Implementing effective accounting and payroll systems will give you more time to focus on business planning, says Sarah Daly.
With planning for 2021 well underway at the moment, a priority for many businesses will be putting the right processes in place to survive, and hopefully thrive, in the so-called ‘new normal’ environment.
While the environment has changed dramatically when compared with this time last year, the principles that underpin effective management remain the same. You still need to get the numbers right, manage cashflow, and look after your employees, customers and suppliers. You also need to focus on strategy rather than allowing yourself to become bogged down in the day-to-day crises that will always want to fill up your time.
Bookkeeping and accounts
This is a good time of year to review your bookkeeping and accounting processes. If backlogs have built up, now is the time to deal with them. Whether through growth, or simply due to lack of time, it is not unusual for businesses to reach a point where they either need to hire someone to look after their bookkeeping, payroll and accounts, or they need to outsource these functions to a specialist service provider. Whichever route they choose, these are big decisions for a small business. Often, outsourcing will be the most cost-effective option, but as always, there are pros and cons to consider. Previously on this blog, we explained how to examine the business case for outsourcing. If this is something that you are considering, please get in touch. We’d love to hear from you.
What to focus on when reviewing your accounting processes
If you still look after your own bookkeeping and accounting, tasks that need to be carried out include checking debtors and assessing what action may need to be taken to follow up on any money you are owed.
Cashflow is more important than ever at the moment with many businesses in difficulty due to the impact of the Covid-19 pandemic and Brexit so you also need to tackle any improvements that may be needed in your cash and working capital processes.
Costs also need to be reviewed, checking that 2020 purchases are correctly coded so that you will have accurate data in your accounting system when it comes to preparing your budgets and forecasts.
Other administrative tasks on the ‘to do’ list are likely to include
- reconciling balance sheets,
- checking profit and loss accounts,
- ensuring fixed assets are correctly recorded,
- bank reconciliations
Chasing missing information and resolving anomalies and inconsistencies will increase the workload, adding to the demands on your time in what is often already a highly pressured environment.
Cloud accounting systems like Xero and SortmyBooks can take a lot of the pain out of routine accounts administration however any system is only as good as the information it is given. Unfortunately, if you don’t record transactions accurately as they occur, you won’t be able to rely on the data in your system when it comes to budgeting and forecasting. This, in turn, means that your forward planning process will be more time-consuming than it needs to be.
Payroll is another time-consuming task and this year’s disrupted working patterns due to Covid-19 created additional headaches. It has not been easy to keep up to speed with the various Government supports introduced to help businesses and individuals through the pandemic. The changes were sometimes difficult to implement where employees work non-standard hours or have different pay, benefits and conditions. As a payroll service provider looking after businesses in a range of different sectors, GroForth has seen at first hand the difficulties small businesses encountered this year with many looking for help to reduce the administrative burden.
Making time for yourself
Like many small business owners, I have too many demands on my time so I know from personal experience that when we are constantly on call for clients, employees, family and friends, it is easy to fall into ‘firefighting’ mode, focusing more on who shouts loudest than on what is best for ourselves and our business. Previously, on this blog, I shared tips on the techniques and tools that help me to manage my time more effectively.
Lack of time isn’t just a problem for small businesses, it also affects their accountants and was the number one barrier to growth identified by accounting firms who participated in GroForth research earlier this year. More than four in ten accountants we surveyed said that they struggle to manage competing demands on their time and would like a better work/life balance.
Streamlining business processes is a great way to improve operations while also getting time back for yourself. So, if this is a priority for your business in 2021, why not contact us for a chat to find out more about our services and how we can help.