Guest Post - Are you keeping good records?

Today's blog post is courtesy of Lee Murphy from The Accountancy Partnership

During our 8 years as online accountants, we have noticed that the quality of the records we have received from new clients has not generally been of a good standard. Because of this we decided to carry out some research into the amount of businesses in the UK that had inadequate records.

We sampled more than two thousand businesses that had joined with us as clients over a period of six years. The samples of businesses that we took were in a range of locations and were a range of different types including contractors, builders, transport et cetera. To find out whether the records were adequate or not we looked at a number of metrics including the completeness of the records, if a double entry bookkeeping system was used (if applicable) and if certain accounts has been reconciled or not. We did not consider things like bookkeeping mistakes as factors but more the methods of how the bookkeeping was completed.

Our findings showed that 78% of new clients that submitted their records to us for their first year of trading were sub-standard. What’s more, 52% of the clients that joined with us and submitted records to us for the second trading year were also below a decent standard.

We felt that these figures were high because new business owners did not have the necessary skills to use complex bookkeeping software packages and as the business was so young, did not have the funds available to employ a bookkeeper to outsource the work.

As this problem seemed to be so large we thought that it would be a good idea to think of ways that we could help improve the standard of the bookkeeping records that we were receiving from clients. The first thing that we did was to issue new clients with a starter guide that outlined what is expected of a business owner with regards to their bookkeeping, accounts and taxes. This basic guide also outlined the timescales involved and the potential penalties for missing those deadlines.

Thankfully this prompted clients to take much more of an interest in their bookkeeping and it meant that they were willing to put a good system in place early on. We recommended these clients to try an online accounting system such as AccountsPortal as it’s easy to use features and support is perfect for business owners who are new to bookkeeping. Getting a system such as this in place from the beginning also helps business owners to know their finances inside out which ultimately will help them to monitor costs more easily.

We explained to these clients that if a good system was not adopted early on then paperwork could mount up and they may find it difficult to remember what some transactions relate to. When the time came for us to request records from these clients the process was much smoother than usual, as we avoided having to ask for more and more details which is always time consuming and hassle for the clients as well as us.