Crunchers Accountants

Crunchers Accountants

Xero, EPOS and Card Services Integration – avoid the pitfalls

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Xero, EPOS and Card Services Integration – avoid the pitfalls

As you read, developers across the globe are coding away to fulfil the integrated vision that business cloud services promises.  And don’t get me wrong, we are big fans of the revolution and the streamlining benefits are manifest but in some areas, if you aren’t careful integration can lead to more work not less.

One such area is the integration between Xero, EPOS and Card Services.  You can get EPOS systems that integrate with Xero, you can get Card Services that integrate with Xero and no EPOS system worth the name is without integrated Card Services.

So in theory you have a fully integrated system working seamlessly.  But if you aren’t careful you have an unholy mess.

Here is how the problem usually looks.  The EPOS system records a sale and it records how the payment is taken – usually card or cash.  The EPOS system then aggregates this information over a day and when the till is closed sends it off to Xero.

So far so good, Xero now has a sales information recorded in the form of an invoice and payments against them in the form of ‘Money In’ transactions to the bank.  The problem comes with reconciling these to the bank transactions because Card Services rarely deposit an amount of money that matches this money in.

The reason for this is two-fold.  Firstly card fees are often deducted before money is transferred from the Card Services provider to the bank.  Secondly there is a timing issue.  The Card Services provider will often deposit some money from one day and some money from another all in one payment a few days later.  The poor bookkeeper is left scratching their head how to make it all reconcile.

In fact the best Card Services providers are wising up to this problem and giving account holders the option to pay fees separately to money transfers and to have control over how payments are bundled up.

Square is the best we have seen at achieving this, but we also know Payment Sense gives this functionality and potentially PayPal although we have yet to see it work.  Stripe at least gives you access to an account which breaks down payments and their fees but iZettle seems to have no way to deal with the problem that we have been able to find.

So if you are researching an integrated EPOS / Xero system make sure you consider how the card services will interract and if possible choose one that will all you to:
  • Separate card service fees out from deposits to the bank account
  • Bundle payments by day as the EPOS system will (vs as a random collection of days and parts of days)

Business Buddies

Since reading Gino Wickman’s excellent book, Traction, on business development, we have been mindful of the importance and power of meetings, especially meetings where we as business owners are held accountable and particularly where we are held accountable for our job of building our business.

In fact Traction recommends a weekly ‘Pulse Meeting’ to keep us on track with the vital (but rarely urgent) work of business development.   This is great advice but it presents a problem for small business owners:  Who should we be having those meetings with?

We don’t have managers or Directors to report to and one thing it is very hard if not impossible to do is to be held accountable by oneself!

As the next best thing we are recommending to find a ‘Business Buddy’.  The idea here is to find someone else who will have a weekly meeting with you (probably by phone) and hold you accountable for keeping on track with the work of building the business.

This person could be a kindly volunteer but we think it could be more powerful to find someone to reciprocate the service.  In other words we recommend to find someone else in business with whom you can buddy up and swap this service.  The most important quality this person can have is to be reliable in attending the meeting.  In fact they need to be holding you account that they happen.

After that it is great if they can provide some useful tips or coaching but much more important is that they make sure you account for you actions and results – or lack of them.

If there no personal connections spring to mind to fulfil this function, may be Crunchers can help.  We are offering to act as a clearing house for requests, matching up business owners who want to start this habit.  Here is how it will work:

Just email to say you would like to find a Business Buddy and we will match you up with someone else looking for the same thing.

Remember you need to willing to offer to provide that person with their weekly meeting too.  And here is what we recommend those meetings look like:
  • Duration: 30 mins
  • Time: Ideally office hours and at a regular time
  • Agenda: Update; Review of Development Goals you have for the quarter;  Actions from Last Week; Issues / Problem Solving; Actions for the Week Ahead.

Tax Year End Changes

With the new Tax Year almost upon us we review the changes to tax from 5th April 2018.

Minimum Wage Increases
Minimum wage increases from April 2018.  For employees over 25 the increase is from £7.50 to £7.83 per hour.  Other ages and categories of employees’ rates can be found here:

Deducting Mortgage Interest for Property Income
From April 2018 the % of mortgage interest that is tax deductible for buy to let properties reduces from 75% to 50%.  By 2020-21 this is will be 0%.

Income Tax thresholds
These have all moved up with Taxable Allowance increasing to £11,850 and Basic Rate rising to £34,600 which means Higher Rate tax starts this year at £46,450.

Dividends Allowance
Dividends Allowance has been slashed from £5k to £2k in 2018-19 tax year, bringing an extra £225 in tax to Basic Rate shareholders.

Capital Gains Allowance
From Apr 2018 the amount of tax free Capital Gains increases from £11,300 to £11,700.

Student Loan Plan Thresholds
The thresholds for paying Student Loan have increased as follows:#
  • Plan 1 loans will rise to £18,330
  • Plan 2 loans will rise to £25,000
Benefit in Kind for Company Vans
Employees or Directors with personal use of company vans or fuel provided for personal use will see rises in the amount that is considered Benefit in Kind.  The flat rate for personal use of vans rises to £3,350 and fuel rises to £633.

Diesel Supplement for Company Cars
The government is also introducing extra Benefit in Kind charges on diesel cars that fail to meet new Real Driving Emissions Step 2 (RDE2) standards.

Life-Time Allowance for Pension
From April the Life-Time Allowance for pension contributions increases from £1million to £1.03million.

Sell, Sell, Sell

One of the privileges of being an accountant is to see into many different people’s businesses.  After a while you start to see the patterns.

Something that becomes clear quite quickly is that whilst most people are getting by not many are really making a profit.  And when you start to look why you can’t help noticing the weakness of most business’s sales and marketing.

Maybe selling has a bad name.  Maybe we are afraid to make promises to customers.  Maybe we just prefer to stay in the comfort zone of delivering our product or service.

Whatever the reason and honourable exceptions aside the marketing systems are puny and the effort we put in is paltry.

Another place this shows up is in the price people charge.  Selling is much easier if you are giving something away for nothing and this is exactly what happens in a lot of businesses.  Often the price charged simply doesn’t cover the costs, especially if you include the value of business owner’s time.

So in this newsletter we want to celebrate marketing and selling and remind ourselves what a fundamental aspect of business this is.

Of course sales and marketing is culturally very associated with swindling and conning people.  But in fact we assert that good sales and marketing is the only place in your business where you can create value for your customer.  Here’s why:

The sales and marketing process is the means by which you uncover what is important to a customer and show them that what you are offering is going to make a difference over and above the alternatives.

When people get that, they get that what you are offering has value.

Delivering our product or service may seem like the place where we create value because that is where people get to experience the value but unless the value has been created first there is no experience of it later.  You can see this when products or services are given away, recipients often do not get what is on offer.

In fact we assert that our fundamental fear that our service or product may not have value is often what stops us from selling.  Conversely people who themselves get the importance, possibility and value of what they have to offer also have no problem in sales and marketing.

If you want to sell with integrity you need to be clear to whom and in what circumstances your offering has value and also to walk away if in particular instances you find it does not.

So let’s go out and sell, for ourselves to make money and for the value we will create for our customers.

Motivating Staff

As business owners one of our jobs is to get the best our staff.  From time to time we get asked about performance related pay and bonuses and our response is always the same – beware!

Somewhere it has entered business culture that offering financial rewards or perks is an effective way to motivate staff.  Unfortunately study after study by psychologists disprove the theory.

There are numerous studies we could quote from but the one we have chosen is a study on the effects of rewards on children done by Mark R Lepper and David Greene from Stanford University and the University of Michigan.

A cohort of children were selected for their interest in and fondness of drawing.  The test consisted of inviting them into a room by themselves and asking them to draw for 6 minutes.  A randomly selected group were also told they would get a reward if they performed this task.

Then over the next few days the children were watched to see how much they continued to draw of their own accord.

The study revealed that those who had been rewarded almost spent half as much time drawing and the drawings produced were found have less artistic merit.

The implication is for these children the reward damaged their desire to draw.   The theory is that the reward interrupts the natural flow of enthusiasm for a task and introduces the idea that the task is something we are suffering for.  After all if we weren’t suffering why would we need to be rewarded for it?

If we follow the logic of these studies, clearly we will ditch rewards as motivational tool but it begs the question – how then can we motivate staff?

Here are Crunchers recommendations for an alternative:
  • Only employ people with a natural motivation to do the job you have in mind.  People need money to live, but some people do also love doing their jobs.  People who do their jobs well generally have an intrinsic love of the job well done.  We need to stop thinking we can provide that motivation to do the job well if they don’t have it innately.   Recruit in such a way that you find the people who just love the work, doing it well and your company.
  • Cultivate a culture of appreciation for the job well done.  We need to acknowledge and thank people publicly for the job well done and weed out those who fall below accepted norms otherwise those who perform well will feel like no-one cares about their good work.
  • As far as possible get pay to disappear as a motivation for doing the job.  This is a tricky one because people need a job for money.  They also don’t want their pay to communicate to them that they are not appreciated.  This will happen if you pay markedly less than the norm and is also a danger to anyone paying the minimum wage.  However we say that if people are doing the work for the money they probably won’t be doing a great job.  We recommend to have a transparent pay policy that everyone understands and takes away any question of why one person is getting paid more than another.  Our recommendation is to pay people at or a little above the market rate.  You don’t want good people leaving because they can get paid better elsewhere but you equally don’t want people staying because they can’t…that just leads to people staying for the wrong reason.
  • Find out as much as you can about what naturally motivates someone apart from enjoying the work and doing it well.  Then as far as possible see how you can facilitate them achieving what motivates them.  Perhaps someone loves organising social events – put them in charge of the Christmas party.  Perhaps someone really wants to progress in their career, provide them with that pathway even it means them eventually leaving you.  This is why regular reviews with staff are important so you can keep in touch with what is motivating your staff.
Finally having warned of the dangers of rewards, there is one type of reward that the above study found to be at least benign and perhaps even beneficial.  As well as telling some children about a reward for doing their 6 minutes of drawing some children were given a surprise reward for their efforts.  Those children went on to draw just as much as those who had not been given any reward and in fact drew slightly more, although not a statistically significant amount.

So if you are going to reward someone for their good work, do it without telling them, as a thank you, but make sure it doesn’t turn into something that is expected.

Daily Bookkeeping

Here at Crunchers we’ve been toying with the idea of providing a daily bookkeeping service and we are now proud to announce that after trialling it with some clients, we are rolling it out across the practice.

The traditional model of a remote bookkeeping service is that you send over information once a month and get the books brought up to date month by month.

Increasingly we have felt that is a redundant model.  Xero updates tbe bank feed daily, many clients send purchase records through to Receipt Bank daily so why couldn’t we do the bookkeeping daily?

In a world where we are getting used to our needs and wants being met almost instantaneously it starts to feel out of place to wait a month for anything.

Interestingly our trial indicates that our job is easier if we don’t allow a month’s worth of transactions to build up the bookkeeper’s job is easier.  It becomes simpler to what is matching with what if there are fewer transactions to deal with at a time.

For anyone interested in the service – just register your interest on our Contact Page.

The Rise of the Digital Accountant

In October we attended Xerocon London which is Xero’s annual conference in London.

By rights this should be one of the dullest experiences known to man – a conference on a piece of software that does bookkeeping.  It hardly sets the pulse racing.  But it turns out that Xero and it’s ilk are right in the crucible creating the future of technology and work.

In particular Xero is at the cutting edge of machine learning and what that will mean for white collar workers.

Xero is already a semi-automated bookkeeping system because can teach it how you want transactions recorded but the next step will be to get the system to teach itself.  If DeepMind’s Artificial Intelligence took only three days to master the game of Go and beat the world masters how long would it take to master bookkeeping?

Xero is already testing automated bookkeeping, the Ok button on the reconciliation page may eventually disappear.

So much for the bookkeeper, but what about the accountant?  Here too the landscape is changing.  Whilst HMRC’s Making Tax Digital delayed, no-one who really questions whether it will become a reality.  When it does the bookkeeping software will be connected directly to HMRC and potentially the information for the tax return could be taken directly from there without human intervention.

There is a lot of speculation about how far machine learning and integration can take us.  Could accountants become redundant for submitting tax returns and accounts?  Will business owners rely on a version of Amazon Echo or Google Home to get questions answered?  Might machines even give business advice?

There is also a lot of speculation on how long it will take.   Our feeling is that people underestimate the amount of engineering there is to get the whole thing to work.

Perhaps as accountants we should be nervous we are talking about a technology that could wipe out our business.  For some reason we don’t think it will quite work like that.  But if it does so be it.  As our accountants we have a choice to resist this change and cling onto ways of working that are increasingly inefficient or to embrace the change and find ways to add value to our customers.  At Crunchers we are committed to the latter.

Dragon’s Den Success!

Congratulations to our client Adelle Smith and BKD London Ltd whose success on Dragons Den was made public last Sunday on BBC2.

Multi-award winning children’s baking company, BKD  has secured investment from British entrepreneur and businessman Peter Jones CBE assisted by Crunchers in preparing for the bid.

Adelle Smith launched BKD from her kitchen in Shoreditch, London, in May 2015, after reigniting her passion for baking when making her son’s first birthday cake. The business has grown rapidly since then, with revenues of £151,000 in 2017 and over 30,000 units being sold.

The brand’s products are now stocked in retailers including John Lewis, Moonpig, Gousto and Arnotts throughout the UK and Ireland.

Adelle pitched to the five dragons, including new investors Jenny Campbell and Tej Lalvani, asking for £80,000 in return for 20% equity in the business. Dragons Peter Jones CBE and Jenny Campbell were both interested and offered the full amount in return for 35% and 30% equity stakes, respectively.  Adelle opted for Jones’ higher 35% offer due to the investments he has made in serveral food businesses, including Levi Roots and for his connections with key UK retailers including Sainsbury’s.

Adelle has been very generous in her acknowledgement of our role saying:

‘Thanks again for all your help, literally couldnt have done it without you.’

Of the investment Adelle Smith says, ‘I’m absolutely ecstatic to have Peter on board and the investment will allow us to massively escalate our growth. We plan to continue expanding within the UK and Ireland, via direct customer sales, retailers and supermarkets, as well as looking into European export opportunities. BKD has had a lot of interest from countries all over the world. We also intend to spend the investment on digital marketing, PR, website and technology improvements and extra machinery.’

Peter Jones CBE, says, “I’m absolutely delighted with my investment in Adelle and her company BKD.  I’m sure that both she and the business will benefit from the explosion in interest in the baking category over the last few years. I’ve already tried out the kits with my own family and we had great fun sharing the experience so I’m confident about the company’s future.”



Intoducing Vivienne Johnson

I am originally from New Zealand, a country which I adore and am lucky enough to travel back to regularly to see family and friends. Having been educated there and spent my formative years in New Zealand, I moved to the UK with my now husband in 2006 to work and travel.  Fast forward 11 years and we have now acquired a house, some goldfish and two beautiful young children, William and Lucy.
From a career perspective, following university I have worked in a variety of roles within client services in the Financial sector in New Zealand and in the UK. Once my youngest child Lucy came on the scene I took a career break and got involved in the world of nurseries, school playgrounds, PTA’s and the occasional school cake sale.
I love to travel and have been lucky to venture to many parts of the world. I also love food and cooking, especially sharing it with family and friends. 
So after a few years off work I have decided to plunge back into the world of work.  While working for large corporations I often felt that they were rather impersonal and you were but a number in a massive business. The ability to make change was rather restrictive and the variety of work very limited.   What really attracted me to accountancy and the Crunchers ethos is the ability to support small businesses and help them grow in their ventures.  I believe that small businesses are the backbone of the community and I hope that I can support and nurture your business in order for it to thrive.
I am looking forward to working with you.

Canvases – creating a Business Model that works

If your business is struggling, you might say you have not found a business model that works.  And even if a business is working, it is well worth understanding one’s business model because it can help to focus resources.

Wikipedia defines them thus: A business model describes the rationale of how an organisation creates, delivers and captures value.

In practice a business model ties together a conceptual framework (who your customers are, what they are looking for, what you will provide them with, how you’ll provide it) with some financials (cost structure and revenue streams).  In essence it is a planning tools and as with much planning the value comes from the clarity of action that emerges in the process. There are many different ways to approach defining your business model but the tool we like most of all here at Crunchers is something called a Canvas.

A canvas is a way to put the business model on a one page document and it has the advantage of making something that could be very complex relatively simple.  Obviously it will not have the rigour of a full business plan but it is a way to rough something out quickly, like sketching the house you are building vs doing architect’s drawings.

What is great is that it allows you to clarify some basics quickly that can massively help in focusing action.

There are different types of canvases that we can use each with slighly different sections to complete but our favourite is the Lean Canvas, developed by a business coach Ash Maurya.  As you can see above the canvas consists of the following sections to complete:
  • Customer Segements
  • Problem (the customer has)
  • Solution (the business is providing)
  • Unique Value Proposition
  • Unfair Advantage
  • Channels
  • Key Metrics
  • Revenue Streams
  • Cost Structure
As Ash Maurya says in his excellent video coaching you through the Lean Canvas:, this process can be done in 20 minutes and he advises do one quickly because the point is not have a perfect business model but to get to one before your resources run out.

We find this tool so useful we have built it into our Improving the Numbers software GoalDriver.