Bookkeeping – Go Paperless

Bookkeeping – Go Paperless. Yeah right! Sure, how can we do that?

I can hear you all now. That fella is pulling our leg! And why would you want to go paperless anyway? What’s in it for me? We will explore further and make a case for it by looking at.

• Does paper cost money?
• Meet Mickey and Maud
• Invoicing first
• Purchase invoices – Dext
• Bank feeds
• Summary

 

Does Paper cost money?

It costs time and money. Not only for you but for your customer too.

Picture the scene. You bought a property in 2014. The accountant is onto you looking for the contract, and the legal and stamp duty costs, so you can minimise your CGT. You used a different solicitor then, called Eoin, and you ring him up looking to see if he has it. The answer goes like this.

“Well Mickey we should have that but will have to take a look. All the 2014 files are in storage on the Cork Road. We’ll send one of the lads down to see if he can find it. But it could be a week or two”.

Mickey is up against a deadline to file his CGT returns and was hoping to have the info next Friday. What’s wrong with this situation?

For Eoin

1. He’s not getting paid for his time. Time for the call and time to pay one of his staff to look for an old contract.
2. He’s paying for storage and storing stuff for a person who’s not giving him money for it.
3. The call and task are distracting for him as it takes him away from fee paying work.
4. It will cost him more time and money if he posts a copy of the contract. The stamp, the envelope, and paying the secretary to do it.

For Mickey

1. He won’t get it on time to meet the deadline, so the CGT computation and the return won’t be right.
2. The accountant confirms that they will submit an estimated return. They will revise the return once they have the correct numbers and contact Revenue. As that is more work for them, they will charge €200 plus Vat for it.
3. Mickey gets the contract and must drop it into the accountant who is 30 kilometres away. That’ll take him an hour.

Mickey calls the office and arranges a time to call in. He meets the receptionist and talks to her for 15 minutes. After that he meets the “numbers man” to hand over the paper. Another 15 minutes gone. Mickey is a lovely fella, but you know that it’s cold out there and Rashford got some goal at the weekend.

Money and time wasted all over the place.

 

Meet Mickey and Maud

“Oh please baby, please don’t leave me in this jam Mickey”

Mickey has a brilliant business making metal feeding troughs. He has a retail business in a local town and wholesale to the larger Co-ops. Maud, his wife, looks after the office. The payroll, sales invoicing, and purchases. She takes the payments and looks after the Vat too. A very capable lady.

Mickey is 48 and loves working. The quality of what he makes is amazing, but things are getting a lot busier. He’s not interested in the numbers and knows Maud has everything under control in the office. But in her mind, they can do things a bit better. She’s snowed under with paper. Lever arch folders everywhere.

• Sales invoices
• Purchases invoices
• Payslips and expense claim forms
• Bank and credit card statements
• PAYE & Vat returns

Maud and Mary are the accounts department. They are the HR department and operations too. Maud finishes every day at 3 o clock and Mary works Monday to Thursday. A customer calls in on Friday afternoon at 3.30 to query her invoice. The price she agreed on the phone is lower than the price on the invoice.

Mickey says to her “sorry but the accounts department is closed and you’ll have to come back on Monday.” He knows that invoice is in a folder somewhere in the office, but it would take him ages to root it out and have a look. The customer leaves and isn’t happy as she buys a lot from them.

Invoicing first

What should Maud do? Do the invoicing first and get that onto the cloud. Start small and build from there. Automate the invoicing so everyone that needs visibility on it has it. And how would she do that?

Choose a cloud software that can do this for you. We use and recommend Xero. The steps would look something like this.

1. Get all your customers into Xero. Names, addresses, and e-mails.
2. Put all the products you sell into it.
3. Input the prices you sell each product for
4. Set up your invoice template with all the info including bank details, vat number, payment terms, etc.
5. Include your sales Vat rates.
6. Make sure the invoice sequence number is right.
7. Start invoicing.

Congratulations you have just eliminated paper invoicing. You have taken the first step in going paperless. Sending an invoice now should take no longer than 30 seconds.

No writing, no printing, no posting, no copying, and no storing. Maud, Mickey, and Mary have full visibility on all the invoices. Type in any customer’s name and they can search all the invoices issued to them. If they need to make a change, they can edit the invoice or issue a credit note.

Over a glass of wine on a Friday night, Maud tells Mickey how happy she is with the new system. She’s in great form and drops a hint that she’d like to have a look at the purchase’s invoices next.

Purchase invoices – Dext

Dext is next for the purchase invoices. We link your Dext to your Xero. This is to push the purchases into your Xero. But reviewing your invoices in Dext comes first.

Again, this is a cloud-based software that reads and stores your invoices. It will extract certain information like net cost, Vat, and gross cost. Maud plays around with it a bit and she sees that she can.

• email the invoices in
• upload saved invoices from her laptop.
• submit invoices like diesel receipts using the Dext app.
• Fetch invoices from certain suppliers, like Vodafone

With a little help from her accountant Reg, they set up rules in Dext to help speed up the process. Their main supplier is Duffy Steel. The rule for that supplier is that it is a “Steel Purchase”, and the Vat rate is 23%. Likewise for other costs like

• Vodafone – mobile phone – 23%
• Eir – broadband – 23%
• Applegreen – motor expenses – 23%

Once you have reviewed the invoices and are happy you push them into Xero. No pushing but clicking a button!

Maud is very excited about this. She starts ringing suppliers and tells them to e-mail all future invoices to her and to cc Dext. It’s the 5th of February 2023 and she’s in her Xero. All the sales invoices are in there. Nearly all the purchase invoices are there too, bar a couple of small ones she’s waiting on.

She calls to see Reg that day and they run some reports. Reg works his magic and brings in the wage costs. They can see the sales numbers, purchase costs, payroll costs, and profit. They can drill down and see what made up each cost item as Maud can’t believe repairs were so high.

It’s coming up to Valentine’s and Maud is so happy that Mickey is supporting her with the changes. He’ll be getting a serious present. She mentions that Reg said something about bank feeds. Mickey thinks “that bloody Reg will cost me a fortune”

Bank Feeds

At some stage we all made that call to the bank looking for statements. And you usually need them in a hurry. Life is too short for the endless wait on the phone. Then you pay for them, and you say a decade of the rosary that you get the ones you asked for. With no pages missing.

The technology is there for your bank statements to come into Xero. AIB is set up and BOI is on the way. This works very well for our clients and the powers that be in Xero promise that BOI is very close. We don’t know if there are plans to integrate PTSB.

Reg sets this up for Maud and it amazes her that all the bank information is in there for January. She can now reconcile her bank account and

1. match lodgements to sales invoices and
2. payments to purchase invoices.

It’s Valentine’s Day and Maud is so delighted that she buys Mickey a new Casio calculator watch. But she tells him the bad news. He can’t issue invoices on the watch, but he can add up the profits. They have a bottle of wine and put on their favourite song

“Oh Mickey, what a pity, you don’t understand

You take me by the heart when you take me by the hand

Oh Mickey, you’re so pretty, can you understand?

It’s guys like you, Mickey…..”

Summary

 If you stayed with us this long, fair play to you. You have great patience. There are a couple of things I am trying to get across here. Firstly, by going paperless you are reducing your use of paper by a huge amount. As we discussed that saves time, money, and the environment too. Fewer trees cut down to support your paper addiction!

Secondly, you are putting in a new financial system with great processes. Great systems and processes will add value to your business. Plus, it will give you the confidence to do what you love doing assuming it’s not the books. You are investing in your finance function and can get brilliant information. You are making things easier for you and your customers too. Sure, why wouldn’t you do it?

Do you want to find out more about how Xero and Dext can help your business? If so, Start Here