All your questions answered...
Everything you need to know about daily bookkeeping, improving your cash flow, which apps work best for you firm and what it’s like working with Fresh Financials.
First off, before you start downloading, you’ll need up to date numbers of your finances. Apps can be so useful, but they’ll only track what they know. Imagine trying to use a fitness tracker without any knowledge of your personal information, weight, height, activity level. The app will work, but it won’t be of any value and it won’t track your trajectory. It’s exactly the same for finance apps.
After you’ve got your numbers, you’ll discover there’s a bunch of apps in the app store created to help businesses manage their finances. The first rule: don’t get software drunk. It can be quite tempting to download a lot of different apps. You might need a few different ones (this is called app stacking) but first off, decide what you need. At FreshFinancials we use Xero as our main hub for bookkeeping and reports, ReceiptBank for data capture, Chaser for credit control and Float for cash flow forecasting.
We recommend checking out the explorer tab in Xero HQ because it shows what apps are being used and will recommend apps based on your industry.
Cashflow is the movement of money in and out of a business and is considered the number one problem for business owners. There are two proactive things you can implement fairly quickly so you have a handle on your cash flow. Firstly, get paid faster by using automated tech to send out payment reminders and overdue notices. Given the current trend is a customer typically waits 40 days before paying or asking for a change in payment terms, most businesses will be stunted by late payments. We use Chaser for credit control, but there are plenty of systems out there. Secondly, in order for better cash flow, it’s important to use good financial technology. If you use a top-notch online accounting system, you have real-time data at your fingertips to help you navigate demanding months (and that’s the crux of a cash flow crisis).
Here’s a list of things you can do now to map out a positive cash flow in the future.
Have separate accounts for tax. All of our clients have a tax corporation savings account and a VAT savings account. We don’t show these in the cashflow so they aren’t taken into account for the daily calculations.
Check out the Xero Cashflow App Playbook. This is a really great cheat sheet to the apps that will help you with cash flow. These are the apps that will help you get paid faster, forecast your cash flow, manage your debts and access capital.
Have the courage to reduce payment terms. If late payments are crippling your business, being lenient and giving customers longer to pay is going to be even more damaging. Be bold, reduce your payment terms and adopt Chaser to be proactive in reminding customers when payment is due.
Be transparent with your accountant about your finances. They’ll do their very best to help you, with the most accurate data they have. We’ve seen everything, so there’s no judgement. You’ll get the best service if you’re totally upfront with where you’re at.
See where HMRC can help. You can ring HMRC and ask for longer payment terms for VAT. You can ask to pay your VAT return over 4 weeks instead of taking one initial hit to your cash flow. If you can see you’re going to have trouble paying, HMRC are more likely to help if you call them in advance, not on payment day.
The best way to answer this is to ask you to imagine you’re logging into your personal online bank account. You’ve got some big expenses coming up and you want to see how things will balance out this month but unfortunately your available balance hasn’t been updated for 30 days. You know you’ve made quite a few transactions recently, although you can’t remember what exactly, and you need to make some more payments. Nightmare.
It’s become the norm to see our money in real-time. We want to see what we’ve earned, what we’ve spent and what we can spend. We want to know where we stand. The same goes for your business. You don’t run a business once a month, you run it daily, so it makes sense to track your business finances everyday too.
Fresh Financials is about breaking free of misconceptions about bookkeepers; we’re fun, positive and modern. We’re the type of bookkeepers you’d share your crisps with and who prefer jumpers over suits. Combined with our high quality services and ace skills, Fresh Financials is where excellent bookkeeping comes as a standard. We don’t do Excel, we despise ugly reports and we hate seeing our clients feeling out of control. We won’t wait till the end of the year to see how you’re getting on because when you work with Fresh Financials, you’re entering into a partnership because we’re motivated by your success all year round.
This won’t be your average accounting relationship. Our main goal is for you to be able to focus your business and we do that by making sure there’s an awesome financial backbone keeping everything secure. You started your business with passion and we plan on making sure the flame never goes out.
I feel like I’m always a step behind with my finances. How do I become proactive instead of reactive?
This is a great question and a common issue for business owners. The good news is as soon as you’ve decided to be proactively involved with your accounts, you’ll benefit from that change. You might be feeling worried and a little nervous of judgement; if you’re constantly playing catch up with your finances, your books are probably a little messy. That’s fine. Like a family doctor, we’ve seen everything and together we can get your finances back on track and fighting fit. To do that, we do an initial in-depth health check on your business finances.
We want to catch any issues before they cause any damage, so we get the lay of the land first by taking a note of your current VAT return figure and deep diving into Xero. If you’re not affiliated with Xero, don’t worry, we’re happy to discuss software and explain to you why we think it’s so dreamy. Our in depth health check looks like this. We:
- Check in on your bank accounts Look out for any unreconciled transactions
- Do a full check of your profit and loss Does anything look out of place?
- Do a full check of your balance sheet Look for any discrepancies in your assets and liabilities
- Note your aged receivables How long it takes for customers to pay you
- Note aged payables How long it takes you to pay suppliers
- Check in on payroll Look for any cross system issues since moving to Xero
After that, it’s just a quarterly check-up (which is less detailed than the initial intake) and you’ll never need to play catch up again. It’s transformative. From hereon in, you’re proactively engaged in your business accounts! Congratulations - it’s an awesome feeling.
The short answer? Yes. Here’s three reasons why daily bookkeeping will transform your business.
You can seize the day (not the quarter)! If your books are updated every quarter, you’re unable to make the most of opportunities as they arise. You have true power when you have a real-time update of where your business is at because you can capitalise on an opportunity as it shows itself. Having the tools to be proactive rather than reactive means you can make smart business decisions quickly. You can increase stock that’s selling well, adjust your prices to improve profit margins or hire someone to bring new skills to the business.
Your bank balance isn’t accurate. Your bookkeeping will be. So often we speak with business owners who admit they habitually check their bank balance to know if they have enough cash for the next project. The thing is, looking at a bank statement is like reading a cash history book. It gives you no indication of payments creeping up around the corner. When we automate bookkeeping in Xero, and use the processes and procedures to make sure your numbers are up to date, you’re blessed with the ability to forecast. Daily bookkeeping means you can project how much cash you’re going to have, so you can make changes to affect cash flow now, and avoid any pitfalls.
You can stop worrying about tax. Your tax obligations shouldn’t be controlling the way you run your business. When you do daily bookkeeping, being compliant with HMRC is a standard. You’re able to log in at any time and see how your VAT liability is increasing. You’re not going to lose track of what you owe HMRC, which means you’re not going to be stung by the bill. You’ll have time to prepare if you need extra funds to cover yourself. Worrying about tax can be a thing of the past, whilst you prepare for a profitable future. Fear of your tax bill might be holding you back from even thinking about growth and we want you to thrive.
If any of the above sound familiar, you need a fresh approach to your bookkeeping.
We took the best apps for a spin, whittled down our shortlist, and assembled them into a smart and streamlined internal workflow. The Fresh Approach is a slick combination of the four finest cloud accounting and finance platforms, expertly implemented through your finances. Designed to enhance efficiency and improve decision making, the Fresh Approach is a simple 8 step process.
- We set you up with ReceiptBank, Xero, Chaser and Float (and show you how it all works)
- We tailor the set-up for your business requirements
- You’ll start using ReceiptBank to capture receipts
- Xero will start providing you with up-to-date financials with direct access to your bank feeds
- Your business will use Chaser to automate the process of chasing overdue sales invoices
- Your business will use Float to keep an eye on your current and future bank balance
- You’ll choose how you would like to work with us after implementation:
- we manage all your bookkeeping requirements
- we tailor our partnership and you decide how much you would like us to be involved
- or, you manage your own bookkeeping, and we offer you unlimited* telephone and email support
- We have regular check ins and will send you timely reports
*Fair usage applies.
It’s our tried and tested “we got you” approach and once we get going, you’ll never look back.
Bookkeeping is one of those jobs that most people attempt themselves when their business is in the start-up phase. This generally makes sense as a few transactions plus an excel spreadsheet can make it both an achievable and an affordable task. But as your business grows, when do you know when to quit? If you want to avoid having to pay to have your bookkeeping cleaned up, here are three signs that you may be reaching the point where you should consider outsourcing.
You begin to find the software confusing Often the first step business owners take when they want to streamline their bookkeeping process is to make the leap from Excel to accounting software. If you’re sitting at your computer, getting increasingly frustrated and wishing you’d stuck with Excel, it’s probably because you don’t understand the software. Excel is great for small, simple start-ups but once your business is up and running, accounting software is a sound investment. It might just be you’re not the person who should be using it.
The numbers don’t make sense A good sign you should start outsourcing your bookkeeping is when the numbers don’t make sense anymore. That can happen in more ways than one. Maybe you have completed your bookkeeping for the year but the numbers your accountant returns bear no similarity to your own records. Or, perhaps your accountant is regularly asking questions you don’t know how to answer and pointing out adjustments you need to make. Finally, a good indicator your books need work is your accountant has increased their fees because they’re spending more time rectifying mistakes.
Your records show you’re making a profit, when in reality you’re making a loss You know something has gone wrong but you’re not sure what. Cash flow is the life line of your business, so inaccurate monitoring of incomings and outgoings of your business will open the door to a mountain of stress later on.
It feels like a chore You can use the software and the figures you’re producing are accurate but you simply do not want to do it. Perhaps bookkeeping is forever on your to do list but you continually leap frog it for more interesting or important tasks. As your business grows, it becomes increasingly important to spend your time wisely. You can still do the finances but maybe it’s time to shift what “doing the finances” means.
Investing in bookkeeping you trust is a massive asset to your business. We’ve worked with so many businesses that have grown in size and confidence once they have their books in order.
The reason the bank connection needs to be renewed every 90 days is due to the new EU standards that were enforced on the 14th March 2020. This new banking practice is referred to in the UK as ‘Open Banking’ and changes the way third parties access bank data. Xero uses a platform called ‘OpenWrks’ to connect your bank account to Xero on a live feed. This feed enables us to see your bank activity and keep on top of your accounts with our daily bookkeeping tasks.
You, as the bank account holder, have to renew the bank connection every 90 days, not us. This is a requirement of the new open banking standards and we’re unable to login to your online banking account on your behalf because you need to enter sensitive information (which we’re not privy to)
To renew your bank connection you need the following information to hand:
- The account name, number and sort code
- The account balance
- Your card number
- Details of your transactions
Once you have the above, login to Xero and go to the accounting tab along the top bar. Click the bank accounts tab and then the ‘renew bank feed’ button. Select the account that needs to be renewed and put in your details.
If you need to renew more than one account you will need to repeat this process for each account.
With remote working, genuine connection and regular face time with your team is so important. Here are a few things that we do at Fresh Financials that keep the team connected, positive and productive.
- A weekly group huddle at the start of the week. We discuss personal development, business ideas and our weekends
- A mentor or supervisor checks in daily with their team
- We have a morning coffee every morning with the whole team
Most importantly, flexibility is key and it’s rooted in trust. Trust your team to do a good job and show them that trust is there. They may have children, take their lunch at a different time to you or miss a phone call - but they work for you for a reason. Make them feel invaluable by showing them that trust is there and make a lot of time for connection.
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