When you run any sort of business there are always overheads. If you are a start-up, then those overheads may be small, especially if you are a one-man business operating from home. You may have travelling costs going to meet clients or potential customers, and you have the cost of phone calls and your internet, but that aside, there is very little else.
However, assuming your business is successful, and you want to expand, you will have to take on some help, perhaps in the form of a secretary, a salesman, or worker to help produce your products. As soon as you start to do that, several things begin to happen. Not the least of these is that, within certain boundaries, you have to provide that employee with a pension. You also have to pay the employee, deduct tax, pay the tax to HMRC, and so on. Before you know it, you are knee deep in all sorts of admin that you probably understand very little about.
Your business continues to expand, and you take on some more employees. You are also gaining new customers and you need to send them invoices, chase up the invoices when they don’t pay on time (not all of them will), send credit notes if required, and more. You are now spending time on accounting which, while it is a vital part of the business, doesn’t actually earn you anything whatsoever. It is an overhead, and one that just gets bigger and bigger the more your business grows.
This is why so many SME’s turn to accounting software which can deal with a lot of the issues which crop up when you do the accounts and payroll. For instance, payroll can vary according to a number of situations. Some employees may be on certain benefits which will affect their taxes, so you can have two people doing exactly the same job at the same rate of pay but with different amounts payable. Salesmen on commission will have a different amount payable each month. Then there is holiday pay, sick pay, pension contributions, people opting out of your pension scheme, people wanting to opt back in (all of which is perfectly legal, by the way). And what if you pay fortnightly, or even weekly? It can just double or quadruple the issues.
Accounting software, such as that offered by Sage, will make all of this so much easier. Once you have learned how to use it!
Yes, the Sage accounting systems are very good, but as with anything else, they come with a learning curve. That is why, at Total Training Solutions we provide a Sage course in Manchester that will get you on to the right path quickly.
The financial side of your business is responsible for all of the day-to-day transactional accounting for the organisation, such as raising and chasing invoices, paying bills, and dealing with bank reconciliation. You have to manage cashflow so that there is sufficient money available to pay all the regular bills, and to pay your employees.
You need to manage the purchase and sales ledgers, and also your expenses and payroll processes. There is bank and petty cash reconciliation, and also your VAT returns. Then there is accounting, to include all cash flow analysis, profit and loss, deferred income, depreciation, prepayments, and so on. You need to be able to plan ahead for the long term and this involves using data and analysis for forward planning for the business and your financial strategy, and possibly investments.
Credit control is also vital. The bigger your business gets, the more customers you have. The more customers that you have, the more invoices you send. And the more invoices you send, the more you will have slow payers, and maybe even customers who try to avoid payment altogether. So, you need a very robust credit control strategy in order to keep finances under control.
All of this can be handled successfully using your Sage accounting software, and at Total Training Solutions we also have eLearning courses for Sage available which are designed to keep you up to speed and your business moving forward.