Six accounting hacks for SMEs and start-ups

From simplifying credit control to managing expenses software and improving record-keeping, accounting professionals share their simple and ingenious tips on how to quickly master your financials.

According to Richard Williams, partner at accountancy Beever and Struthers, an HLB International member firm, leaving the annual accounts to the last minute can also be costly. “If you can get your information in order and to your accountant before the January rush, you’re likely to be able to get a better price for the work,” he says.

Make your commute more accountable

By submitting information close to the deadline, businesses are limiting the time that their accountants have to spot any potential issues, such as bad debt, says Keith Steele, partner at accounting firm PKF Littlejohn.

He suggests using time spent commuting or travelling to scan invoices or expense receipts via smartphones and software such as Receipt Bank and making use of online banking to check balances and decide which suppliers to pay to control your creditors.

“Rather than creating invoices in Word and then transferring into the accounting system,” he says, “why not put them straight into the accounting system and do the same with payments? This could save a lot of time and reduce the risk of duplicate payments being made on the same invoice.”

Why bank statements are not enough

Another common issue accountants face is businesses not providing supporting documentation for transactions because they think a bank statement is sufficient detail. Amanda Greppellini, manager of outsourcing and accounts at one of the UK’s first accounting practices Saffery Champness, member firm of Nexia International, says that this is often not the case since income may have costs deducted before payment of a net amount, which is only apparent with sight of the underlying documents.

Why not put invoices straight into the accounting system and do the same with payments? This could save a lot of time and reduce the risk of duplicate payments being made

Keith Steele, partner, PKF Littlejohn

“Businesses sometimes assume that accountants only require information regarding payments made and receipts received during the period in question, whereas in fact we need details of all income and expenses due, regardless of whether these were paid or unpaid at the year end,” she says.

Efficiency gains from digital accounting

Keeping manual records can lead to missing or duplicate transactions, says Darren Clarke, client service director at accountant and tax adviser Rickard Luckin, an MGI Worldwide member firm.

The automatic bank feeds available through online accounting software reduce the risk of duplicating transactions and speed up the process of recording and reconciling receipts and payments.

“If up-to-date information is used, online accounting software can produce useful reports on how the business is performing, including identifying the customers that owe money,” says Clarke.

The software can also be accessed by the firm’s accountant, enabling them to work more collaboratively throughout the year, rather than only in the immediate period before a return is due.

The importance of asset management

Many small businesses fail to maintain a fixed asset register, which can make it difficult to trace assets identified and acquired throughout the year, says Grant Anthony, partner at audit, tax, advisory and risk firm Crowe.

“This means that potential eligible capital-allowance claims could be missed, resulting in the business paying more tax than it needs to,” he says. “Failure to keep records of transactions (such as petty cash receipts) can also be costly since without records, input VAT that could have been claimed will be lost.”

Staying on top of financial information and processing it in a timely manner rather than delaying the processing of invoices is another step small businesses can take to make the accounting process run more smoothly. Regularly updating and reviewing financial information will prevent issues from arising further down the line as a result of accountants dealing with out of date and/or incorrect information.

The value of cloud-based accounting software

Williams also recommends establishing a system that works for both the business and your accountant. Ask your accountant how they would like to receive the information from you and when – many will provide spreadsheets, which just need to be populated by you throughout the year. This makes their job more efficient and therefore cheaper for you.

“Using cloud-based bookkeeping means information can be accessed any time from any web-enabled device,” he adds. “This approach ticks the box for the digitalisation requirements that were brought in by HMRC’s Making Tax Digital initiative on 1 April 2019.”

Cloud-accounting software systems allow businesses to raise sales invoices within the system and email them direct to customers, and then chase the debt by a simple click of a button. Some systems even allow payment methods such as PayPal to be added, so customers can pay via a link on the invoice itself.

Of course, businesses don’t want to chase debts if they’ve already been paid or pay supplier invoices twice. “To avoid this we recommend clients use a bank feed as part of the system, whereby the bank will transmit the banking transactions to the accounting software on a regular basis so that owners can allocate receipts and payments quickly,” says Greppellini.

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