Welcome to the 2015 Financial Year. Now is the perfect time to take a good hard look at how your numbers stack up, how you track them and setting up systems to make sure you hit all your financial goals this year.
I love that we have a New Year and a New Financial Year, it’s like 2 opportunities for fixing F ups and moving on.
In this post, I’m not going to be explaining the differences between accrual and cash accounting (you can learn all the accounting terms you need in The Academy , or making you set KPI’s for the year (I’ll do that another week).
What I am going to do is give you a few questions to answer:-
What financial reports are you going to look at?
Who is going to prepare these reports and do the data entry?
How often are you going to look at them?
What software will you use for your accounting?
How up to date will it be?
How are you going to communicate with your bookkeeper / accountant?
How much do you want to make this year?
How is that broken up with your products and services?
For the whole month of July, we’re going to be talking money. It’s so important, no matter how passionate you are about your business – the numbers matter more!!!!
I encourage you to download my 2015 Finance Part 1 doc and get cracking on what you want to be achieving this year.
REMEMBERRespect the numbers and they will respect you!!!!
Money Money MoneyWe all want it.We all need it.Some people have lots.Some people are broke.Some people manage it well……but most people don’t.
This is such a big hurdle for most entrepreneurs. Especially if they started as a one man / woman band. Even for me – who’s trained to manage business finances!!!! OK that was hard for me to admit.
The thing is, once you understand basic financials, and respect the numbers – you’ll start to see changes in your money. The biggest change however happens, once you delegate the bookkeeping.
The most common question I get asked from clients when we are talking about delegating the books – is ‘but how do I organise it all?’ So here are my Top 5 Tips for managing the organisational side of delegating your bookkeeping basics.
Keep and add a note to everything (the rule is, if in doubt – keep it)
Have an online filing system that works (Dropbox is a girls best friend)
Ask for and look at reports at least fortnightly
Keep your business and personal expenses separate
Use online accounting software that you can access anywhere (Xero, MYOB etc)
But Sam……I still don’t get it?
OK – let’s look at a few things.
PAYPAL – your general VA or bookkeeper should be logging in (unless it’s an auto feed to your Xero etc) and reconciling these payments and expenses at a minimum fortnightly.
BANK – your general VA or bookkeeper should be logging in (unless it’s an auto feed to your Xero etc) and reconciling these payments and expenses at a minimum fortnightly.
RECEIPTS – you should be scanning (or taking a pic on your phone) and uploading to your software or dropbox straight away. Your bookkeeper or general VA should again be processing these at a minimum fortnightly. Try to pay for as many things as possible on a card, so it can be auto fed (but you still need to keep receipts for taxation purposes (and the thermal ones fade).
CREDIT CARDS / DEBIT CARDS – well firstly I don’t believe you should ever have a debit card for your business bank account as it becomes too easy to blur the money being spent (been there stuffed that up). Your general VA or bookkeeper should be logging in (unless it’s an auto feed to your Xero etc) and reconciling these payments and expenses at a minimum fortnightly.
CREDITORS INVOICES – try and get as many as possible to be electronic, so you can just upload them for action. If they come via snail mail – then scan and upload. These should be processed on an as needed basis, but I would stick to the 2 week rule here also. These days we pay for most things automatically online anyway.
DEBTORS INVOICES – well someone (either you, your VA or your bookkeeper) will be doing these (if you have any need for them) on an as needed basis. BUT make sure they are followed up for payment as soon as they are overdue – email reminders straight from your system are best, but someone will need to make sure this happens.
TAXATION – STAY UP TO DATE!!!! PAY TAX!!!!! BE GOOD AND COMMUNICATIVE WITH THE TAX DEPARTMENT!!!!! All correspondence should be again electronic – scanned etc and stored. I know I’m shouting in caps, but honestly, we can really F ourselves by getting behind or not talking to the tax man. They don’t want to shut small businesses down – they just need to be kept in the loop and paid.
PAYROLL – well I personally believe we should be paid PAYG something, it helps when going to get mortgages etc. It doesn’t need to be much, but it does make you feel better. Up to you how much, and who does it. Just keep a good payroll system (Xero and MYOB are great) and pay the correct tax, superannuation etc.
Look I could go on and on here – and I would be happy to help you set up all these systems (just don’t ask me to do your books), but these are the basics I think you need to keep on top of.
Inventory, asset management, and staff etc are another blog post.
The reality is, I don’t want you to do it. It’s better if you don’t. Scan everything, email everything, note everything, store it all in Dropbox and make sure it’s all up to date by looking at reports every 2 weeks.
The reports you want to look at are:
Profit and Loss
Balance Sheet (although if you’re not doing some journals till the end of the year this may not mean much)
Again, if you are holding stock, I’ll cover that in another blog post.
MY BIG PS>>>>>>>>
Don’t give your VA or Bookkeeper access to your bank / credit card / paypal accounts (you can set up auto feeds)…….most people are honest, but protect yourself.
It’s your money – so until you’re big enough, keep the responsibility of spending money to yourself – just make sure you are diligent with notes for payments you make so it can be reconciled easily. The whole point is someone should be able to reconcile it all without having to email or call you 15 times.
You want a system for this that means you and your bookkeeper don’t need to meet – unless it’s for Xmas drinks and a bonus!!!
Good luck, and feel free to ask me any questions over on Facebook.
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