Keep Your Bookkeeping in Check: Outsource Your Bank Reconciliation

Staying on top of your business's financial health is crucial, and one key aspect is regular bank reconciliation. Many business owners struggle to find the time or expertise to manage this effectively. That's where outsourcing your bookkeeping comes in.

Get into the habit of doing your bank reconciliation

When it comes to bank reconciliation, it’s important to get into the habit of doing it often. Putting it off can mean bad things for your business records! 

What is Bank Reconciliation?

Bank reconciliation keeps your bookkeeping accurate and can help lower your tax, alert you to fraud, and allow you to track costs. It involves a comparison of your sales and expense records against the record your bank has.

Saving time

It can take a lot of time to do it manually, so you may want to consider using software. Most banks can send transaction data directly to accounting software like Xero through a secure online connection. However if you do bank reconciliation, do it often.

The longer you go without doing it, the longer it will take to catch up. It won’t just be that you have more transactions to do, it will take longer per transaction, because you’ll have a harder time recalling the details.

Why Outsource Your Bookkeeping?

Outsourcing your bookkeeping, especially tasks like bank reconciliation, can save you time and ensure accuracy. Here's why outsourcing might be the right choice for your business. 

Expertise and Accuracy

As professional bookkeepers, we have extensive training and experience in managing financial records. We understand the nuances of bank reconciliation and can catch errors or discrepancies that might be missed by someone less experienced. This expertise ensures that your books are accurate, which is crucial for making informed business decisions.

Time Savings

Outsourcing frees up your time to focus on other important aspects of your business. Instead of spending hours each week reconciling your bank statements, you can concentrate on growth, customer service, and other core activities. This can lead to increased productivity and potentially higher revenue.

Consistency and Timeliness

A professional bookkeeping service, like First Class Accounts Ovens & Murray, will ensure that your bank reconciliations are done consistently and on time. We can set up automated systems to streamline the process, making it easier to keep everything up-to-date. Regular reconciliation helps in identifying any issues early, preventing potential financial problems down the line.

Scalability

As your business grows, so does the complexity of your financial transactions. Outsourcing your bookkeeping allows you to scale your financial management processes without the need to hire and train additional in-house staff. This flexibility is particularly beneficial for businesses looking to expand.

Cost-Effectiveness

While there is a cost associated with outsourcing, it can be more cost-effective in the long run. The time you save and the potential for avoiding costly errors or penalties can outweigh the fees for professional bookkeeping services.

Don't let bank reconciliation become a daunting task

Contact First Class Accounts Ovens & Murray and Busy01 Consulting today to see how we can help you streamline your bookkeeping and keep your business on track. Let's take the hassle out of bank reconciliation so you can concentrate on what you do best—running your business.

Talk to us, we can help.

Keeping your receipts

Source document management

When it comes to small business compliance, source documents – bills, receipts, checks, or anything substantiating a transaction – are critical.

Collecting and managing source documents can mean a lot of administrative effort and time. Plus you have to store all the documents too. Historically, source documents have been paper based, so that means a lot of office space just dedicated to paper document storage!

The good news is that bookkeepers, like First Class Accounts Ovens & Murray, can help small businesses to better manage source documents.

Here are a few frequently asked questions to better understand why and how bookkeepers can help. 

Who should manage source documents: the business, or the bookkeeper?

Allocating source document management to your bookkeeper means you can better manage your source documents for compliance-related reasons. This is because your bookkeeper is able to provide more accurate reconciliation. The added bonus is that this can lead to meaningful business insights.

Why are source documents important for bookkeeping?

Source documents are vital for business compliance and audit preparation. Bookkeepers keep up to date with compliance requirements and understand the types of documentation that small businesses are required to keep compliant.

Source documents are also important for improving bookkeeping quality. Having source documents readily available will not only make the reconciliation process faster, easier, and more accurate, it will also help to gather clean data. Again, that data can then be translated into business insights.

What’s the best way to collect and manage source documents?

One of the best ways to collect and manage source documents is to do so digitally. This means implementing a process and using technology to automate and digitise document management.

Using a single system and process for collecting source documents gives you a centralised document storage solution, and all your documents are readily available when you need them.

There are a number of apps and tools, such as Dext, that can make it easy for both bookkeepers and business owners to collect and digitise documents. Most of these will integrates with cloud storage platforms and integrate with cloud accounting packages.

Are digital documents acceptable in the event of an audit?

Yes! Many governments accept digital files as source documents in the event of an audit, including the Australia.

In the event of an audit, having all documents readily available in one place will help to make sure the audit process goes smoothly.

Talk to us about improving your source document management

If you are interested in digitising your source document management, contact us today to discuss the apps and tools available, and how we can help, 

Collect your debtors faster

Managing cash flow effectively is crucial for the sustainability of any business. A significant component of this involves managing debtors efficiently to ensure that cash inflows occur on time. However, it's important to remember that even uncollected sales impact your financial obligations.

Did you know that you still have to pay tax on your debtors, even if you haven’t collected them yet? This happens because your tax obligations are calculated based on your sales figures, not just the cash you have received.

Why It's Critical to Collect Debtors Promptly

When your cash is tied up in uncollected invoices, it restricts your ability to reinvest in your business, pay your bills on time, or even meet your payroll obligations. This can hamper your business's growth and potentially lead to financial difficulties.

Therefore, collecting debtors promptly should be a top priority.

How to collect your debtors faster

Agree on Payment Terms at the Time of Sale

Clear communication about payment terms sets the stage for all future interactions with your customers regarding payments.

Ensure Your Customer Signs Your Terms of Trade Before You Start the Job

This formal agreement protects you legally and ensures that both parties understand the financial obligations involved.

Include a Guarantee in Your Payment Terms

This adds an extra layer of assurance that you will be paid, encouraging prompt payment.

Invoice as Quickly as You Can

The sooner you send out an invoice, the sooner you can expect to be paid.

Ask for a Deposit Prior to Starting the Job

This not only secures a portion of your payment upfront but also commits the customer financially to the project.

Change Your Payment Terms to Within 7 Days of Invoice or On Delivery

Shortening the payment period accelerates your cash inflows.

Send Statements Religiously at the Start of the Month

Regular updates remind your customers of their dues and prevent overdue payments from being overlooked. Implementing automated reminders through your cloud accounting system, such as Xero, can encourage late payers to pay on time. 

Have Someone Other Than the Owner Be Responsible for Collection of Debtors

This can often lead to more systematic follow-up and less personal conflict.

Document Any Changes to Your Standard Payment Terms in Writing

Keeping a written record of all terms and agreements avoids misunderstandings and provides legal backing.

Use an Integrated Payment Gateway App

This technology simplifies the payment process for your customers, making it easier and faster for you to collect your money.

Don’t Provide Credit to Customers Who’ve Been Late Payers in the Past, and Don’t Offer More Credit to Customers with Outstanding Payments

This policy helps mitigate risk and improve your cash flow.

Proactive management is key

Don’t procrastinate on your debtors. Establishing clear, firm payment terms and ensuring you stick to them is vital. Remember, it’s often the proactive, attentive businesses that manage their cash flow most effectively.

"It’s the squeaky wheel that gets the oil." – Anon

Don’t let your business be slowed down by late payments. Be the squeaky wheel, take action today. We can help.

Keeping debt low through proactive credit control. 

Having a large amount of debt in your business is bad for cashflow, weakens your overall financial health and brings down your credit score as a business.

So when customers don’t pay on time, that ‘aged debt’ is bad news for your finances. Aged debt can begin to stack up, adding to your liabilities and reducing the health of your overall balance sheet.

The good news is that there are ways to tackle late payment head-on.

Get effective with your credit control

Being proactive with your credit control procedures and debt management helps you speed up payment, reduce your debtor days and rein in your overall debt as a business

To improve the efficiency of your credit control, these strategies help speed up payment processes, reduce debtor days, and maintain a healthier financial status for your business.

Make your payment terms clear

The foundation of effective credit control is clear communication about payment terms. Ensure that your payment conditions are explicitly stated on all invoices. Additionally, incorporate a detailed credit control policy into the terms and conditions your customers agree to. This clarity helps prevent misunderstandings and sets clear expectations from the start.

Run regular debtor reports

Regular reviews of your debtor situation are vital. Run frequent reports to identify which invoices are overdue and which customers are consistently late in payments. Understanding the pattern of late payments allows you to prioritise debt collection efforts effectively.

Be proactive in chasing late payment

Being passive about debt collection is a common pitfall, however it's important to not be shy about asking a customer to pay their bill. Adopt a proactive approach by regularly contacting customers with overdue payments. Set up reminders for yourself to chase late payments, ensuring you are persistent but respectful in your communication.

Automate your credit control tasks 

Technology can significantly streamline your credit control processes. Many cloud accounting platforms offer built-in tools or integrations specifically designed for automated credit control. These systems can automatically send reminders to customers as soon as an invoice becomes overdue, reducing the manual effort required and ensuring timely follow-ups.

Leveraging technology for better credit control

The use of technology in managing credit control cannot be overstated. Automated systems not only save time but also reduce the chance of errors and omissions that can occur with manual processes. These tools ensure that all customers receive consistent communication and that no overdue invoice slips through the cracks.

If late payment and aged debt is weighing heavily on your balance sheet, we’ll help you implement the appropriate apps that support the automated systems, debtor reports and credit control processes needed to reduce debt.

Get in touch to improve your credit control.

Make your business more profitable

Is making your business more profitable at the top of your business goals this year?

Achieving significant profit is not an overnight feat. It requires a steadfast commitment, a clear focus, and a meticulously crafted strategy aimed at enhancing profitability.

This entails a comprehensive review of your business model and an examination of every operational area to identify opportunities to reduce costs, increase margins, and ultimately maximise revenue.

Understanding Profitability

Profitability is the ability of a business to earn a profit.

A profit results when the total income generated by the business exceeds the total expenses incurred. However, simply generating revenue is not enough; effective management of costs and strategic pricing are crucial to realising a substantial profit.

Strategic Review of Your Business Model

The first step in boosting your profitability is to conduct a thorough review of your existing business model.

This analysis should cover all aspects of the business, from supply chain management to customer relationship handling.

By understanding the nuances of each component, you can pinpoint inefficiencies and areas for cost savings that directly contribute to the bottom line.

Focus on your key drivers

Having surplus cash at the end of the year allows you to invest back into the business, fund your growth plans and increase the size of your own dividends and drawings as the owner.

To achieve these profits, it’s important to focus on the key financial drivers in your business.

To drive profits:

Boost Sales

Enhancing sales volume is a direct path to increasing net revenue. This can be achieved by investing in marketing, amplifying sales activities, and expanding business development efforts. Each of these initiatives should be tailored to meet the unique needs and preferences of your target market.

Increase Prices

Setting a higher price point can significantly enhance your profit margins, especially if you manage to keep the cost of goods sold low. This strategy needs to be balanced with market demand and customer value perception to avoid any negative impacts on sales volume.

Cut Costs

Operational costs and overhead expenses can diminish your profit potential. Implementing effective spend management and cost reduction strategies are crucial for maintaining a lean operational model. Regularly reviewing supplier contracts, reducing waste, and optimizing workflows are practical steps towards cost efficiency.

Reduce Taxes

Tax liabilities often represent a significant expense for businesses. Engaging in sensible tax planning and taking advantage of available tax reliefs can substantially lower your tax burden and increase your profitability. Consulting with tax professionals can provide insights into new tax saving opportunities and compliance strategies.

Talk to us about boosting your profits

At First Class Accounts Ovens & Murray and Busy01 Consulting, we help businesses like yours optimise their profit margins.

If you'd like to make your business more profitable, we're here to help:

• review your business model
• identify your key financial drivers
• proactively drive your profit performance.

Get in touch and let’s start boosting your profits.

7 ways to save time and money in your business

We all know that time is money. And the quest to find balance between quality and speed can often feel like a never-ending battle.

With this in mind, the emphasis on strategies to save time and money has never been more critical. The good news is, technology offers a variety of solutions designed to streamline operations, reduce costs, and boost productivity.

Below, are 7 ways to help your business save time and money. These insights are not just theoretical; they're actionable strategies that have proven effective across various sectors.

How can technology help?

Here are 7 ways to save time (and money) in your business.

1. Automate your invoicing

While invoicing is a vital part of running your business, it can take up a significant amount of your time. Using a digital/cloud accounting system to extract data from supplier emails and auto-populate your invoices can save hours each week. You can also use cloud accounting systems to set up recurring invoices and timely payment reminders, saving your more time.

2. Simplify your expense claims

If you have a manual expense claims process, implementing a digital automated process means your team will save time submitting receipts, approving expenses and dealing with any mistakes.

3. Reduce human error

It’s well known that manual data entry brings a high risk of error. You can eliminate this risk by automating key manual data entry tasks. And that allows you to spend more time on data analysis so you can make better decisions.

4. Automate approvals

Streamlining your bank reconciliation with an automated platform means you don’t waste time manually approving individual transactions.

5. Up to date payroll

Keep staff details up to date and calculate tax contributions within your accounting software. You’ll save significant chunks of time and you’ll avoid mistakes.

6. Accurate information for tax

Instead of Excel spreadsheets, receipts and physical documents, by using cloud accounting software. the information needed for your accountant to complete your tax is accessible through your software.

7. Better access to business data

With smart software and cloud based apps and add-ons, you get accurate business data wherever and whenever you need it. No more going back to the office to check a number, getting back to clients with final details, or reworking quotes because the numbers were wrong.

Harness the power of technology

At First Class Accounts Ovens & Murray and Busy01 Consulting, we specialise in implementing smart, effective apps and solutions that save time and money. Whether you're looking to automate your invoicing, streamline your expense claims, or gain better access to business data, our team is here to guide you through the process. 

So, if you want to save time(and money) in your business talk to us about setting you up with the right systems.

Why Bookkeeping is Essential for Your Business

As a small business owner, navigating the financial aspects of your operation can often seem like a daunting task. 

You may find yourself asking whether you need a bookkeeper, an accountant, or both. It's a common query that many entrepreneurs face as they look to streamline their financial processes and ensure the financial health of their business.

At its core, bookkeeping involves the organisation, recording, and reporting of financial transactions of a small business. 

This might seem straightforward, yet the role of a bookkeeper extends far beyond mere number crunching. They are the custodians of your financial accuracy, ensuring that every cent in and out of your business is accounted for.

The Role of a Bookkeeper

Bookkeepers clear the way for accountants to work with your business strategically. Their day-to-day responsibilities include keeping track of daily transactions, sending and managing invoices, handling the accounts payable ledger, keeping an eye on cash flow, and preparing the books for the accountant. 

These tasks, while seemingly operational, are critical for the strategic financial planning and decision-making processes of any business.

Moreover, a good bookkeeper provides a level of financial insight that is invaluable for a small business. This insight allows for the early detection of any financial discrepancies that could potentially escalate into bigger issues. It also aids in maintaining a steady cash flow - a critical component for the survival and growth of any small business.

When hiring a bookkeeper, it’s essential to inquire about their area of specialisation. The financial needs of a business can vary greatly depending on the industry, size, and stage of growth. 

Some bookkeepers may offer additional value by being able to train staff in using online accounting or Point of Sale (POS) systems or providing advice on optimising business processes for financial efficiency.

Specialisation in Addon Apps

These days, there are numerous applications designed to streamline business operations, including financial management. 

One of our specialities at First Class Accounts Ovens & Murray, and Busy01 Consulting, is advising on Addon Apps. 

We pride ourselves on understanding the different options available for various industries and businesses. By providing insights and guidance on the most suitable apps for your business, we aim to improve efficiencies, save time, and reduce costs. 

Whether you need help streamlining your invoicing process, managing your inventory more effectively, or tracking your expenses, there's likely an app that can assist. We are here to help you navigate these options and implement the appropriate apps for your business.

The Difference Between Bookkeeping and Accounting

Understanding the distinction between bookkeeping and accounting is crucial for any business owner. 

While bookkeeping lays the groundwork for the financial management of your business by maintaining accurate records of all transactions, accounting builds on this foundation to provide strategic financial analysis, planning, and advice. 

Accountants use the data prepared by bookkeepers to generate financial reports, conduct audits, and prepare financial forecasting. These are essential for strategic decision-making, securing loans, attracting investors, and ensuring compliance with legal and tax obligations.

Why Bookkeeping Matters

Efficient bookkeeping is the cornerstone of a healthy business. 

It ensures accurate financial records are kept, which is not only a legal requirement but also critical for understanding your business’s financial health. 

Regular bookkeeping helps in budgeting by categorising revenues and expenses, providing a clear view of where the business stands financially. This clarity is essential for planning future growth or addressing potential shortfalls.

Moreover, bookkeeping plays a vital role in tax preparation. With accurate and up-to-date financial records, preparing for tax season becomes much more straightforward, ensuring that you can claim all your entitlements while also meeting your tax obligations.

Bookkeeping is more than keeping records

Bookkeeping is not just about keeping records; it's about setting the foundation for your business's financial health and strategic growth. 

A bookkeeper is a key player in your financial team, working alongside accountants to ensure that your business not only survives but thrives.

If you're looking to improve efficiencies in your business to save time and money, or if you need expert advice on managing your financial transactions and selecting the right Addon Apps for your business, do not hesitate to get in touch. 

Our team specialises in providing tailored bookkeeping solutions that meet the unique needs of your business. Let us look after your books, so you can focus on what you do best: growing your business.

Bringing your cashflow processes into the digital age

Keeping on top of your cashflow is even more important during tough economic times.

Over the last few years we've experienced the global pandemic, natural disasters and economic downturn. And businesses are seeing the impact of that now with cash flow becoming tighter and tighter.

Why is cashflow so important?

To keep your business operating, you need enough money coming into the business to cover your outgoings – with enough surplus cash to deliver a profit.

When economies downturn, this can have a significant impact on your income.

People will have less disposable income to spend on your products and services. Business customers will be looking to reign in their spending on suppliers. As a net result, your business is likely to make fewer sales and will bring in smaller revenues.

This means:

• Reduced income coming into the business
• Less cash in the business to cover your operational expenses
• Not enough money in the bank to pay suppliers, utility providers or payroll costs
• In the worst-case scenario, insufficient cashflow for you to continue trading.

So, what can be done to help improve cashflow?

What can you do to improve your cashflow situation?

For a start, cloud technology and fintech apps can give your business the best possible control over its cash.

Plus, the more informed you are about your cash position, the more you can do to prepare for any cashflow gaps. It’s this foresight that can make all the difference when you’re battling against tough external economic forces and a downturn in sales.

If you want to safeguard your cashflow, these are some sensible steps to take:

Switch to cloud accounting

Accounting and finance technology has moved on in leaps and bounds in the past decade. The latest crop of cloud accounting platforms all offer a detailed reporting of your cash position. These software tools will generally offer real-time data, giving you up to date cash numbers.

Integrate with cashflow forecasting apps

Cloud accounting platforms let you add third party apps to create a custom app stack of helpful business tools. There are plenty of cashflow forecasting apps to choose from, giving you the ability to predict your future cashflow position.

Plan ahead for the cashflow gaps

When your forecast shows a shortfall of cash coming up, that’s the time to take evasive action. If you can see that there’s a cash hole approaching next month, it’s time to look at ways of raising extra finance to fill that hole. That could mean extending your bank overdraft, taking out a small business loan or taking out an invoice finance facility with a lender.

Look for opportunities to cut your overheads

One way to even up your cashflow is to cut down on your expenditure. If you can cut back on overheads, expenses and unnecessary costs, this can help you re-balance your cash position, even when cashflow is getting tight. Look for cheaper suppliers, buy in smaller quantities and take every opportunity to cut costs and keep your spending more sensible.

Update your prices and your sales strategy

Raising your prices is one way to bring in more cash, with the same volume of sales. But it's a balancing act. Putting your prices up can alienate existing customers and could see you losing customers, but if you can find the sweet spot for your pricing AND also drum up more sales, you can quickly increase revenue and give your cash inflows a healthy boost.

Review your cashflow reports regularly

It’s important to look at your cashflow numbers and reporting regularly, not just at period-end. This is particularly important when economic times are tough. With the most current cash information to hand, you can make informed business decisions and aim to keep the business operational.

Talk to us about updating your cashflow processes

With your business in a healthy cashflow position, you give yourself some solid financial foundations for riding out the global recession. No business is invulnerable in these conditions, but with liquid cash in the business, you have more flexibility and more capital to play with.

Book a meeting and let’s see how we can improve your cashflow processes.

Review your expenses - and save yourself money

Running a business will always mean incurring certain expenses or 'spend'.

Whether you’re a large family business or a small fledgling startup, there will be costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.

So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?

Getting proactive with your spend management

Spend management is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.

Why does this matter? 

Well, excessive spending eats into your cash flow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business.

So if you can get proactive with your spend management, you can actually make your company a far more financially productive enterprise – and that’s great for your overall business health.

So, what can you do to reduce spend and slim down your company expenses?

Here are some key ways to reduce expenses:

Reduce your overheads

Your overheads are the unavoidable costs of running your business, producing your products or supplying your services.

If you have bricks and mortar premises, these overheads will include rental payments, utility bills and even the cost of paying your staff.

Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your workforce, to reduce payroll expenditure.

Put limits on staff expenses

If your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to put a spending limit in place, so each staff member can only spend up to an agreed amount.

Having a clear expenses policy helps, as will training up your staff in good spend management techniques. Expenses cards – such as Webexpenses, Soldo or Pleo – allow you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.

Look for cheaper suppliers

If you can reduce your supplier costs, this will go a long way to bringing down your overall spend.

If you’ve been with certain key suppliers for years, look around for new quotes, look at current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers who will be willing to meet you in the middle on price.

Make your operations leaner

The bigger your operational costs are, the less margin you’ll make on your end products and services.

One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum.

By making the business as lean as possible, whilst still delivering the same output, you keep your revenue stable, but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cash flow, more working capital and bigger profits.

Talk to us about improving your spend management

If you’d like to get in control of your expenses, we’d love to chat.

We’ll review your current costs, run forecasting, and help highlight the key areas where expenses can be cut. Then we’ll help you formulate a proactive spend management programme, to reduce your unnecessary spending.