suggests the right answer when it comes across a new transaction that’s similar to something it has seen in the past.
The in-house training on QB has been successful (we had regular screen-sharing calls during the catch-up phase so the clients could learn along the way) and every day new transactions are being accounted for and the bank feed is being cleared.
We can now take further advantage of having all of the bookkeeping taking place in accounting software by using the software to help with credit control.
As well as being able to see at a glance which invoices are unpaid, we can start to use tools such as sending statements and automatic payment reminders to clients to chase them for payment.
And, perhaps most importantly, we can now raise and send sales invoices in QuickBooks which means credit control starts with the invoice.
Financial control and management accounts
No one in the client company is an accountant, yet here they are doing the accounting!
To make sure they’re doing everything correctly and completely, we are producing monthly management accounts for review with the MD.
The management accounts not only tell the story of financial performance, they act as a check that the numbers are correct. For example:
- do the bank balances agree to the bank statements at month-end?
- are there any old debtor balances that need to be chased or written off?
- are there any negative customer or supplier balances that need to be understood and resolved?
- have all transactions such as depreciation and payroll been accounted for correctly?
- is the VAT liability correct?
All in all, what started as a phone call has resulted in a transformation from no accounting being done to all of the bookkeeping taking place in recognised accounting software, financial reports being available on demand and the safety net of financial controls helping to keep everything on course.
If your business sounds a little like the one described here then you should make the phone call they made.
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
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Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW
