follow us on twitter @EliteFranchise find us on facebook connect with us on linkedin google+ page

Making sure financial records are all present and accounted for

Written by Glen Murphy on Friday, 15 December 2017. Posted in Finance

Staying on top of your franchise’s accounting records can feel daunting. But ensuring your books are up to date is easier than ever thanks to technology

Making sure financial records are all present and accounted for

Paperwork is a necessary evil in business. Very few people in this world can honestly say that sorting out receipts, invoices and other paperwork is their idea of fun. But staying on top of your bookkeeping and compliance is vital, even for the smallest businesses. Being disorganised isn’t an option – unless you enjoy paying late penalties and fines.

It’s important to know exactly what’s going on with your business’s finances for a variety of reasons. Maintaining a healthy cashflow, spotting trends and problems and working within your budget is vital for the health of your business. If you, like the vast majority of companies, hope to one day grow or sell your business, being able to give a clear picture of where you are will make it far more attractive to potential investors or buyers.

And, in a franchise situation, where there are further recording necessities such as management service fees and cross-network performance to consider, keeping accurate records can be especially important.

Many people consider keeping accounting records a daunting task but it’s much easier to keep financial records than you might think, particularly in today’s digital age. For a very small number of businesses, it is technically still possible to satisfy HM Revenue & Customs manually by maintaining a cashbook or spreadsheet of your income and expenditure periodically. However, these are time-consuming and outdated processes that come with a high risk of error. There are far better options available. Save yourself time and effort: look for a solution for your business that allows you to record things quickly and easily whenever and wherever you are and also allows you to run reports so you can use your financial data to guide your business decisions.

For most businesses, there’s no question that cloud-accounting software is a far better option and this is what I highly recommend. Usually paid for through a monthly subscription of around £30, cloud-accounting software allows you to use your time far more effectively, as there’s no need to be chained to a single desk or device. You can access your financial information on any compatible device – such as a phone, tablet or laptop – anywhere in the world, not just one desktop computer. Market leaders in cloud accounting software such as Xero and Quickbooks offer secure, easy-to-use services that allow you to keep a full record of your banking activity, sales and purchases. They allow you to run useful, real-time reports such as actual performance vs budget, profit and loss accounts, balance sheets and detailed reports of creditors and debtors.

At this point, it’s important to remember that organisation and efficiency doesn’t just affect your business behind the scenes – it can improve things throughout the entire franchise, including customer service. You can use the software to raise invoices and track any stock that you hold, as well as use a ‘bank feed’, meaning that your banking transactions are automatically imported straight into the cloud accounting software, saving you the admin. They often integrate with other packages such as CRM systems too, so you can minimise your time spent bookkeeping. These functions are made super easy and can genuinely transform the way your business runs.

Desktop software packages, such as Sage, that you buy upfront and install on your computer are also still available. Some people use these very successfully and indeed they are powerful tools. However, if you’re making the switch to digital, I’d recommend cloud-accounting software as this is built to be user-friendly, not just accountant-friendly. Generally desktop software is a bit more complex to use, plus you run the risk of your computer breaking for some reason. Cloud accounting software is easy to use, comes with lots of support and completely avoids the risk of losing access, as the data is all stored securely in the cloud.

Another reason to keep your records online is that it will soon become essential. Within a few years, UK businesses will begin transitioning into a new online tax system. Under the government’s Making Tax Digital scheme, most businesses will be required to submit returns online and unlike previously, where tax returns were an annual requirement, they will instead need to be filed quarterly. The new system is designed to minimise tax inefficiencies and errors and will require businesses to use some form of software to keep digital records.

The current timeframe on these changes means that businesses with a turnover above the VAT threshold will be required to keep digital records for VAT purposes from April 2019 and onwards. Everyone else will need to follow suit from 2020. However, in this digital age, it’s important to future-proof your business’s finances and I recommend getting on top of online accounting now so that you are ready, familiar and prepared, rather than switching in a rush when it becomes compulsory to do so. 

It’s not just about being ready for the Making Tax Digital changes either. Compared to manual bookkeeping and accounting processes, cloud-accounting software will make life much easier for you and your staff and improve efficiency in your business. Regardless of the size of your business, speak to an accountant that specialises in cloud software and they can get you set up and running on a system that suits you in no time. It’s much easier than you think. 

About the Author

Glen Murphy

After honing his banking knowledge and client management skills at NatWest for over six years, Murphy joined accountancy firm Dennis & Turnbull in 2016. In his role as a client relationship manager, he advises businesses owners and franchises on their financial health.

Affiliate Partners

Strategic Media Partners