In our previous accounting blog we touched on how to monitor your sales and costs accurately, understanding the different type of transaction and how these apply to different types of business. In continuation this week we’re sharing our insight on how these factors apply to management accounts, and how you can ensure your transactions are being accurately recorded.
As a business owner it’s natural that you want to monitor the performance of your business. Ensuring that you’re doing all the right things and not investing your time or resources unwisely. You’ll also want to keep track of the money you’re owed, and the money that you owe to suppliers.
Unfortunately it’s all too easy to view business accounts through rose tinted glasses, seeing a high bank balance and forgetting that the majority of what you see is owed to the VAT man or employees at the end of the month. Especially if you haven’t had the time to chase your customers to pay their bills.
Remember who owes what, and who you owe money too
Here at the Chichester Accountants we’ve seen a horror story or two of business owners who simply take their eye off the ball. The worst case we’ve ever seen is a businessman who was too busy working and managing is team that he simply forgot to invoice customers. His bank balance went from £60,000 when he inherited the business to £7,000 6 months later.
Record transactions accurately
We can not stress enough the importance of ensuring your transactions are being recorded accurately and in time. This will allow them to be used for management reports, aiding the monitoring of performance, decision making process and collection of money.
As a business owner you deserve to benefit from your hard work. Most owner-directors take dividends, however it’s essential that this is done through the correct process. HMRC are very clear that dividends must come from realised profits, and that the correct procedures and documentation must be observed.
If you are a director without the time or inclination to look after the paperwork and bookkeeping yourself it’s essential that you learn to delegate. Otherwise you may be keeping yourself in the dark and putting yourself at risk of falling foul of HMRC.
What are you waiting for?
The information contained in this blog is for general information purposes only. If you do need help with your bookkeeping, accounting or require financial guidance you can get in touch with the Chichester Accountants on 01243 532490 or email firstname.lastname@example.org.
This blog was written by Monica Jervis, small business owner, founder of the Chichester Accountants and qualified accountant. If you’ve got any questions don’t hesitate to get in contact on Twitter, Facebook or Google+.
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