Day 6 keeping track
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Transcript of 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