Frequently Asked Questions
There is a 4 stage onboarding process:
- We are required to collect anti-money laundering information. We’ll lead you through this & keep it as simple as possible.
- Next we’ll write to your existing accountant (if you have one) to ensure that we collect the right tax & compliance records so that you’re looked after fully
- Then we’ll check over your accounting system & make sure that it makes sense and is able to deliver the answers that you need.
We’ll sit down with you to understand your needs and how your processes work. We’ll agree deadlines, requirements and style.
There are two parts to this answer:
Practical tips include:
- Forecast your cash in and out flows asap – know where you stand!
- Invoice as quickly as possible
- If possible, get a deposit paid before you start the work
- If you can, invoice your larger clients for a year in advance (rather than for monthly payments)
- Foster a good relationship with your suppliers’ accounts department – when people like you they pay you faster
Your monthly management accounts are your BFF (best friend forever). Just like a friend would, they will tell you when you’re doing the right things or the wrong things. They’ll give you insights into the financial health of your business and you’ll use them for day to day management and for strategic direction. Once you’ve got a bit of history behind you, you’ll be able to see trends and spot anomalies.
They will consist of an Income Statement (aka the profit and loss account) and A Statement of Assets and Liabilities (the balance sheet). They should also include Key performance indictors that are appropriate for your business (new customers gained. Customers lost, average revenue per customer etc). It’s best if they are produced monthly, as this will give you enough time to make any changes that your business needs.
Normally after your first year of trading, your management accounts at that time will be used to produce your statutory accounts which will be filed at Companies House (if you trade via a limited company). This will also be used for the basis of calculating any corporation tax that may be due.
Without regular management accounts you won’t be able to effectively grow your business.
Your Financial Controller (FC) is the FD’s second in command and is responsible for the integrity of your accounts department. They manage the day to day tasks of financial transactions which include manging your debtors, creditors and financial assets. They will produce monthly management accounts, VAT returns, payroll, and other HMRC obligations (e.g. EC sales list reporting).
When a company first starts it often outsources this responsibility and so get access to an extremely skilled team for a fraction of the cost. Once more established a firm may have an FC with one or two finance assistants, depending on the complexity of the company’s business.
Often when a business starts it is usual for an administrator to do these tasks but the rules can be very complex (for example, did you know that a UK Company can invoice you in any currency and still charge VAT) that it’s better to bring someone with the right skills into the business as soon as possible.
Yes. And no.
Practical Accounting strongly believe that we help people (using a basic, simple commercial approach) stop spending where it doesn’t help but also to see where more spending on something else could help more. Our business planning approach also helps business owners set reasonable expectations about their investment decisions; sometimes that helps not pulling out too early.