In dealing with coronavirus and lockdown, many businesses have struggled and have had to rely on extra means of support; others are secure and want ways to maintain that; some are thriving and need to invest to realise these opportunities. Whatever position you’re in, the value to your business of bookkeeping – short-term and long-term – is worth exploring.
The role of business data
To start, here are some questions to ask yourself about your business:
- It has never been more important to give confidence to your stakeholders (like employees, investors, suppliers and shareholders). How do you satisfy third parties when looking for an investment, or a loan or simply a supplier credit facility?
- When you pitch for new jobs, how do you assure your potential clients that your business is stable enough to support them and their ambitions in the years ahead?
Your business data can be crucial to these aims – and bookkeeping can provide that data.
In taking steps to protect your business against the impact of COVID-19 – such as cutting some costs, furloughing employees under the Coronavirus Job Retention Scheme and deferring your VAT and PAYE payments – have you also regarded your bookkeeping as something you can defer? Have you maybe gone as far as furloughing bookkeeping staff?
If you are currently without the bookkeeping support required to get you the business data you need, the next area to explore is:
Where you get your data from
In our experience, here are the most common sources of data in the absence of bookkeeping – along with their pros and cons:
- Looking at your bank statements is a good first step but only tells you about money that you have spent or received, not what you are still due to pay or receive. It does not tell you anything about the future or the current value of assets you may have bought months ago.
- A report on sales is very useful to a business owner. After all, you probably know better than anyone else how the business is generally placed in the market and how it is specifically impacted by coronavirus. But it can’t tell you how a fluctuation in sales does or doesn’t impact your cost to provide the services or goods you sell. What are your costs of sales and what are your fixed operating costs?
- What about using an Excel report to combine the above? Excel reports are very flexible and have a place in the running of a business, but are usually not the type of information that investors or finance institutions are looking for.
How bookkeeping is better
Any analysis you need always starts with recording all of the relevant data in the first place and that’s one of the core functions of bookkeeping. And the closer to the event you record this, the more accurate the information.
Ensuring the information is up to date is important too. This makes it easier to see trends early, allowing you to react or to forecast what might happen next.
So how can BKL help?
As accountants we understand what third parties are looking for and how to follow the widely accepted general accounting practices for presenting the numbers third parties are interested in.
While this attention to detail and expertise is essential to good accounting, so is being more than just number crunchers. We are also mentors who care about our clients. After we have cleaned your business’ data and produced accurate management information, we help you to understand this well enough to make good business decisions and feel financially secure.
Accounting is not just about recording your business’ history. Together with you we will look forward, helping you to create budgets, prepare forecasts and monitor cashflows. We collaborate with our corporate finance team in providing this service: find out more here.
In building relationships with clients, our outsourcing team – like all our teams – take the same approach that we took earlier in this article: asking questions that are designed to help you clarify your vision or get to the root of problem areas.
So as you think about keeping your business in good health, remember how much there is to gain from good bookkeeping.
If you’d like to talk to us about helping you to get up to date, or to learn about how you can become more efficient using cloud accounting systems, please get in touch with your usual BKL contact or use our enquiry form.