It’s disheartening, when you do a great job for someone, (and have been doing work for them for over a year), and then ‘all of a sudden’ you realise that they’re built up quite a big debt with you…. so then you politely ask them to make a payment, and suddenly they’re not quite as friendly anymore.
This is a situation facing a client we saw. The dispute is for about 25% of the entire debt. Thus, of the £12,000 balance, their client only wants to pay £9,000. But you see, the £3,000 could be where all the profit for that company is. What do you do?
Tips:
1. Try and resolve it as quickly and as amicably as possible
2. Use a mediator if that helps, but don’t get emotional about it OR ignore it.
3. Invoice regularly, and (preferably) get paid for each part of the job.
If you are self-employed … it can be difficult to ask for your money… Especially if you work quite closely with your client, and you are doing the work (hands-on) yourself. If you are focused on your work and you’d like someone separately to be focused on your books, then it might be worth getting a part time bookkeeper to do the ‘dirty’ work for you…
Small businesses often ask, “Do I need an accountant or a bookkeeper?”. The answer is normally, “both”.
Accountants & Bookkeepers have some overlap in what they do… they both might do the payroll, they both might do the VAT returns… but then the accountant does higher level activities than a bookkeeper. I always compare it to a Doctor and a Nurse. A nurse can do a lot of what the doctor does… but a doctor (like an accountant) is more qualified.
But bookkeepers and accountants, essentially do different things and have very different roles to play in helping businesses to manage their finances properly.
Bookkeepers charge far less for their time. Far less. That’s is a principle difference between a bookkeeper and an accountant. Therefore, it makes sense to get a bookkeeper to do as much of your work as they can. Bookkeepers record the financial transactions of a business and present them in a neat and orderly format – which could be on accounting software such as Sage, Quickbooks, MYOB, MyCake or on a spreadsheet. This information is then used to complete the VAT figures.
Bookkeepers tend to work on-site, with their sleeves rolled up and as a result, they’ll spend more time with your business and really get to know how it ticks. They are more down to earth, and tend not to speak in jargon, and so can tell you plainly – what the figures say.
Some will take over the task of credit control - chasing customers for payment. It is always better to have a different person trying to sell a service, from the person collecting money.
Accountants do not normally want to provide an ON SITE bookkeeping service. What they do best is to take the figures from the bookkeeper and then complete the year-end accounts and other formalities. They will advise you on exciting things like ‘succession planning’ and ‘exit routes’ and how to ‘save on tax’.
The best advice, as in most other matters, is to make sure that you use the correct person for the job. Both bookkeeper and accountant should be qualified and be up to date in best practice in their respective professions so that you can rest assured knowing that your business is in safe hands.
Above all, make sure your bookkeeper and accountant talk to each other and get on with each other. They should be in agreement over the best accounting system for your business.
Getting it right from the offset will mean that you have regular information about your business that you understand from your bookkeeper and reduced annual fees from your accountant. So the question should not be “Do I need an accountant or a bookkeeper?” but rather “Have I got the best bookkeeper and best accountant for my business?”
I had a call from a client last week. Unfortunately, he’d had to put his business into administration, and was starting again…so was ringing me to explain the situation. A few of his clients had gone bust on him - but one in particular owed him almost £10,000, and that had left him in an impossible situation. I asked him - what 3 things have you learned from this experience. His answers were:
1. Just because someone is ‘posh’ doesn’t mean they’ll pay you. So don’t just accept people at face value. Get payment up front wherever you can.
2. Don’t spend the VAT money. Put it away into a separate account. (Our bookkeeper used to tell him this, but he didn’t listen).
3. Don’t take too much money out the business. There’ll be nothing left. (Another thing our bookkeeper warned him about).
Sometimes, you might be accustomed to a lifestyle… but in business, if things aren’t going so well, you need to either a) adjust your lifestyle or b) improve the business because, there isn’t a bottomless pit. And the definition of insolvency is: ‘Unable to pay your debts as they fall due.’
Fortunately, for us, he was on our standing order scheme, and our bookkeeper always made sure our bill was a priority… and he’s a decent bloke. But who has gone bust leaving you with bills you now can no longer meet? This is the knock-on effect of the credit crunch.
We’ve seen it on the news… MP’s have been claiming for expenses that weren’t really there… I mean, who in their right mind “forgets” that they’ve already paid off their mortgage?! Would you forget a significant fact like that?
A good bookkeeper would make sure that your expenses are all up to date, with the appropriate receipts attached. With the bank reconciliation done - you’d know your mortgage had finished!
If you know of any member of parliament who is struggling to keep track of their invoices and receipts, send them to us, Boogles the bookkeepers… we’ll make sure they stay on the straight and narrow!
Instead of explaining in words how our Boogles bookkeeping service works, we created a video which shows what we do… every day we do the books for clients all over London, UK. It’s only 1 minute 20 seconds long. Take a look. Click here.
Hello and welcome to the Boogles Blog. This is the first post. My name is Boogles, and I’m a business owner. This blog is for all of you out there with dreams of starting up your own business or are running a business. When we began in 2004, with just £150 and not much else - we never believed we would be where we are today.
We help a lot of small businesses in running their business, by managing their bookkeeping process for them. It gives us a unique insight into how a lot of businesses out there operate - good and bad. We’ve seen and experienced the good, the bad and the ugly - but all names and dates will be changed to protect the innocent.
I do hope that we become an information source for you, your collegues, suppliers and customers.
