accounting software Archives

Why Every SME Needs Solid Bookkeeping — And How to Make It Work

I stopped doing my books when I realised I was making them worse!

Running a small or medium‑sized enterprise (SME) means juggling sales, marketing, operations, staffing, compliance, and countless daily challenges. With so much to do and so little time, it’s tempting to push bookkeeping down the priority list. But weak bookkeeping isn’t just an administrative nuisance — it can undermine the very foundation of your business.

In this blog, we’ll cover why SMEs need good bookkeeping, the risks of neglecting it, why training matters, and how outsourcing can help. We’ll also show how Blue Dot Consulting Ltd can support your business in building strong financial systems.

What Is “Good Bookkeeping”?

Good bookkeeping goes beyond entering invoices and receipts. It means:

Recording every transaction consistently and accurately
Reconciling bank accounts and supplier statements regularly
Categorising income and expenses correctly
Storing and managing supporting documentation
Producing clear, timely management accounts and reports
Staying compliant with HMRC requirements (VAT, payroll, tax)

It’s about creating a reliable financial record that supports decision‑making, compliance, and growth.

Why SMEs Need Good Bookkeeping

1. Cash Flow Visibility

Cash is the lifeblood of your business. Without accurate records, you risk overdrafts, missed payments, or late payroll. Good bookkeeping keeps you in control by showing exactly what’s coming in and going out.

➡️ The VAT payment you were worry i ng about? That got paid last week!

2. Informed Decision‑Making

Accurate books let you see which products, services, or clients are profitable. They provide insight into costs, margins, and growth opportunities.

Without them, you’re flying blind.

3. Compliance and HMRC Readiness

Missed deadlines or errors on tax returns can lead to penalties and investigations. Good bookkeeping makes VAT returns, payroll, and year‑end accounts smoother and less stressful.

➡️ Making tax digital – the useful bits have very little to do with tax

4. Credibility With Lenders and Investors

If you need funding or investment, you’ll be asked for financial reports. Clean, up‑to‑date books build trust and open doors. Poor records, on the other hand, can scare off potential partners.

5. Fraud Prevention

Neglected books can hide errors and fraud. Regular reconciliations and oversight catch problems before they escalate.

6. Scalability

Growth brings complexity: more transactions, more staff, maybe multiple locations. Good bookkeeping ensures your systems scale with you.

➡️ In-house accounting for a growing business – often the right answer but how do you get there?

Why Training Is Essential

Some businesses hand bookkeeping to an untrained team member or assume accounting software will do the job.

Which means there are two strands of training to consider.

Accounting software – FreeAgent, Xero, QuickBooks, spreadsheets
Accounting knowledge and applying it to your business

It isn’t enough simply to know how to use the software. Numbers reach across every business and so must your finance team. They need to be confident to:

chase customers for payment
chivvy sales people to get their contracts signed and invoices ready
deal with suppliers who want paying yesetrday
communicate financial information to non-financial colleagues

Your finance team should be an investment not a cost.

➡️ You’ve got the people, let’s help them do the job

The Alternative: Outsourcing Bookkeeping

Not every SME has the time or resources to manage bookkeeping in‑house. Outsourcing is a powerful alternative.

Benefits of outsourcing:

Access to experienced professionals
Predictable monthly costs
Scalable service that grows with your business
Reduced risk of errors
Freeing up time to focus on sales and operations
Continuity — no disruption if staff leave or are absent

For many smaller businesses outsourcing bookkeeping is more cost‑effective and reliable than building in‑house capability.

➡️ Outsourced accounting and bookkeeping

How Blue Dot Consulting can help

We specialise in helping businesses take control of their bookkeeping whether through training, outsourcing, or a hybrid model.

Our services include:

Assessment of where you are at the moment and where you need to be
Software training – FreeAgent, Xero and QuickBooks
Outsourced accounting and part-time CFO
Hybrid support – split responsibilities between your team and ours
Workflows and technology

You’ll always have clear, accurate books and financial information you can trust.

Bringing It All Together

Consider two businesses:

Company A lets bookkeeping slide. Invoices pile up, VAT returns are rushed, and management can’t tell whether the business is profitable. Eventually, penalties, cash shortages, and poor decisions cause serious damage.
Company B invests in bookkeeping discipline. They train staff, use software effectively, and get professional support. As a result, they have real‑time cash flow visibility, credible accounts for lenders, and the confidence to grow.

Which company do you want to be?

Final thoughts

Every successful business is built on a solid foundation of good bookkeeping and accounting.

Training is essential for your in-house team.

Outsourcing is a good option and it can be a hybrid option.

Ready to get started?

📞 Call Michael Austin on 020 7125 0270 or

📧 info@bluedotconsulting.co.uk

Let’s talk about your business and discuss how we can take your bookkeeping from a weakness to a strength.

Michael

Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.

^{© Blue Dot Consulting Limited, Chartered Accountants, Bedford House, Fulham Green, London, SW6 3JW}

Overhaul and rebuild your finance function

An optimised finance function is not just about crunching numbers, it’s about providing useful financial information and insight into business performance that people take action on.

From time to time a business has to overhaul and rebuild its finance function.

Don’t put it off for a rainy day – you’re fighting with one arm tied behind your back if your finance function isn’t fit for purpose.

It’s going to be a game-changer – so, what do you need to think about?

Why overhaul your finance function?

Information and insight

Accurate and timely financial reporting is essential and an optimised finance function is not just about crunching numbers, it’s about providing useful financial information and insight into business performance that people take action on.

Enhance efficiency and productivity

Inefficient financial processes and outdated systems can slow down operations and increase costs.

By overhauling your finance function, you can automate routine tasks, reduce manual errors, and free up your team to focus on other business initiatives. This boost in efficiency can lead to significant cost savings and improved productivity.

Reduce risks and improve compliance

In today’s regulatory environment, compliance is critical.

A fit-for-purpose finance function can help ensure that your organisation stays compliant with all relevant regulations, reducing the risk of penalties and reputational damage.

Additionally, robust financial controls and risk management processes can safeguard your company against fraud and financial mismanagement.

Steps to overhaul and rebuild your finance function

Define your objectives

Your objectives might include:

Quicker and more accurate financial reporting
Closer ties with all the other areas of the business
Improved efficiency in processing transactions
More effective credit control
Improved cashflow
Fewer queries from customers, suppliers and colleagues

By defining what you want to achieve, everyone will know where they’re heading and you can easily see if the objectives have been met.

Assess where you are at the moment

You know where you’re heading but where do you start from?

Look at:

The skills and experience of the current team
Workflows
Technology being deployed
Current pain points across your business
Whether and how other parts of your business don’t help the finance team

Now you have a starting point and a destination. All you have to do is get there!

Invest in technology and training

Technology is the backbone of every finance function and cloud-based platforms offer accessibility, scalability and flexibility..

At the centre is cloud-based accounting software such as QuickBooks, FreeAgent or Xero. But make sure you choose software that produces the reports you need and make sure all users are trained properly to use the software.

Look at which tasks can be sensibly automated. Adopt document management software, such as Dext or Autoentry for data entry.

If your sales invoices are produced in CRM software then invest in software that will import the sales invoices into your accounting software.

Much of the software you introduce will contain machine-learning code that will speed up data processing as you do more of it.

But right at the moment – be a little wary of the promises made about AI in accounting.

Streamline processes and workflows

Review and streamline your financial processes and workflows. Identify redundant tasks, eliminate bottlenecks, and standardise procedures across the organisation. Implementing better practices will improve efficiency and reduce costs.

Set a target for producing a monthly reporting pack within, say, five working days of every month-end and organise workflows to do so.

Reporting, data management and analytics

Information is everything so ensure the right financial reports are coming from your finance function in good time, going to the right people and being acted on to improve business performance.

If your financial data set is large enough to make the investment worthwhile then investigate analytics tools which can provide insight above and beyond what your accounting software can provide.

And from time to time, because businesses evolve, loop back to data entry and make sure it remains complete, accurate and up-to-date.

Can we help you overhaul and rebuild your finance function?

We help many business to bring their finance functions up to scratch and this is what they say when we do it:

Blue Dot Consulting went above and beyond in helping us navigate not only the transition to cloud-based accounting but also in leading our accounts team through a broader period of transformation.

Their deep understanding of our unique needs and challenges was evident from the outset. They provided unwavering support to our team, ensuring they felt confident and well-prepared for the changes ahead.
Senior finance manager

Projects range from:

implementing QuickBooks, FreeAgent or Xero properly
becoming the finance team of a £15m business, helping them to develop an in-house finance department
installing cloud accounting software for a global business, making sure the top team receives the management information it needs to grow profitably

We’ve helped a wide range of organisations – can we help you?

Call Michael Austin on 020 7125 0270, email info@bluedotconsulting.co.uk or simply pop in for a chat – we’re at Bedford House, Fulham Green, London, SW6 3JW.

Michael

Related links:

Part time finance director

Measure business performance and make more money

Gross Profit Officer – appoint one today!

^{_{© Blue Dot Consulting Limited}}

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

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

You won’t be a spreadsheet-free zone but use spreadsheets to give additional insight rather than to do the work that your accounting software can do better.

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

I recently visited three different companies, all different sizes, doing very different things and they each had cloud accounting software. One Xero and two QuickBooks.

They all had one thing in common – they aren’t allowing themselves to get what their businesses need from their chosen software.

Here are some of the stumbling blocks.

Be committed to your accounting software

Your accounting software must be your go-to place for financial information – so kick out all those spreadsheets that people are relying on to manage sales invoices, who you owe money to and whatever else.

Create useful reports in your software that produce the necessary financial information and make sure everyone who needs access has access.

Create your management accounts in your accounting software and every twelfth set will become your year-end accounts.

You won’t be a spreadsheet-free zone but use spreadsheets to give additional insight rather than to do the work that your accounting software can do better.

➡️ Your accounting software needs to be the font of all knowledge.

What numbers would be useful?

One way to make better use of accounting software is to be aware of and use the various tools that help you produce more useful numbers and shed new light on business performance.

Let’s look at Profit Centres

If you have several different business streams / divisions then introduce profit centres to your bookkeeping so you can see profit or loss by business stream.

Use “classes” in QB and “tracking categories” in Xero to establish profit centres.

Ensure you include the relevant profit centre in the bookkeeping transaction for each sale and expense.

Hey presto! You can measure profit and loss by business stream / division / profit centre.

Profit centres are just one example – more tools such as projects and locations are available.

Bookkeeping is a continuous stream of activity

Financial transactions happen every day – so, to remain up-to-date, bookkeeping should be continuous.

In a larger business daily bookkeeping is imperative.

In a smaller business you can get away with bookkeeping happening less often – but ditch the idea of giving everything to your bookkeeper / accountant once a month.

➡️ Be regular – but not like Halley’s comet

Invest in training

Make sure everyone knows how to use your chosen software properly. This isn’t just to do with data entry, it’s also:

making sure that functionality such as profit-centres is being used
setting up a chart of accounts that will drive accurate, granular reports
using available data-entry fields with a view to reporting on them
using tools such repeating / recurring transactions so the computers do more of the routine work
using apps, such as Dext or AutoEntry to make bookkeeping more efficient
ensuring there is strong accounting knowledge in your team so that accruals, prepayments and tax provisions can be accounted for

➡️ Make sure everyone knows what they’re doing and how best to do it

Make better use of your accounting software

The businesses I visited had one other thing in common – they all wanted to start making the most out of their software.

Good for them.

How about you?

We provide in-house training for FreeAgent, Xero and QB users and we do a lot of work with businesses of all shapes and sizes to help get their financial processes and reporting running like a well-oiled machine.

Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s have a free-of-charge chat about your business.

Michael

In-house accounting for a growing business – often the right answer but how do you get there?

Complete your team with our Fractional CFO service in London

Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.

^{_{© Blue Dot Consulting Limited, Chartered Accountants, Bedford House, Fulham Green, London, SW6 3JW}}

Is Xero helping your business grow or holding it back?

Xero is brilliant – but only if you use it well.

And what holds back too many Xero users is that no one has ever shown them how to use it properly.

Xero is brilliant – but only if you use it well.

And what holds back too many Xero users is that no one has ever shown them how to use it properly.

Six common missteps Xero users make

They don’t:

keep Xero up to date
organise the most efficient workflows to make Xero easier to use
understand well enough the financial information available
do the bookkeeping correctly – particularly e-commerce
check that Xero is correct e.g. by doing proper bank reconciliations
get the VAT right

This can be true of both business owners using Xero for themselves and also true of bookkeepers and accounts who should know better!

So what if my Xero is wrong?

Businesses and organisations use bookkeeping software to measure and improve financial performance.

Yes, there are some other benefits, particularly around compliance, such as VAT returns, year-end accounts and tax returns. But these are second-order benefits and come a long way behind having accurate financial information at your finger tips.

So, what can go wrong if your Xero is wrong?

Amongst other things, how about these:

Poor and late decisions based on out of date numbers
Worsening cashflow
Missed opportunities to make higher profits
Stress!

And if you don’t want these and other issues impacting adversely on your business then why not invest in Xero training to help put you on the right track?

I was anxious about using the cloud based Xero and its many automated functions.

Michael’s straightforward, practical and tailor made approach was perfect for me and our business. With clear explanation and reasoning he was ready to answer any of my questions with calm reassurance at all times.

Thank you Michael. 

Invest in Xero training – invest in a better business

Our Xero training usually takes place in half-day sessions ideally at your business but our office can also be the venue.

We take some time to understand your business and how it works before taking a detailed look with you at how your bookkeeping is taking place and how it can be improved.

We look at:

Sales invoices and credit control
Entering and paying suppliers’ bills
Clearing the bank feed and agreeing Xero to your bank statements
Creating and using helpful financial reports
Accounting for other business processes, such as expense claims and payroll

It can get very intensive, which is why our training sessions are in half-day blocks.

But we also work with you if you need some further ad hoc support – we’re happy to run short sessions on Teams / Zoom to help you get the best from Xero.

Sounds useful? – To find out more about our Xero training and how it can help your business call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk

Michael

Related links:

Xero training for your business

Video – create a useful Chart of Accounts in Xero

Management information

^{_{© Blue Dot Consulting Limited}}

Blue Dot Consulting Limited, Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

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?

How is your business performing?
How could it perform better?
Who owes you money?
Who do you owe money to?
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

Paper-free accounting

Actually, the inertia that holds most people back from paper-free accounting is a reluctance to lose the paper.

This blog first appeared in 2017 and this is the 2025 uppdate.

Since 2017 there have been huge leaps and bounds in technology but in many ways the state of play in 2017 is very much what it it now.

AI may change that but to date I haven’t seen much in the AI space that offers a significant improvement to a meaningful problem.

Actually, the inertia that holds most people back from paper-free accounting is a reluctance to lose the paper.

Apps for paper-free accounting

Suppliers’ invoices and receipts

Apps such as AutoEntry and Dext manage and store images of invoices and receipts and will push the documents, along with the correct accounting entries, directly into your cloud accounting software.

You forward emails containing the PDF of your suppliers’ invoices to these apps. Equally you can download a version of the app on your phone and capture an image from there.

Sales invoices and e-commerce

If you use a CRM system to raise your invoices then there are several apps that will import the sales invoice data straight into to your accounts system. You can also create your own program to do it for you.

If you sell online then take a look at A2X, a highly-recommended app that takes accounting data from your e-commerce site and does the accounting for you.

On both the sales side and the purchases side, nothing is printed out and nothing needs to be physically filed. Workflows change, and they change for the better!

However, it’s vitally important that the business has a full and reliable back up of these documents in case the primary source is somehow lost or damaged.

Also worth visiting is HMRC’s guide on record keeping – even they say “HMRC recommend you keep all the original documents you receive. This does not mean you need to keep them on paper.”

Accounting software and paper-free accounting

Since 2017, bookkeeping software has migrated from the desktop to the cloud.

Advantages include:

You and your accountant can both work on and access your data and financial reports any time and anywhere
You can be in a PC or a Mac environment on a phone or on a tablet and still use the software
The client is best placed to raise sales invoices and raising them in the online accounting system does the accounting at the same time, improving credit control and saving time and money
Apps continue to be developed that link to accounting software – not all of them are as helpful as their marketing suggests

The disadvantages:

Prices keep rising! This is one of the biggest changes since the 2017 blog. We’ve all painted ourselves into a corner with this and I’m afraid there’s not much we can do about it.
With only one or two exceptions, the cloud accounting software services do NOT allow you to keep your own back-up that can be restored if needed. You can subscribe to third-party apps at a cost
Additional functionality keeps being added, into the product and into the price, but is it all useful to your business?

How can Blue Dot Consulting help you become paper-free?

Firstly, you’ve got to want to do it and, in fairness, we still see businesses owners who will not give up the lever-arch files.

But even if you’re not ready to give up the paper, you can still use the programs and apps I’m discussing here and we can help you to do that.

Indeed, if you’re self employed or a private landlord, then HMRC will soon mandate that you do your bookkeeping digitally if you fall into the size limits for their Making Tax Digital (MTD) regime.

Give me a call on 020 7125 0270 or email me at info@bluedotconsulting.co.uk and let’s have a chat about being paper-free.

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:

Be very clear what the purpose of the spreadsheet is
Create separate areas of the spreadsheet for inputs, calculations and outputs (the outputs might be your print ranges)
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)
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)
NEVER hide rows, columns or worksheets (you simply don’t know the world of pain that hiding things can unleash)
Freeze rows and columns so they are always visible (make it easy for the user to use)
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
Ensure each separate sheet has a sensible title and page name
Use autosave or get into the habit of saving your work frequently
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?

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

We can’t send you your invoice because our accountants are so behind with processing direct debits

Normally I’m delighted to hear that a business is getting paid by direct debit because DD is the silver bullet of credit control.

But when I heard a senior manager in XYZ Limited say this about their invoicing and their accountants, you could have knocked me down with a feather!

So, let’s see how they could have avoided getting into this mess in the first place.

Raise your sales invoices as soon as you can

Every business needs to raise its sales invoices as soon as it can. Make sure they are:

correctly describing the goods / services sold and are correctly priced
addressed to the correct person and contain a PO number if required
sent by email – ideally as a PDF not as a link. Why make it difficult for your customer?
accounted for as soon as possible if they’re not raised in your accounting software

Do this and you know how your business is performing from a sales perspective and you know how much money you are owed.

Get cracking with credit control straight away

Credit control differs for every business but however you go about credit control get started straight away so your invoices have the best chance of being paid on time.

This blog isn’t about credit control but there are a couple of links at the end which you might find helpful if you’re a bit rusty.

This blog doesn’t need to be about credit control because XYZ Limited gets paid by direct debit!

What could have been done differently?

It so happens that we use the same direct debit provider as XYZ Limited and this is how we would have gone about things.

The first step is to link the direct debit service to your accounting software.

As new clients come on board you send them a direct debit mandate to complete, stating your payment terms clearly so the client knows when their payments to you will leave their account.

Pro tip: If a client won’t sign up to direct debit you should seriously consider not working with them as they could well turn out to be a bad credit risk. And who needs that?

Raise your invoice, using the agreed payment terms, and send it to your client.

Sit back, relax and you’ll be paid on time. And if you use the combination of DD provider and accounting software that we use, the accounting for the payment will be done automatically.

Bookkeeping in the 21st century

There’s a link below to a blog about this.

Essentially we live in an age in which all sorts of online platforms exist for making sales and receiving customer payments.

This is generally a good thing but it does require businesses, bookkeepers and accountants to know what they’re doing and walk through every step of the sales process, from order to payment, making sure everything happens in the right order and is working correctly.

You establish workflows that work and scale from there.

It seems that XYZ Limited and their accountants have somehow tied themselves up in knots with a very visible outcome – XYZ’s clients aren’t getting their invoices even though they have made their payments.

Not a good look for XYZ Limited!

Workflows, accounting, getting paid – can we help?

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:

This is bookkeeping in the 21st century

Five tips to improve your sales invoicing

Getting paid on time – your company is NOT a source of alternative finance!

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

How good are your management accounts?

This company has annual sales in the millions of pounds and it reminded me that there are many businesses in the UK of all shapes and sizes that do not have adequate financial information.

Financial information is the lifeblood of every business and your management accounts are the key source of the information you need.

With good up-to-date financial information you can make sensible decisions, change what’s not working, get early warning of problems and track the results of your business.

Anything less than good financial information will hold you back, sometimes disastrously.

So what financial information do you need and how can you get it?

Continue reading “How good are your management accounts?”

Getting paid on time – your company is NOT a source of alternative finance!

Remember – your company is NOT a source of alternative finance for your customers!

Getting paid on time – it’s one of the biggest drags on the business community and it hits the smaller business particularly hard.

But there are things you can do, it’s time to hit back.

Remember – your company is NOT a source of alternative finance for your customers!

Contracts and agreements

Firstly, have a standard contract for the work your company does which includes the prices you charge and the terms of payment. Get it signed by both parties.

Sometimes it’s difficult to know the exact price in advance, particularly for some services, but give an estimate, allow for a contingency and make sure there are no surprises.

And if you think you will have to do a lot of work upfront then ask for an upfront payment on account before you start or before you release a phase of the work you are doing.

Sales invoices – right first time, on time

Sales invoices are the key to getting paid on time.

They should be correct, sent on time, contain the terms of payment and contain your full bank account details.

Sending sales invoices by email is sensible because it’s difficult for the recipient to say the invoice has not been received. And it’s a good idea to send the invoice to your main contact and to the accounts department of your client.

Direct debit

There are several direct debit services that you could use to get paid on time, such as GoCardless.

Direct debit is the closest thing to a silver bullet for credit control because you get paid on time, every time.

And if a client or prospect is unwilling to sign up for DD then you have a very good indiction that they might no be a client you want to have.

Chase for payment

Don’t be shy about chasing for payment. Your accounting software should be able to email statements and reminders to everyone who owes you money (if it doesn’t then you have the wrong software!).

Where debtors don’t respond – get on the phone.

If that doesn’t get you paid then stop working with the customer and consider legal action.

Don’t waste time with slow payers. They are painful to work with and a risk to your bottom line and remember – a sale is a gift until it’s paid for!

Michael