Category: Management information

What are management accounts and do you need a makeover?

Setting a five day deadline will throw up issues in your business about people and processes.

Both need to be fit for purpose.

What are management accounts and why are they vitally important for every business?

Management accounts, ideally produced monthly, are the reports that tell you how your business is performing.

Typically they include:

  • P&L for last month and for the year to date, compared with budget and with last year
  • Month by month P&L for the last 12 months
  • Balance sheet
  • Aged debtors and aged creditors

These are basic reports that will fall out of your accounting software, such as FreeAgent, Xero or QuickBooks.

What are management accounts going to tell me?

The first two reports are telling you if you’re making a profit or a loss. They offer comparisons with last year and against your budget if have one.

Looking month by month tells you about growth and seasonality.

They both tell you if you’re missing something.

The balance sheet speaks to financial strength. It’s a list of assets (e.g. cash, debtors, stock) and liabilities (e.g. creditors, loans, taxes) and you need your assets to be greater than your liabilities to be a solvent business.

Aged debtors is a list of who owes you money and since when – vital for credit control

Aged creditors is a list of who you owe money to and how old these liabilities are.

Not having management accounts is simply not an option and yet we continue to see companies, some with multi-million turnovers, that have nothing like the management information they need to run their businesses.

Sounds familiar?

Organise a management accounts makeover.

Management accounts makeover

Your MONTHLY management accounts should include as a bare minimum:

  • P&L for last month and for the year to date, compared with budget and with last year
  • Month by month P&L for the last 12 months
  • Balance sheet
  • Aged debtors and aged creditors

Plus any further analysis, such as profit by client, profit by service / product that is relevant to your business.

And, if you are concerned about cashflow – you need to be reviewing a cashflow model!

Your management accounts need to be correct to be useful

If you have the wrong information you will make the wrong decisions and probably think you are richer than you really are.

So make sure your bookkeeping is complete and accurate.

Some numbers in the management accounts are estimates, that is inevitable, but they should be accurate estimates.

Other numbers, such as your bank balances, can be exact because they can be agreed to your bank statements.

If you have stock – count it and value it at least every quarter.

And make sure you are recognising the cost of depreciation of fixed assets each month and, assuming you are making a profit, make a provision for the tax you will have to pay.

Get your management accounts out quickly

Aim for no more than five working days as a deadline. Information is better fresh and waiting a month to know what happened last month is pretty pointless.

Setting a five day deadline will throw up issues in your business about people and processes. Both need to be fit for purpose.

The aim with management accounts is to make their production a routine, quick process and then to use them, along with other data, to monitor and improve business performance.

If it feels like pushing a very heavy boulder up a very steep hill – ask for help. It’s a false economy not to.

Michael

Related links:

Management information – Important as it is, no one does bookkeeping for the sake of bookkeeping

Management accounts – five steps to useful numbers

Profit improvement – make profit your first cost

Blue Dot Consulting Limited

This must be my profit, it says so on my phone!

Cloud accounting software is often sold as being everything you need, easy to use, do it yourself etc.

Well so is a Delia Smith cookery book – and you really don’t want to see my attempt at a soufflé!

“It’s on my phone so it must be right!” said a client of ours recently.

And it struck me that because we use our phones for pretty much everything, we tend to assume they tell us the right answer all the time.

But perhaps your smart phone is not so smart after all – or perhaps the users aren’t!

I’m talking here about the phone apps that accompany cloud accounting software packages such as QuickBooks and Xero.

They’re an extension of the software you can also access from a laptop, PC or tablet.

They let you carry out data entry on the go, such as new purchases and sales invoices, and access some reports, such as the Profit & Loss report my client was looking at.

Apps are the way of the world and it’s Canute-like to think this technology is going to disappear. It isn’t.

So the trick is to understand and use cloud accounting apps properly.

Is data entry on the go really a good use of your time?

It is if you use an app such as AutoEntry which allows you to take a photo of your receipt and will code it ready to be imported into your accounting software, along with the PDF of the receipt. You have to keep the receipts as proof of business expenditure and to reclaim any allowable VAT and AutoEntry will make this record-keeping very easy.

Also, use your business debit card (don’t leave home without it) to pay for everything and then the transactions appear on your bank statement. So even if you don’t get a receipt or can’t get one (TFL) you still don’t miss the expense because it appears in your bank account.

Visit our bookkeeping for your business page to learn more about how we can work on reducing your data entry time.

Creating  sales invoices on the move

Yes, you can create sales invoices on the move. But you don’t want to get them wrong because that will delay payment and may damage your reputation with your client.

And think of the client – do they want or need your invoice right here, right now?

Not always.

Has everything been accounted for correctly?

Two aspects to this – “everything” and “correctly”.

Miss something and your profit is wrong, whatever your phone tells you.

Our experience is that users of cloud accounting apps and cloud accounting software, such as Xero and QuickBooks, need some help and training to get things right.

Cloud accounting software continues to be marketed as being everything you need, easy to use, do it yourself etc.

Well so is a Delia Smith cookery book – and you really don’t want to see my attempt at a soufflé!

Every transaction has to have been accounted for correctly (including transactions such as depreciation and corporation tax) for the profit to be correct.

Otherwise, it’s wrong.

Can Blue Dot Consulting help your businesses with its accounting?

Our client’s profit was not what his smart phone told him it was. It turned out the profit was a little higher, but it isn’t always like that.

We run practical Xero and QuickBooks training sessions help many businesses get just what they need out of their cloud accounting software. We use your live transactions to show you / your team how to use your chosen software more efficiently and how to get useful financial reports from it to help improve business performance.

Embrace cloud accounting software and cloud accounting apps but just take the time to really understand how to use them in the best way so you don’t mistakenly end up thinking you’re richer than you are.

Until then, don’t believe everything your phone tells you.

You’re reading this on your phone, right?

Michael

Related links:

Management information

Part Time CFO – if this is the solution, what’s the problem?

Outsource your financial management

Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Don’t let costs embed themselves in your business – go on a fossil hunt!

We looked at how costs and processes get embedded in a business and stay there, like fossils, for years and years, eating up cash, when they don’t need to be there at all!

This is a “physician – heal thyself” post about cost control and the processes that build up in businesses over the years!

Some time ago I ran a workshop for MDs about good financial management and one of the sessions looked at how costs get embedded in your business and stay there, like fossils, for years and years, eating up cash, when they don’t need to be there at all!

Fossilised costs, we call them.

They exist everywhere and sometimes you need to go on a fossil hunt and clear them out!

We had a fossil hunt several years ago when we had to move offices. Our landlord gave us a 100% rent increase and we decided to move out.

At which point we looked at what we needed in the new office, compared it with what we had and what it cost and thought “how did we let these costs build up without challenging them?”

In any business it’s worth standing back from time to time and asking whether you need everything you’re buying and whether you are buying at the right price.

Look at everything from people to premises, phones, stationery, storage, subscriptions and anything else you spend money on.

 

It’s not just cost control – look at processes and workflow too

Also, look at your processes and see if you can’t change the way you do things and be more efficient.

One outcome of our office move is that we decided to go “paper-free”. This saved a huge amount of time and money each year because we didn’t have to archive paper files and it led very quickly to putting our entire business into the cloud.

Costs and processes become habitual, “we do it this way because we have always done it this way”, and you take them for granted.

An expensive mistake.  Check your workflow processes, increase profitability and make more money.

Cost control – it all starts with a fossil hunt!

 

 

Michael
Sales | Margins | Profit | Cashflow

 

Can we help you to reduce costs and improve your profits? Give us a ring on 020 7125 0270.

 

Winter is coming – be prepared!

The economic headwinds are blowing stronger and there’s plenty you can do to batten down the hatches and prepare your business for a recession.

There may be trouble ahead.

But forewarned is forearmed and there is plenty you can do to batten down the hatches and prepare your business for a recession.

And be ready to take advantage of the better days that will follow.

Know your numbers

Your bookkeeping must be up to date and stay that way so you know exactly where you are and you minimise the surprises that will surely come your way.

Make sure you understand what the numbers are telling you and take action based on this information.

Look ahead – at profit and cashflow

There are two forecasts you need:

  • Profit forecast
  • Cashflow forecast

In your profit forecast be realistic about future sales and be prepared that you’ll lose some customers and that some contracts and projects may be postponed or cancelled – sometimes at the last minute.

On the cost side of your profit forecast identify which costs you can reduce or cut completely and get on with it. People and premises are usually the areas that will yield the biggest savings.

It’s often best to cut hard and cut early.

As for cashflow – go backwards before you go forwards. Get a simple cashflow model working by modelling the last six months of actual cashflows and then, using your profit forecast and your up to date bookkeeping information, model the next six months or so.

In both forecasts – be realistic and don’t forecast too far into the future.

And keep updating the forecasts because circumstances will change.

Credit control is paramount

If you’re not on top of credit control then get on top of credit control now, and stay there. Make sure you have an aged debtors list to review at least once a week.

If you can, set up your customers to pay by direct debit. Be wary of any that won’t sign up as this could be a sign that they are going to be slow and payers.

Difficult customers? You might be better off without them.

Get on the phone and, if you have to, go out and visit customers that owe you money.

Don’t rely on automated messages and simply sending statements from your software. By all means set them up so there is a steady trickle of credit control reminders going out to customers but nothing beats talking to customers if you want to get paid.

Cut costs and do more with less

Take a thorough look at workflows and ask if they can be made more efficient and, indeed, if they need to be done at all. Can you redesign workflows and processes to make them simpler and cheaper?

Counter-intuitively, is now the time to invest in new software, automation and other capital items to improve productivity?

Look closely at costs of sales and margins. If sales are likely to reduce in the coming months then are there deals to be done with key suppliers, who want to keep your business as a customer, which will lower your costs of sale, meaning you make more money from each sale you do make?

Finally, run through all of the business overheads and see which can be cut.

Cost cutting doesn’t need to be “all or nothing”. It may be that all colleagues share the pain with a pay cut across the board rather than some people lose their jobs but not others.

Build a cash reserve

It shouldn’t take the threat of a recession to prompt any business to build up a cash reserve, there should already be funds in place. But, in the real world, that may not be the case.

Charities and other not-for-profit organisations are compelled to build up reserves that amount to, say, three or six months’ of operating costs. If charities can do it, why not you?

Building up a cash reserve now means you have to work harder on your cashflow and in practical terms, if you don’t already operate two bank accounts, then open a second account now.

=> Why two bank accounts are better than one

Marketing opportunities

Go right back to basics – the four “P”s of marketing:

  • Product – can you diversify or discontinue less-profitable products or services?
  • Price – don’t lose sight of the value you add as prices come under pressure. Protect your margin!
  • Promotion – as market conditions change for everyone then communications must adapt
  • Place – do you need to be everywhere? Perhaps regroup and simplify.

It’s important to be positive with marketing and recognise there will be opportunities in your market. Simply put – not everyone will get through to the other side.

Be different and be seen to be different. Innovate with products and services and make sure you communicate effectively to customers and prospects.

And if opportunities arise then try to capture market share.

Know who your friends are – customers, suppliers and colleagues

In hard times it pays to have strong relationships with customers, suppliers, colleagues and other stakeholders.

Provide great service and clear communications and perhaps now would be a good time to set up a customer loyalty scheme that rewards repeat business.

Continue to build close relationships with customers (not forgetting to jettison any that are not profitable) and, provided your cashflow supports it, pay everyone consistently on time.

In fact, if you can consistently pay your suppliers on time then use this as a negotiating tool to agree lower prices.

There seems no doubt that the economic headwinds are blowing stronger and running your business will become more difficult.

Be prepared. Take action sooner rather than later and come through it stronger than before!

Michael

Related links:

Blue Dot Consulting Limited

Know your numbers, don’t get lost in the fog

The technology doesn’t change the essentials and there is a real danger that businesses can get so caught up in the “how”, the graphs and the apps that they forget the real point of why they want the numbers in the first place.

There’s a lot of marketing noise about how rapidly technology is changing the way accounting gets done.

We know. We’re completely in the cloud and it makes a big difference to our clients and us.

But the technology doesn’t change the essentials and there is a real danger that businesses can get so caught up in the “how”, the graphs and the apps that they forget the real point of why they want the numbers in the first place.

Too many businesses are lost in the fog.

Five financial essentials

If you’re running a business can you answer these five questions?

  1. How is your business performing?
  2. How could it perform better?
  3. Who owes you money?
  4. Who do you owe money to?
  5. What is your cashflow like?

You need reliable answers to these questions to be readily available.

If you don’t have them then something needs to change.

Accounting software

It might be a software issue – we still see sizeable businesses running their accounts in spreadsheets.

Get some proper accounting software – there’s a lot of it about!

It might be a software issue – you’ve bought the software, they said it was easy to use, just like riding a bike, but actually no-one in your company knows how to use it properly.

Get some training!

Accountants

You might have accounting staff or a freelance bookkeeper, it’s quite likely you have an external accountant. But you’re still lost in the fog!

Change the people – improve them or lose them!

An MD’s cry from the heart

We’re working with an MD. She has a decent business, two or three staff, happy clients, made it through some difficult times and wants to kick on. She rang me because she doesn’t have reliable numbers and doesn’t know what to do.

In her case the bookkeeping has been poor and the accountants (gold medalists at non-responding) have barely shown up to make things right.

At least in this case the MD knew she was lost in the fog; we fixed it for her and gave her the clarity and peace of mind she was looking for.

How about you?

Let the fog clear – give me a call on 020 7125 0270

Michael

Related links:

Management information

Is my accounting any good?

Set up an accounts calendar for your business

Cloud accounting for business – Are you getting in your accountant’s way?

Cloud accounting requires cloud workflows – the old ways will hold you back!

Every accountant under the sun is banging on about cloud accounting for business users. Often for very good reason.

We’re no different.

We encourage all businesses to use accounting software and, these days it’s cloud accounting software.

Why?

Primarily because cloud accounting:

  • makes data entry much more efficient
  • is accessible to the accountant and to members of your business
  • can be done anywhere, anytime – tailor-made for WFH

Usually a business will raise its own sales invoices, ideally within their accounting software so that raising an invoice is also accounting for the invoice and starting it on its route to get paid. Sometimes a business will have their own CRM system for invoicing.

But it’s all the other accounting – for suppliers’ invoices, expenses, bank receipts and payments, credit card transactions etc. – where cloud accounting should make a big difference to bookkeeping and producing up to date, accurate, complete financial information.

The information you need to run your business profitably and maintain good cashflow.

Don’t be the block in the road

And this is where many SME business owners can get in the way.

Cloud accounting is a continuous activity. Sales, purchases, bank receipts and payments happen every day. So make sure your bookkeeper has access to the transactions as they happen.

  • Raise your sales invoices as soon as you can and pass them to your bookkeeper if they are raised outside your accounting software
  • Keep your bank accounts connected to the software (they will disconnect every 90 days for security reasons)
  • Forward all incoming suppliers’ invoices to your bookkeeper when you get them
  • Consider using a document processing app (AutoEntry or Dext)
  • Send all of your bank statements to your bookkeeper early in a new month so they can be agreed to your accounts (the bank reconciliation is a key financial control and should be carried out frequently – don’t let anyone tell you otherwise!)
  • Respond to queries from your bookkeeper promptly
  • Only do parts of the work yourself if you have had appropriate training and can do it right

Accounting software is only as useful as the information it generates so make sure you understand, review and take action on financial reports.

Cloud accounting really is teamwork – between your business, your bookkeeper / accountant and perhaps one or two apps.

If you work together it all works well and you can concentrate on making money.

And make sure your accountant knows what they’re doing as well.

Cloud accounting does not a good accountant make!

Michael

Related posts:

Set up an Accounts Calendar. It’s about time (and money)

This is bookkeeping in the 21st century

To increase profitability – We’re going to purposefully do less!

Blue Dot Consulting Limited

Profit Margins: Make more money with every sale

It’s taken some time to bed this approach into the business but it’s now working and the success of the change is being felt all the way to the bottom line and on into the bank!

If you want to make more money then look at the profit margins your business makes – and change them upwards.

Your margin is the gross profit you make on every sale.

Tea pot margin

Every teapot you sell now makes you £10 instead of £7 so with every sale you make more money.

Which is a massive part of why you’re in business.

Profit Margins – a case study

These are the year-on-year results of a business I work with. As you can see, sales are down but their gross profit is up – they have made more money from fewer sales!

This year £’000Last year £’000Change £’000
Sales9351,070(135)
Cost of sales375545170
Gross profit56052535
Profit margin %60%49%

They have tasked their sales team not just with making sales but with making sales at higher gross profit margins.

This is reflected in the commission plan for each of the sales team – they earn substantially more commission on every sale they make above a hurdle level of gross profit.

It’s taken some time to bed this approach into the business but it’s now working and the success of the change is being felt all the way to the bottom line and on into the bank!

If they repeat last year’s sales at this year’s margin then their gross profit will increase from £525k to £642k – an increase in excess of £100k!

How can I increase my profit margin?

As with the teapot example, there are only two variables – sales and costs of sales. You need to look at both and not be afraid to change either.

You don’t need to make wholesale changes – why not increase prices in a selection of products or services and see what happens. Once you have tested some increased prices and have a good idea of what works and what doesn’t then roll out what works across your business.

It doesn’t matter if you lose some revenue provided the increased gross profit more than compensates. 

As the example above demonstrates – less can be more!

On the supply side, it’s a competitive world.

Are you getting the best price from your suppliers and do you know who else you could buy from if you’re not? Review what you’re buying and how much you’re paying and keep your suppliers on their toes.

Finally, you need to measure gross profit accurately and keep your eye on it.

One way of doing this is to make it someone’s job to be the Gross profit officer.

Increasing your profit margin – the amount of money your business makes on each sale – results in higher profits and improved cashflow. It’s so beneficial and simple to put in to practice – why not start making your changes today?

At Blue Dot Consulting we do a lot of work with businesses to help them improve profitability.

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

Related links:

Profitability

Profitable pricing – goes right to the heart of your business

Fine margins

Improve profitability – in five simple steps

© Blue Dot Consulting Limited

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Is your finance team fit for purpose?

From the board of directors down, does everyone know how to do their job to make sure that the numbers are right and are produced in time to be useful?

You might have a part-time bookkeeper or several staff reporting into an FD.

You might outsource everything to a firm of accountants or you might do your own books.

Whoever does the job, there is one question you need to ask:

Is your finance team fit for purpose?

If all is well…

Tell-tale signs that things are working well would simply be that:

  • you’re getting all the financial information you need to run the business profitably
  • cashflow is well managed, debtors an creditors are in good shape
  • few surprises
  • you’re up to date with tax returns and other regulatory filings and payments

If you’re not seeing this then you can be pretty sure that things can be improved. So, where to look for improvement?

Processes and systems

Bookkeeping is the bedrock of all businesses.

But too often the data required to record a financial transaction accurately and in good time is not available when it should be. For example:

  • sales invoices are raised late
  • suppliers’ bills sit in an in-box or a portal and are not passed on to be accounted for

Technology has improved considerably in recent years and makes accounting life so much easier and efficient.

So, unblock and speed up the processes for getting all of the right data into your accounting software as soon as possible.

People

If the processes and systems are all o.k. then you have to look at the people. Do they know how to do their jobs properly?

From the board of directors down, does everyone know how to do their job to make sure that the numbers are right and are produced in time to be useful?

Also, do the users of the information understand it?

And do they act on it?

Accounts and finance can be an arcane world in which it has been known for people to pull the wool over the eyes of non-financial colleagues – having bad accounting staff can be very costly.

What can be done if there are problems?

We work with a large number of businesses every year and we have a good idea as to whether the finance team is fit for purpose.

We also know what needs to be done on both the process side and the people side to generate improvements.

So if you are worried that the financial side of your business is performing below par, why not give us a call on 020 7125 0270 and let us help you plug the gaps in your finance team.

Michael

Related posts:

Why your business DOES need a Finance Director / CFO — just not Full-Time

How could my business perform better?

Management information

Profitable pricing – goes right to the heart of your business

There is no point in “buying” sales with low prices that you can’t make money from.

Profitable pricing is a virtuous circle if you get it right and a vicious circle if you get it wrong.

So, how do you get it right and price profitably?

How profitable is your pricing at the moment?

Astonishingly, too many businesses simply don’t know how profitable their products and services are because their management accounting processes are not up to the task.

It’s not just the costs and revenues that need to be measured.

If yours is a service business then time is literally money and logging time spent on each client, at least in a way that’s “roughly right” and not “precisely wrong”, will provide invaluable information about how profitably you’re performing client work.

So step one is to make sure you have the management information you need to measure profitability accurately.

Step two is to act on it.

Be competitive but profitable

There is no doubting that the business climate is tough.

But competitive doesn’t have to mean cheap and you don’t have to abandon profitable pricing. There’s only room for one lowest-cost firm in your market and if that is not you then compete on other aspects of your product or service such as:

  • quality
  • delivery times
  • customer service
  • experience
  • understanding of your client’s business

Look at your competitors and see what fronts they’re fighting on (or not) and look beyond your own market for ideas about how to position your business so that it stands out from the crowd.

Have the confidence to walk away

Sometimes when you make a pitch that embraces profitable pricing the client or prospect will say you are too expensive.

It’s important to negotiate but one of the options here is to walk away – you just need to be polite and have the confidence to do it. There is no point in “buying” sales with low prices that you can’t make money from.

You might be nicely surprised at the reaction when you walk away – the buyer might really quite like you and be prepared to pay what you want simply because you’re a great fit for their business!

Also, think about the lifetime value of a client. Establishing a good working relationship now at lower prices than you’d ideally like might be the foot in the door for a long-term relationship in which you can increase prices or lower the costs of doing the work in the future and make the profits you want.

If you adopt this approach then make sure you’re clear that prices will go up so there are no surprises.

Offer an introductory discount, fix the price for six months only, think how landlords offer rent-free periods, there are lots of examples of how to do this so you do not end up with permanently low prices and a contract you can’t make money out of.

The virtuous circle of profitable pricing

Profitable pricing falls straight to your bottom line.

This translates into more money in the bank, provided you deliver what you promise and are on top of credit control, and the value of your business increases.

But it’s more than just a financial thing. Everyone feels better in a business that’s performing well. Some of the profit can be reinvested in training, in new products, new markets and rewarding everyone involved.

And, of course, pretty much the opposite happens when you don’t get it right.

Good luck with your next pitch!

 

Michael

 

Spreadsheets in accounting – use fewer of them but learn how to build them better

I come to praise spreadsheets not to bury them – but you may not have the balance right.

Spreadsheets in accounting – this is mainly for bookkeepers and accountants but CEOs and MDs might recognise some of the road blocks and I suspect the points raised might apply equally well to sales, marketing, operations and HR.

To be clear, I come to praise spreadsheets not to bury them – but you may not have the balance right. So let’s begin where bookkeepers and accountants should always begin.

Accounting software.

Is your accounting software any good and are you making the best use of yours?

Your accounting software should be capable of generating the overwhelming majority of the reports your business needs.

Produce those reports, share them, make sure they are understood and used to improve business performance.

Listen to feedback – sunlight is the best disinfectant – and if improvements to the reports can be made then make them.

But!

Choose the right accounting software because some of the popular packages are simply rubbish at producing reports. You might need to change software.

Get proper training on your accounting software – particularly around reporting! (we can help you with QuickBooks, or Xero)

Produce your sales invoices in your accounting software or CRM software – but not in a spreadsheet!

Work backwards from the reports you need to make sure your data entry of transactions is going to feed nicely into your reports.

Build a chart of accounts that is right for your business and build it to last – see related links below.

Make sure your bookkeeping is complete, accurate and up-to-date.

=> The opposite of “Garbage In – Garbage Out”

From time to time you may need to prepare reports in spreadsheets

Accounting software isn’t infinitely flexible and some reports will need to be created in a spreadsheet where tools such as pivot tables and lookup formulas can be brought into play.

Also, you may need to combine data from your finance system with data from other sources and from other areas of your business. In which case:

Make sure data that should be the same IS the same!

For example, if you have customer numbers make very sure that the sales and marketing teams have exactly the same customer numbers for each customer record as the finance team.

Pivot tables pivot around common data – there’s a clue in the title.

If you get your data cleaning right then you can generate very powerful and valuable insights by combining data from different data sources.

But inconsistent data will hold back your business in a very significant way.

=> Finance transformation

Take time to learn best practice for spreadsheets

There’s a time and place for spreadsheets but learn how to use them well.

A good first principle is to assume that other people will be the audience or users of your spreadsheet and that they will either print it or save it as a PDF. Straight away this means you have to build spreadsheets in a simple and well-structured way with a focus on clear outputs.

This is a blog and not a spreadsheet tutorial (you can find lots of them on YouTube) so I’m not going to go into depth on the tools and formulas you might utilise but here are my top ten tips to get you started:

  1. Be very clear what the purpose of the spreadsheet is
  2. Create separate areas of the spreadsheet for inputs, calculations and outputs (the outputs might be your print ranges)
  3. Have an empty row at the bottom of a column of numbers and put the total in the row below that (makes it easy to insert new rows into the column and ensure it will still add up correctly)
  4. Use control formulas to prove that the result of one calculation that should agree to another calculation actually does agree ( i.e. if X43 should equal B9 then the control formula will be =X43 – B9 and the answer should be 0)
  5. NEVER hide rows, columns or worksheets (you simply don’t know the world of pain that hiding things can unleash)
  6. Freeze rows and columns so they are always visible (make it easy for the user to use)
  7. Format numbers with commas and an appropriate number of decimal places and display negative numbers in red and in brackets so they jump off the screen at the user
  8. Ensure each separate sheet has a sensible title and page name
  9. Use autosave or get into the habit of saving your work frequently
  10. Put a page of notes at the back to explain what the spreadsheet is for and how it works ( I guarantee you won’t make sense of your own notes the second time you read them)

There are many other hints, tips and online tutorials that will get you using spreadsheets better and don’t overlook getting someone in to do some training across your business.

Spreadsheets in accounting (and in other disciplines)

To summarise:

  • choose good accounting software, get training and use it for the majority of your financial reports
  • use well-built spreadsheets to gather data and answer questions that your accounting software can’t help you with

I think these ideas can be applied across your business. Think of sales management software, CRM systems, HR and other applications.

Are you getting everything you need from the main system or are you over-reliant on spreadsheets?

We do a lot of work with businesses to help them improve the quality of financial information and this is one area we frequently take a look at.

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:

Proof of Profit

Build a useful Xero chart of accounts

Why don’t businesses make better use of accounting software?

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Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW