Day 6 keeping track

B R I A N W S T E E Ldeveloping higher performance

Starting in BusinessFinance – Keeping track

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Finance –Keeping track

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Why keep records?

Monitor successInform decision makingProvide information for bank and othersAttract investorsBudgetingPrep tax returnsTracking costsMonitor and account for VATControl wages, NI and other staff costsDistribute and account for profit.

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Accounting for profit

Must keep all business records for 6 years

Must keep all personal bank statements for 6 years

Must keep all contracts for fixed assets

You must seek professional advice on accounting from the start.

You must comply with all HMRC requirements on accounting.

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Key records – The book-keeping system

Petty Cash records

Bank Statements [business and personal]

Invoices received

Invoices sent out

Day book – sales and purchases

B R I A N W S T E E Ldeveloping higher performance

Day Book – simple book-keeping LEFT hand page - EXPENDITURE

Date Description Cost VAT Total

1/9 Petrol 40.00 8.00 48.00

1/9 Road Tax 135.00 135.00

3/9 Business cards 5.00 1.00 6.00

B R I A N W S T E E Ldeveloping higher performance

Day Book – simple book-keeping RIGHT hand page - INCOME

Date Description Cost VAT Total

2/9 Evans & Co 600.00 120.00 720.00

2/9 Baldwins 1500.00 300.00 1800.00

B R I A N W S T E E Ldeveloping higher performance

Day Book – simple book-keeping LEFT hand page - EXPENDITURE

Date Description Course Advice Books Speakg VAT Total

20/6 Bath Uni 1500.00 300.00 1800.00

24/6 Business West 800.00 160.00 960.00

24/6 P.Wilson L’poolNine Steps

29.99 29.99

26/6 J.JonesMD Elliot & Co

425.00 85.00 510.00

28/6 Bath Chamber 300.00 60.00 360.00

B R I A N W S T E E Ldeveloping higher performance

Day Book – simple book-keeping RIGHT hand page - INCOME

Date Description Course Advice Books Speakg VAT Total

20/6 Bath Uni 1500.00 300.00 1800.00

24/6 Business West 800.00 160.00 960.00

24/6 P.Wilson L’poolNine Steps

29.99 29.99

26/6 J.JonesMD Elliot & Co

425.00 85.00 510.00

28/6 Bath Chamber 300.00 60.00 360.00

B R I A N W S T E E Ldeveloping higher performance

Computer accounts

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Finding an Accountant.

One that has been recommended

Members of an official accounting body

Have experience dealing with accounts of small businesses.

Willing to let you talk to existing clients

Prepare an initial statement before discussing services with an accountant.

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Credit control

Vital for survivalState terms on invoices, quotes and estimates.Include ‘errors and omissions’ statementState preferred payment methodRecord due dates of payments to follow up.Follow 14 days protocol

Remind buyer if payment not made on time RED LETTERGive 14 days to completeFailure to comply generates Notice to Recover DebtAfter 7 days pass to Debt Recovery Specialist

Keep a record of all contact

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

FINAL DEMAND

Our last statement that was sent to you at the beginning of this month showed in detail that the amount of £1175.00 is overdue for payment to ourselves. We have again attached details of this amount, and respectfully request that your account is paid immediately. Alternatively please let me know your reasons for non-payment. If you require any additional information to enable you to make payment of the overdue balance on your account please contact me immediately on the below number.

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

FINAL DEMAND

It appears from our records that we have not received Payment of the above mentioned invoice dated 00/00/00 as per our terms of sale. We would respectfully like to request that settlement for this invoice is forwarded to us immediately. If you have already sent payment for this invoice within the last few days please accept our apologies and disregard this letter.

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Finding your break-even point

BEP = [Fixed costs + Drawings [Overheads]]/Contribution per unit

£12,000 per year from college.Need to make £30,000.Got fixed costs of £2,500 per yearHow many days do I need to sell to break even if I can make £500 per day?

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Finding your break-even point

BEP = [Fixed costs + Drawings [Overheads]]/Contribution per unit

£12,000 per year from college.Need to make £30,000.Got fixed costs of £2,500 per yearHow many days do I need to sell to break even if I can make £500 per day?

[30,000 – 12,000 + 2,500]/500 = 41 days

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Forecasting and

The ART of

cash flow management

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Forecasting -

the black art

B R I A N W S T E E Ldeveloping higher performance

The Start-up Programme – City of Bristol College

Seven key factors in forecasting:

1. Be realistic. No deliberate under estimating or over estimating.

2. Out with the old, in with the new. Life changes – be flexible and responsive to changing customer demands and opportunities.

3. If you give credit, keep your trading terms up to date. Changes in trading terms directly effect income.

4. Plan promotions/offers into the cash flow.

5. Monitor sales constantly.

6. Learn your customers payment habits

7. Check the paperclips

Jan Feb Mar Apr May Jun Total

Revenue

[A] Cash Sales

[B] Credit Sales

[C] Total Revenue [A+B]

[D]Materials and Stock purchased

[E] Gross Profit [C – D]

Gross profit %age [E/C]100

Overheads

Salaries/Wages

Rent/Rates

Water

Insurance

Repairs/Renewals

Heat/Light/Power

Maintenance

Printing/Stationery

Transport

Telephone

Professional Fees

Capital payments

Loan repayments

Bank charges

[F] Total Overheads

[G] Net Profit before drawings [E – F]

Net profit %age [G/C]100