best-practice-accounting-end-of-year

On December 6, we held a webinar with one of our accounting Partners, Evenstone about best practice at year end so participants could start fresh next year in the best possible shape. Sara Jaffer from our Support Team and Julie Stevens from Evenstone shared their considerable experience, which we have consolidated in this blog for you.

 

The benefits of real-time accounting

1. Better gross profit reporting. Brightpearl uses cost of sales accounting which is different to that used by Sage or QuickBooks. With the latter, inventory counts are required to be run at the end of the period to calculate what has been sold. However, with integrated real-time accounting in Brightpearl, every inventory transaction is associated with accounting entries so you get a real-time up-to-the-minute view of your profit. Having it all in one place means that you don’t have to duplicate your work in different systems.

2. Helpful system interactions. Accounting functions interact in useful ways with other areas of the system to ensure that everything stays in line. For example, when processing a supplier invoice where the cost price has changed, it gives you an option to automatically update the cost price on the product.

3. Easy query tracing. The accounting data within Brightpearl is linked to the original orders and payments so if there are queries in the accounting function, you can just click and immediately see the details of the transactions in question.

4. Save time and effort. Transferring data in and out of different systems uses time that could be better used elsewhere.

5. Avoids potential error. The more systems that are used increase the chance for potential errors. Important data can get missed or duplicated and it can be difficult to go back and reconcile data between the two systems.

To find out what other benefits real-time accounting can bring, take a look at this blog!

 

End of year best practice checklist (part 1): How to help your accountant

Before handing over to your accountant to start preparing year end accounts, make sure that everything is organized to make the process as painless as possible.

1. Have all the bank accounts been reconciled and do the bank balances match the figures on the final bank statements? This should be done frequently as it’s a very effective way to check that the rest of your data is complete. For example, if you notice payments to suppliers leaving your bank account and you don’t have invoices for them, you can create the invoices to pair them up.

2. Review the aged debtors report to ensure that you agree with all the outstanding balances. Do any need to be written off as bad debt? 

3. Review the aged creditors report to ensure that you agree with all the outstanding balances. Are any payments not recorded because they were paid for in cash or with a personal card? Are any invoices missing?

4. Make sure you count your goods and have a year end valuation for inventory. Any inventory adjustments need to be done before handing over to your accountant.

5. Have you made claims for all your personal expenses such as mileage? Expense claims made out of the year they’re for are unnecessary complications.

6. Are all your supplier invoices and receipts neatly filed (either on paper or online) for easy reference? However you work with your invoices, make sure they’re properly organized. Your accountant will thank you!

We recommend closing your year end only after accounts have been checked and adjusted where necessary, sent to the accountant, and when you’re satisfied that what you have is what you want to be filed.

 

End of year best practice checklist (part 2): Planning your tax

Tax planning is really important to do before year end, as far ahead of time as possible. Best practice is to ask your accountant what works for your business and personal circumstances, but here are some of the most common things to consider:

1. Make sure any available tax allowances have been used. Any allowances that haven’t been used may be lost at the tax year end.

2. Review the timing of business expenses. Does it make sense to bring some purchases forwards? Check with your accountant that it makes sense before splashing out!

3. Look at the timing of dividend payments and bonuses. Ensure the most tax effective position for the individual.

 

Bank reconciliation advice

1. Reconcile all your bank accounts.  It may seem obvious, but it’s vital to reconcile ALL bank accounts so that the balances at the end of the year are correct and that everything has been accounted for. If an account has money flowing through it, it needs to be reconciled. Common accounts that people forget about are PayPal, Stripe, Sage Pay and Amazon.

2. One size may not fit all. There are different ways of reconciling bank accounts and you may need to use more than one.

3. Use bank importing. Brightpearl has a bank statement importing functionality that will save you time and reduce the margin for error.

4. Do it often. Do bank reconciliations on a regular basis throughout the year - don’t leave them to the last minute as it will be much harder to remember what happened 12 months ago. Keeping them up-to-date also gives you a much better view on your company position during the year. Exactly how often you perform bank reconciliations depends on the volumes going through your bank accounts, but traditionally, these are undertaken monthly to match the statements issued by banks. Some businesses who deal with very large volumes of transactions find daily reconciliations work best for them. But in short, find the right approach to fit you.

To help you speed up your bank reconcliations, check out this handy checklist!

 

Inventory counts best practice

Before:

1. Make a note of your on-hand figures. Importing inventory levels affects on-hand figures, so make a note of all inventory which has been:

  • Allocated to orders but not yet shipped
  • Marked as shipped in your systems, but not yet physically shipped
  • Physically received, but not yet received from a purchase order

2. Arrange a time to do your cycle count. Make sure your cycle count is conducted outside of business hours and preferably during a slow period.

3. Organize and plan. Make sure the space is clear and each area has a staff member assigned to it. It’s also a good idea to have a plan on how to handle each item after it’s been counted. Before starting your inventory count, you may want to export your inventory levels.

During:

1. Count everything individually. Don’t trust what your labels say - otherwise you can’t be sure your figures are accurate.

2. Consider using an inventory management or integrated warehouse management solution which allows you to scan goods to speed it up. Warewolf is a great example of this and links directly into Brightpearl.

3. Be mindful of prices. Make note of the most up-to-date values for your goods.

 

We hope this advice will help you with your upcoming year end! Have you got any other tips you’d like to share? Why not leave us a note in the comments below…

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About the Author

Tom Mullett is Brightpearl’s Global Customer Marketing Manager and host of the Retail 90 YouTube channel. Tom oversees all the communications to Brightpearl’s customers across the world, so wherever they are, if they’re hearing about new products, features, news, or how other customers are growing with Brightpearl, he’ll be behind it in some shape or form. Tom has managed communications in the education and healthcare sectors, and prior to joining the Marketing team, Tom was an agent in Brightpearl’s Support team, a role that equipped him well with understanding the needs of Brightpearl’s customers. Tom is passionate about celebrating customers and delighting them by delivering amazing service through innovative technology.