Bookkeeping

What we usually find when we take over the bookkeeping

Most of the bookkeeping we take on has been done by somebody, and often by the business owner. The problem is rarely effort. It is that accounting software is very good at accepting whatever you give it, and it will reconcile perfectly to the wrong answer without complaining once.

The faults we find are consistent enough that we look for them deliberately in the first fortnight. Bank accounts that have not been reconciled for several years. Income posted to expense codes, and expenses posted to income. VAT control accounts that have never been agreed to anything. Opening balances carried forward from one year to the next because they were carried forward the year before, with nobody ever checking what they were. None of these announce themselves. They surface at the year end, which is the most expensive moment to find them.

The bank feed fault we see most often

Here is the one we see most, and it is worth describing properly because it is invisible from the inside. A bank feed stops working, which they do. The owner goes into the software, follows the prompt to reconnect, and instead of reattaching the feed to the existing account they create a brand new bank account inside the software.

Everything after that looks fine. The new account reconciles beautifully, because it starts from nothing and every transaction in it is real. The old account also still reconciles, up to the day it stopped. The business now has two bank accounts in its books and one in real life, the balance sheet carries a figure that does not exist, and the profit and loss is missing whatever landed in the gap. We have found this running for over a year before anybody noticed, and by then the VAT returns filed in between were built on it.

This is the argument for having somebody look at the books regularly rather than annually. A duplicated account is a ten minute fix in the month it happens. It is a clean-up job by the time it has a year of history in it, and the clean-up is chargeable work the business need never have paid for.

How the bookkeeping actually runs, month to month

We agree a cadence at the start, monthly or quarterly, and we work to it. Monthly bookkeeping is what most owner-managed businesses end up on. It is often the point at which a problem can still be identified and corrected before it becomes costly. The part that matters more than the frequency is when we ask you things. We check the bookkeeping on the agreed schedule and query anything unclear straight away, while you can still remember what the payment was for.

That sounds small. It is the single biggest difference between bookkeeping that is accurate and bookkeeping that is merely complete. Asking a business owner in November what a card payment in June was for produces a guess, and a guess gets coded, and the coded guess is what the accounts are then built on. Asking in the first week of July produces an answer.

Emails are answered within one working day and calls are returned the same day or the next. That is a service standard rather than a marketing line: poor communication is a common reason clients tell us they left their last bookkeeper, ahead of price and ahead of anything technical.

What accurate bookkeeping makes possible

Bookkeeping is not the deliverable. It is the thing every other deliverable stands on, and its quality decides how much the rest of the year costs you.

Where the records are up to date and complete, a straightforward VAT return takes three to five working days from start to submission. The year-end accounts become an assembly job rather than an investigation. Management accounts mean something, because a profit figure is only as honest as the coding underneath it. Where the records are not in good order, every one of those jobs turns into forensic work first and the job itself second.

Xero, QuickBooks Online and FreeAgent

We work in all three. Xero is generally our preferred platform: we find its bank reconciliation, its reporting and its accountant collaboration tools the most effective of the three, and it integrates well with the other systems our clients tend to run.

We do not believe one package is right for every business, and we will not move you onto Xero because it suits us. QuickBooks Online and FreeAgent are better suited to some clients depending on the size of the business, the transaction volume and the functionality actually needed. If your software is set up badly rather than chosen badly, that is usually a setup and training job rather than a migration.

What we will not do with your bookkeeping

We will not code a transaction we do not understand simply to clear a queue. If we cannot tell what something is, we ask, and if we cannot get an answer it goes somewhere honest rather than somewhere convenient. A set of books with three unexplained items in a suspense account is more useful than a set with none, because the second one is telling you it is finished when it is not.

We also cannot take on a client moving from another accountant until the necessary handover from the outgoing firm has been completed. That is normal practice and it protects you as much as us, but it does mean the handover has a step in it that is not in our control.