Five things you should know about effective bookkeeping

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When it comes to running your business efficiently, bookkeeping can play a crucial role.

Inaccurate or late bookkeeping can bring with it a whole host of issues and even financial penalties, so ensuring this function is running effectively is key. So, what can you do to ensure your bookkeeping is up to scratch? Our team has put together our five top tips…

Credit control is key

An efficient credit control function is critical to the success of a business. Whilst your sales ledger may look impressive, if your customers have yet to pay you, your cash flow will be less than impressive. Lax credit control practices will ultimately encourage your customers to put off paying you on time, leading to a whole host of cash flow issues further down the line, so ensure your credit control function is in tip top shape.

Understand your expenses

Claiming back expenses can be a huge benefit for business owners. We would highly recommend you understand what you can and can’t claim back on expenses to save yourself time and money later down the line, should HMRC question the claim. As they are claimed back on tax, the HMRC will often want to see a record of these, so ensure you keep clear receipts on expenses such as mileages, business trips, work socials, etc. 

Maintain your records

Clear and succinct records are a must. Businesses will often have three types of financial records that will go into their bookkeeping functionality, these are: sales invoices, purchase invoices and cash book. Your cash book will be a huge benefit to any forecasting efforts, your sales invoices will keep your credit control function informed and your purchase invoices will prove invaluable for recording cash leaving the business.

Separate business and personal finances

Although it isn’t a legal requirement, if you are a sole trader we would highly recommend having a separate business bank account from your personal one. Without this, your records could very quickly become a headache to maintain.

Forecast the months ahead

Forward planning can mean the different between a business becoming stagnant or growing. Forecasting will pinpoint what the months or year ahead could hold for your business’ cash flow, such as tracking big expenses, a potential lull in work or even extra working capital.

Are you looking for bookkeeping support? Our expert team here at Ellis & Co. support clients, day in day out, with their bookkeeping requirements. Speak to us today to find out more about how we can help you. Call us on 01244 343 504 or email info@ellis-uk.com.