Open Counting House

Global Bookkeeping Week - Let's Celebrate!

Sue Bruland — Wed, 20 Nov 2019 12:56:43 GMT

Bookkeeping is one of the oldest professions, thanks to Lucia Pacioli who was born in 1447 and wrote a book called "The Summa" which created the theory of Double Entry Accounting. To this day this remains the cornerstone of Accounting.

What an accolade plus he was house mates with Leonardo da Vinci! Imagine what conversations those two had?

Bookkeepers are integral to any small business. It is not unusual for the bookkeeper to be the centre point of a business. They often are the first to see the cashflow trend. It is said that 25% of businesses fail in their first 5 years. This can be due to inexperience, mismanagement or both. Not knowing your numbers and therefore the lack of planning can be a big contributing factor.

Behind those numbers is someone in a bookkeeping role or function. The significance of their services should not be underestimated. Bookkeepers are helping businesses with good record keeping and compliance so that business owners are able to focus on what they are best at....running a business.

Global Bookkeeping Week is your opportunity to reflect and celebrate helping small businesses to succeed. So please raise a glass to your bookkeeper.

hashtag#icbuk hashtag#icbsummit hashtag#bookkeepingweek hashtag#lucaawards

Who was Luca Pacioli?

Sue Bruland — Tue, 12 Nov 2019 11:57:06 GMT

He was Leonardo da Vinci's friend and is to this day the Godfather of double entry accounting which has stood the test of time because it is largely unchanged in over 500 years. What an amazing pair of friends they must have been. Did Luca look after Leonardo’s accounts I wonder?

Which industry other industries are able to claim such provenance?

Fra Luca Bartolomeo de Pacioli sometimes Paccioli or Paciolo; lived to the grand age of 70 (1447-1517). Unsurprisingly he was an Italian mathematician.

Wikipedia states:

Summa de arithmetica, geometria. Proportioni et proportionalita (Venice 1494), a textbook for use in the schools of Northern Italy. It was a synthesis of the mathematical knowledge of his time and contained the first printed work on algebra written in the vernacular (i.e., the spoken language of the day).

It is also notable for including one of the first published descriptions of the bookkeeping method that Venetian merchants used during the Italian Renaissance, known as the double-entry accounting system. The system he published included most of the accounting cycle as we know it today.

He described the use of journals and ledgers, and warned that a person should not go to sleep at night until the debits equalled the credits. His ledger had accounts for assets (including receivables and inventories), liabilities, capital, income, and expenses — the account categories that are reported on an organization's balance sheet and income statement, respectively. He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger.

He is widely considered the "Father of Accounting". Additionally, his treatise touches on a wide range of related topics from accounting ethics to cost accounting".

Pacioli dramatically affected the practice of accounting by describing the double-entry accounting method used in parts of Italy. This revolutionized how businesses oversaw their operations, enabling improved efficiency and profitability. The Summa's section on accounting was used internationally as an accounting textbook up to the mid-16th century. The essentials of double-entry accounting have for the most part remain unchanged for over 500 years.

Accounting practitioners in public accounting, industry, and not-for-profit organisations, as well as investors, lending institutions, business firms, and all other users for financial information are indebted to Luca Pacioli for his monumental role in the development of accounting."

The thing that strikes me the most (apart from the whole double entry thing) is that Luca said “ a person should not go to sleep at night until the debits equalled the credits”. And how true is that? How many a night have I sat staring at a screen working out why it does not balance….and I am defiantly not the only one!

Just like most amazing people of history wouldn't it be amazing if you could have a 1-2-1 to find out how he came onto this amazing theory of double entry and how he thought it would change the world? I guess we will never truly know?

6 Ways to Significantly Increase your Profits – with a resource you probably already have

Sue Bruland — Wed, 17 Apr 2019 16:18:44 GMT

The majority of Businesses think of bookkeeping as a necessary administration evil; filing receipts and updating the accounts. Reactive Bookkeeping does exactly what is says on the tin; it reacts to past monetary transactions and nothing more. It’s not intuitive, it’s rarely up to date and in reality it is costing you lost opportunity and real money.

Believe it or not, bookkeeping is THE secret weapon when it comes to business management and growth. If you have a proactive bookkeeper in the heart of your business, all your transactions will be in Realtime allowing you to

Review accurate and real time financial data.
Make more informed decisions on cash flow projections including income acceleration
And expense reduction techniques
Help grow your business by analysing and utilising the information from your transaction history and forecasts
Only with up to date, accurate and consistent information along with key measurements and indicators are you able to effectively manage and expand a business.

The six ways using a proactive bookkeeper can significantly increase your profits;

AI - Artificial Intelligence. The age of AI has revolutionised the accounting world. We now have bank feeds into account software, Accounting Software which can match the bank feed to purchase invoices in an instant. Software which can accurately read receipts, code it and place it into the accounting software package waiting for your to approve it and much more. Saving you the cost of manual reconciliation.

Cash flow - Cash flow (or the lack of it) can make or break a business. Cash flow affects all arrears of a business and a proactive bookkeeper will be able to manage it accurately so you to can see the inflow and outflow of your cash, and they can flag up any concerns. Effective cash flow management and analysis will reveal your true costs, so that you adjust your business practices accordingly to maximise profit.

Get it right first time and save the costs of an investigation - Incorrect accounting will cost you money, and cause anxiety. It may not show up in the short term but it will in the long run; costing you more money with an accountant who has to then unpick your accounts to make sure it is corrected. Lost receipts cost you money too as without a source document it cannot go through the business’s accounts. Correctly maintained accounts will enable the correct taxes to be paid at the correct time. Discrepancies in your accounts flag question marks with the HMRC which may put you in the radar for investigation. Should you be investigated this can cost you £thousands in lost time and accountancy fees.

Effective tax planning - If your accounts are up to date and correct then you can be proactive with your tax planning. You may be able to reduce the tax you owe because you will be able to be proactive when looking at investments and when these need to be completed by. It also allows you to set aside money for your anticipated tax bill and this removes the stress and anxiety it can cause.

Time - Many Business owners, thinking bookkeeping is nothing more that receipt sorting, will try to do their own bookkeeping without putting a value to their own time. How you value and allocate your time is extremely important to your business. Concentrate on what you’re good at work on or in your business rather than spend time bookkeeping. A professional bookkeeper will do twice the work in half the time. They know what information is important to record and what is not, how to record it and most importantly when government legislation changes they will know how to deal with it and how this will effect your business. Outsourcing will not only ensure the job is done properly but will help with the all the points above while you’re out running your business, creating more income, or simply enjoying your hard-earned profits.

Better decisions - All of the above point to one thing. Being able to make informed decisions for your business with ALL the information and knowledge to hand. Properly categorised income and expenses allow you as the business owner to quickly review the monthly Profit and Loss sheet and take decisions on the back of that information, immediately. It might be to cut costs in a particular area or to increase spending in another. The numbers, your numbers, tell a story about how and what to spend your money on, what makes profit and what keeps cashflow moving. Without this information you will be just running around in the dark guessing at what is right for your business.

For more information please contact:
Sue Bruland
Open Counting House Ltd
50 Stratford Road
Shipston-on-Stour
CV36 4BA
e-mail: sue@opencountinghouse.com
Tel: 01608 670779