Anyone I have worked with knows that I bang the drum about the quality and value of:
- Sage software www.sage.co.uk
Bookkeeping, accounting, and payroll are very important to me. I get mildly irritated if the cost of professional services overrides the value. It’s a false economy and an expensive error to make.
Sooner or later, the focus on cost only is going to catch you out. What’s worse is, it may have already cost you, but you don’t realise it. Never underestimate the value of professional bookkeeping, accounting, and payroll services.
A Case Study: Cash Flow
A new client was using Sage, which is excellent, but they had no control over their business finances. What they needed was a Sage Certified Expert who knows the software.
They were very busy, but cash flow was crippling their operations. It was also destroying trust with their suppliers.
This was a self-fulfilling downward spiral. The worse the cash flow became, the more the suppliers worried about late payment. The suppliers increased the cash flow pressure further by demanding pro-forma terms. The more chaotic the financial management became, the more mistakes were made. Rinse and repeat.
I downloaded the audit trail from the Sage accounting software and analysed the data to identify any issues. What I found was the root cause of the companies’ cash flow problems. It was there in the data. There was a lack of skills, knowledge, and experience in the finance department.
The audit analysis showed unequivocally:
- Low transaction volumes
- All transactions were unreconciled
- Excessive posting errors and corrections
- Frequent duplicate payments
- Excessive payments on account
- Tax code posting errors
- Overpaid VAT
- Low value supplies posted to Fixed Assets
The VAT liability for a quarter was circa £55,000 and this had been paid twice. Each payment was less than a week apart.
Bank charges were excessive due to multiple and daily payments to suppliers. Each payment was charged at a premium rate. Good for the bank, but bad for the client.
Suppliers were paid pro-forma as a payment on account and then paid again against the VAT invoice.
Input tax on hire purchase and lease payments were not claimed. This resulted in overstating and overpaying the VAT liability. Over a period of several quarters this amounted to £,000’s.
Takeaway Message – Understand the Value
The takeaway message behind this post is, quality professional services may be a cost, but the value they add to your business is significant. This cannot be overstated.
A good bookkeeping, accounting and payroll service provider will:
- Control your business finances
- Protect your profits
- Deliver timely, accurate and relevant management information
- Add value to your business
Add Value, Don’t Gamble
Don’t gamble with your business finances. A good service provider using quality software like Sage will be an unbeatable combination to secure your business finances and protect your profit.
Therefore, when you consider the cost of bookkeeping, accounting and payroll services, also consider the added value first and foremost.