Most business owners dread that day every year when the phone rings. Oh no, it’s the accountants looking for the books. A lot of running about searching for the paperwork only to find, as always, you’re missing some. The hassle of ringing the bank to get replacements and paying through the nose for them. Or searching for that final receipt you knew you saw somewhere at some stage some time ago.
So, we at CF want to take the hassle out of that job for you. And help your business with information to grow and develop during the year and not at tax deadline time.
We have listed the Top 5 benefits of outsourcing your bookkeeping:
Accurate and up-to-date Information
Our service offers our clients the option to upload their paperwork on a regular basis. This can be daily, weekly, or monthly We use cloud-based systems like DEXT and XERO. They are user friendly and time efficient tools that enable an easy flow for both us and the client. One client, Jane, who we complete monthly reconciliations for, rang me two weeks ago. She was in a huge panic; a supplier had contacted her to say she owed over €10,000. Jane was certain she had paid this supplier up to date. I know Jane. She is always on time paying her creditors, but the supplier was having none of it. All her supplier invoices and bank statements were on our Xero system. I could see that Jane was right, every invoice had a corresponding payment. I sent the report over to her and this resolved the situation within minutes. I know Jane could sort this by going through the bank and matching the payments. The fact was we resolved the issue in less than the time to make a coffee and it was a stress-free way of doing it.
Easier year-end process
If you’re uploading your documents regularly the dreaded phone call is no longer an issue. CF has the information. The client knows their tax liability earlier. The client can plan for payment of taxes earlier. The accounts are ready for banks if the client needs credit during the year. We have one client, Brian Ltd, that hated the large Corporation tax payment in September. He used to leave everything to the last minute to face the inevitable. So, we at CF came up with a plan. If Brian was willing to complete monthly accounts, we would know the taxes owing for that month. Brian would transfer the liability for that month to a separate “tax” account. Brian had saved his tax liability every month, so it was only a matter of processing the payment. This gave so much peace of mind to Brian and meant us not having to chase him every year for the books.
Knowing your margins
Margins are excellent tools to see how a business is doing. You can compare them against expected margins in their industry. If you are looking at your margins after the year end that is only historic information. While they might be good to know they are not relevant to last year as that has passed. To know your margins and compare them month on month is worth so much to a developing business. We have a food production business as a client. When we looked at the wage cost as a percentage of sales it was quite high compared to the norm in the industry. We called a meeting with the client to review this. The reasons for this were,
- it’s quite a labour-intensive production line and
- they use specialised ingredients, so they need specialised staff.
So how to solve it – they increased the unit price of the labour-intensive products. Labour and ingredient costs form the basis for your unit price, and you must track them regularly. If the business continued at the lower price, it would have had a serious impact on their cash flow.
Making informed decisions
We have several businesses that wish to expand. This is always exciting for CF as we love a business owner that is enthusiastic and always looking forward. But how do they go about it? Whatever the reason for the expansion, you must examine the numbers as they are an integral part of the business. We at CF help our clients to determine
- How much will the expansion cost?
- If you need funding where is the best interest rate?
- What are the best conditions for you?
- When will I start to make a profit on the new expansion?
- Are there any extra costs that I will have to incur?
The best way we find to do this is to sit down with our clients. Find out what they want to achieve and then work out how CF can help them achieve it. We have had one client who made a major expansion. Joan, saw her brand and sales increase rapidly during the pandemic. She decided she wanted to own the building she worked in, so she set about putting a plan together with CF to buy it. We sourced a very agreeable interest rate and terms with a local bank. We built a budget around the repayments so the lender could see the business plan for the next few years. Joan exceeded the sales and profit in her business plan. She has now sourced another building for expansion in 2022 with the help of CF.
Managing Debtors and Creditors
Every business has the same, who do you owe money to, and who owes money to you? Charlie, a client of ours, has a very successful business with increasing sales year on year. Despite his sales increasing his bank balance wasn’t increasing at the same speed. He came to us, and we could see where his money was – all tied up in debtors. After having a chat, we recommended a few changes. These included monthly reports on aged debtors and requesting payment upfront on some jobs. Through their hard work and our reporting, the debtors are now at the lowest they have been. And the bank balance is at its highest.
If you think Comerford Foley could help you with your bookkeeping, please Start here