We will look at bookkeeping and how a partnership approach can make your life easier. Plus, it can improve the bottom line and put more cash in your pocket. Introducing you to Conor and Amy [their real names] we will touch on some of the things that helped them. And why they decided to use us and not a bigger practice.
- The Stars
- Initial piece of work
- Partnership Approach
- When does it start paying off?
- Personal Finances
- Why Conor & Amy chose us?
Conor and Amy are partners of CLS Chartered Secretaries in Carlow. They provide company secretarial services from company formations to share restructuring. Good at what they do, and hard work has led to growth in the business in recent years. The reason we can use their real names is that they very kindly agreed to be our first case study.
Mentioning stars, we can’t forget about a few from our side. Ger, Cathy, Dee & Izabela are the contacts for CLS here. All work hard to try and build and improve the relationship. From our side, they provide the partnership approach.
Back in 2019 they were in a bit of a bind. They knew they had a good business but weren’t certain of the financials. As a result, they didn’t have the confidence to make business decisions based on their numbers. Plus, there was frustration about one aspect of their business. Their debtors were too high, leading to an initial piece of work for us.
Initial Piece of Work
The big issue was that clients owed them a lot of money for work done. So, their cash wasn’t in their account. The plan was to improve that, and we worked together to come up with a new process that would help. Dee, our office manager, got on the case and the main improvement she helped with was a new system to bill and chase.
Some of the steps involved included;
- Issuing an invoice from Xero when the work was done
- Having clear payment terms on the invoice and reducing from 30 days to 14 days
- Putting a link to Stripe on the invoice to give a client more options to pay
- Using an app called Chaser that works with Xero. This chases payments. It can send out reminders a few days before the invoice is due. And send out a reminder if the payment date isn’t met.
- Send an end-of-month statement and scheduling a call to get a payment plan in place
But the main drivers were Conor & Amy and the team at CLS. With our help they could identify the largest and long terms debtors. Adopting the personal touch with meetings and phone calls their hard work paid off. Debtors went from 34% of sales in 2019 to 17% in 2021. With sales increasing and debtors reducing by 50% this was a huge help to get cash into their account.
A partnership approach is the ideal relationship we want with our bookkeeping clients. All sounds lovey-dovey, doesn’t it? Not always, and like any relationship there are bumps along the road.
A bit like dating, there’s a getting-to-know-you phase where you are checking each other out to see if this can work.
- Will she turn up on time for the meeting?
- Does he do what he said he’d do?
- When will she get back to me with an answer to my question?
- Can they help me with the initial piece of work?
- Is it ok to tell you I’m not happy about something and you won’t go off in a sulk and ignore me.
Substitute that for a couple. You said you’d cut the grass. You promised to empty the dishwasher. Why didn’t you put out the bins? Not doing things that you said you would do can impact the relationship and the love will disappear. And fast!
In the early stages, you are building up trust with each other. Assuming we do the initial piece of work well that’s a positive. If a client promises to do something and they don’t then that’s a red flag for us. Our focus for bookkeeping clients is to nail the foundations but the client must buy into that too.
An example would be meeting PAYE & VAT deadlines. We hate missing deadlines for clients. Getting your returns right, filed and paid on time is a huge focus for us. It protects clients and limits Revenue interaction. It’s frustrating for us when clients don’t
- get their information to us on time
- return our calls and e-mails and are generally not responsive
- pay us on time
The key message is that for things to work well there is effort and buy-in from both sides. Sure, it keeps the romance going!
When does it start paying off?
You should see some very positive results and changes after three months. But you need to hold up your side of the bargain to meet that timeframe. The first month can be slow and often that is outside of our control. We are working away in the background to get you onboarded with
- setting you up on ROS as your tax agent
- Getting you onto Dext to help reduce the paper
- Xero set up and linked with Dext
- Bank feeds into Xero so ringing the bank looking for statements can become a thing of the past
- Transferring your payroll to Collsoft if you want that service
What can delay us is getting the information from the previous accountant. Holidays and busy periods for us and clients can impact too but things will get done once we have what we need.
It’s a time of change. But don’t forget you are investing your hard-earned cash to improve your finance function.
What improvements will I see?
The improvements you will see will depend on the type of service you hire us to do. It can be a basic service like payroll and Vat. In that case, you will have
- Vat returns are prepared and filed every 3 months on time
- Annual Vat return of trading details
- Payslips issued to all employees every week/month to include holidays, public holidays, etc
- Payroll returns to Revenue and employees’ taxes based on the most up to do information
- Payments made on time, every time
- Knowing what payments are coming up and permitting us to process the payments
- Tax clearance to ensure no issue with refunds from Revenue, lower RCT rates, and more
As your business grows you may want more services to include
- Management Accounts to analyse the numbers
- Issuing quotes, invoices, statements, and chasing debtors
- Paying creditors after approving the payments with you
With management accounts, we can get stuck into the business and the numbers. Certain numbers will be very important to different businesses. Like wage percentages and sales margins. Keeping a close eye on those numbers can have a very positive impact on the bottom line.
Often business owners are happy. The business is going well and there’s money in the bank account. But they don’t focus on their personal finances.
An example of this was a meeting I had recently on a tax planning issue. The company owner had an average salary of €40,000. But his spouse was working in the company and didn’t take a salary. He thought the most they could earn at the lower tax rate was that amount. He wasn’t aware they could earn up to €80,000 at the lower rate.
For me, it’s a mistake not to focus on your finances when your business is doing well. In a company situation, there can be options around
- Increased salary and bonus
- Company Pension
- Benefit in kind – company car and medical insurance
- Company investments in property and buying other businesses
- Cash extraction on exit
Who wouldn’t like to be mortgage free? You can use company money to pay this off over a shorter timeframe. Like Hannibal in the A-Team, you’ll love it when a plan comes together.
Why Conor & Amy chose us?
Conor & Amy chose us, in their own words, because
- Your personalities, you were young and approachable, and we got on well.
- You appeared to embrace technology, like Xero, which many other firms didn’t do at the time.
- You had an in-house tax person, which normally only larger firms have
- We didn’t want to go with a larger firm, as we didn’t think we’d get the personal service we get from Comerford Foley.
Young? That must be present company excluded. We do get on well. The lads, like Morgan Freeman, love the GAA. Conor is a proud Wexford man and is suffering for this and Amy is a staunch Kilkenny supporter. A big battle awaits on Sunday. We have our own GAA diehards here too with Deise and Cats fans. There’s even a lad in the office who admits to being a Spurs fan. A lifetime burden!
Do you need help with your bookkeeping? If so, Start here