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Crunchers Accountants

Crunchers Accountants

A Revolution in Bookkeeping

Archive for July, 2012

A Revolution in Bookkeeping

The tectonic plates are shifting in bookkeeping and accountancy.

For years and years, bookkeeping has been a job of paper filing and data entry, uncrinkling receipts, finding the date, the amount, the VAT, working out what it was for and entering it onto some kind of database.  The revolution that has arrived is bank feeds.  This takes the information contained on your bank statements and streams it direct into your books.  Already you are saved the trouble of entering the date, the amount and the supplier.

Cutting edge software such as Xero and Freeagent is now taking this a step further giving you the ability to set up rules for the transactions.  For example you tell the software that every time it picks up a payment to BT, it should post this as a telephone expense and that seeing as the VAT amount is always standard rate it can split out the correct VAT automatically.  The end result is that technology is starting to automate your bookkeeping.  All you need to do is make sure it hasn’t made a mistake and approve the work it has done while you are out doing something more important.

Market leader in this technology, Xero, has then taken this a step further and started to integrate with Customer Relationship Management software, budgeting software, and many other pug-ins to build an integrated business dashboard.  Where one software company has led, others are sure to follow and you can argue that the days of manual data entry are numbered.

For us accountants and bookkeepers, there are two ways to look at this.  You either see it as a threat- ‘Hang on a minute – half my work has disappeared!’, or an opportunity – ‘Hang on a minute – I don’t have to uncrinkle pieces of paper any more I can do something more important for my clients!’.

I am proud to say that Crunchers is at the forefront of embracing this new technology and re-inventing the role of the accountant as outsourced financial director.  This is a role all accountants are trained in and in fact employed in large numbers to deliver in medium to large firms as management accountants.  Employed, not for fun or as bright idea but because they deliver real value to those businesses. Until now though, the average high street accountant has been much more concerned with last year’s tax return than next year’s profit.  Perhaps, just perhaps, this is the start of something new.

It’s About Time – Seminar Report

If someone asked you to invest £20,000 you would probably want to know with great security you were going to see a return on it.  You would want a detailed plan of how it was coming back to you.  Yet business owners invest their own time (often with a value in excess of that amount) into their businesses each year with almost no thought or planning, investing that resource wherever circumstances and inclination lead them.

Looking where an investment of time can deliver the greatest yields in a business can be a eurika moment for a business owner, because it sets out in black and white why delivering your product or service is almost never as profitable as marketing it, managing others to deliver it or designing systems that get the job done.  It forces you to confront that marketing is more profitable than production, that delegation is a key business skill and that admin is almost never worth doing yourself.

This is a confronting conversation for most small business owners but 11 committed business people were game on a night when summer finally arrived.

Having established the potential value of the time we invest, the seminar explored mindsets and strategies to be effective and productive with time.

Feedback from attendees was very positive, rating the evening 8/10 for overall value.

The following is a selection of comments:

“Today’s seminar made me think through the way I am set up as a business. It made me realize I need to explore ways to improve my marketing and possibly outsource some of the less profitable aspects of my business (ie admin, editing, marketing).
“Well worth it. Thought provoking.”
“Great to make you view your business from different perspectives to enable you to be more successful and happier within it.
 

 

Your business engine – sales and production

At the heart of the combustion engine is a simple idea.  Fuel is injected into a piston, it is burnt and the piston turns a wheel.  Business has a similar dynamic at its heart.  Inject sales revenue into the business, turn the wheels of production.

If we can get this important dynamic working smoothly then we are well on the way to a successful business.  For many business owners the trouble comes with keeping these two dynamic elements in balance.  If we put too much resource into marketing and sales, production is overwhelmed.  If we spend all our time in production, our marketing and sales is starved of resource.

The tendency becomes crisis management, with resource thrown at each side to deal with emerging breakdowns.  The only chance of avoiding this comes with planning and foreseeing problems before they arise.  Ultimately the business owner /  manager’s role is not to do the marketing or the production but to make sure that each is done in a timely fashion.  Keeping up this role in your business is a particular breakthrough that many business owners struggle with.

Dig a little deeper and we discover that we do not give time to making this dynamic work.  We do not allow ourselves to stand back and get the machinery in place to have both elements working at the same time – sales and marketing rolling along at the same time production continues.  Also we often have discipline problems with the bits we dislike.  We commit to doing a bit of sales and marketing each week and then ignore our commitment because we don’t like doing it.  We are recalcitrant employees and there is no-one to give us a written warning.

And so it turns out that one of the key skills of the business owner is managing time – especially for small businesses and start ups.  This is one reason that we are running our next seminar on this topic.  Of course on the other side of the problem is a breakthrough in having a successful business.  If you can set up a reliable system for sales and production at the level of sole trader, there is no reason why this cannot be replicated or augmented and used to expand the business.