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Get Smart Accountants

Business growth experts and accountants based in the West Midlands

7 Quick Reasons Why You Need To Outsource Your Bookkeeping

Bookkeeping is a necessary task for any business, but it can be time-consuming and overwhelming. That’s why many businesses choose to outsource their bookkeeping. Outsourcing your bookkeeping can save you time and money, and it can also help improve your business’ efficiency and productivity.

In this blog post, I will tell you 7 key reasons why you should outsource your bookkeeping.

Financial Insight

One of the key advantages of outsourcing your bookkeeping is that you will gain financial insight. When you outsource your bookkeeping, you will have a team of professionals to help you track your finances and ensure that you have access to accurate, real-time financial data. This enables you to make informed decisions about your business which can be invaluable in helping you grow your company and achieve your goals.

Avoid Penalties and Interest

Another key advantage of outsourcing your bookkeeping is that it can help you avoid penalties and interest. Late or missing payments can result in late fees and interest, which quickly add up. When you outsource your bookkeeping, you will be able to stay on top of your payments and avoid accumulating penalties and interest.

In addition, when you outsource your bookkeeping, you can also take advantage of Early Payment Discounts (EPDs). By outsourcing your bookkeeping, you can ensure that you are taking advantage of all available discounts so that you can save money on your business expenses without hurting your cash flow.

Business Continuity

Another key advantage of outsourcing your bookkeeping is that it can help to ensure business continuity. When you outsource your bookkeeping, you will have a professional to take care of the task even if you step away from your business for a moment, whether you’re sick or just in need of a vacation.

Saving Time

Bookkeeping is a complex and time-consuming process, and many business owners find themselves tearing their hair out trying to get it right.

However when you outsource your bookkeeping, you can say goodbye to long evenings stressing out about your books. A professional bookkeeper will be able to handle the task quickly and efficiently, freeing up your time to focus on what matters most to you, whether that’s in or outside of the business.

Greater Accuracy

Another key advantage of outsourcing your bookkeeping is that it can help to improve the accuracy of your financial data. When you outsource your bookkeeping, you will have a team of professionals who are experienced in working with financial data who can spot mistakes that you aren’t able to see. They will be able to catch errors and ensure that your records are accurate, which will save you a huge amount of time and money in the long run, as it can help to prevent problems down the road.

Cash Flow

Outsourcing your bookkeeping can also help to improve your cash flow. When you outsource your bookkeeping, your invoices and payments are taken care of for you. This can help to ensure that you are paid on time and that you have the funds available when you need them.

In addition, outsourcing your bookkeeping can help you to better manage your inventory. Your bookkeeper can help you to track your inventory levels and ensure that you are not overstocked. This improves your cash flow by reducing the amount of money that you have tied up in inventory.

Tax

Outsourcing your bookkeeping can also help you to save money on taxes. When you outsource your bookkeeping, you will have a team of professionals who can help you to maximize your deductions and minimize your tax liability. This can save you a significant amount of money over the course of the year, leaving you with more capital to invest in business growth.

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Emma or Paul on 01902 212937

#growthriveprosper

Our Easy Guide To Making More Money In Your Business

Do you charge by the hour?

If you do, it really isn’t the best way of earning money, unless you’re an employee of course.

I’ll tell you why.

What happens if you only want or are able to work 30 hours a week?

Charging by the hour will restrict the amount of money you can earn without going over the hours you want to work.

Let’s flip that and say you want to earn a net profit of £30k, or £35k or £40k.

To move from £30k to £40k you’ll have to work more hours OR put your hourly rate up by 33% (assuming your costs don’t change too), but probably nearer 45% to cover the additional costs and tax.

Now let’s say you charge your fee based on the value you deliver to your customers instead?

Now you can earn more without charging higher hourly rates or working more hours.

I recently came across a bookkeeper who was charging by the hour at £20 per hour.

Assuming she worked 40 hours a week then she would never turnover more than £800 a week or £37600 a year (taking 5 weeks holiday) unless she worked more hours or took on staff.

If her costs were 25% then that’s a pre-tax profit of £28200 and tax would be approximately £5360 (as a Ltd Co.) this leaves her with just £22840 on which she would pay approximately £700 personal tax, meaning her income is now just over £22k.

Let’s say by pricing per job she could earn 30% more for the same work in the same time OR if she improved productivity she could do more work in the same time.

Now her income is £48880, cost remain at 25%, her pretax profit is now £39100 and tax is £7430, take out her personal tax and she’s left with £30175

An increase of 37% for no extra working hours.

NOW will you still be charging by the hour?

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Emma or Paul on 01902 212937

#growthriveprosper

4 Surprise Poor Habits Which Are Damaging Your Business.

Habits are everything.  From getting up early, to working out and eating healthy, habits are what differentiate successful people from others. The same applies in business – entrepreneurs who have good financial habits tend to make better decisions than those who lack them.

If you have poor financial habits, then your small business could be suffering as a result. What’s more is that many business owners aren’t even aware of the behaviours that are costing them money and  slowing their growth.

Let’s take a look at four bad financial habits that could be hurting your business:

1 – Not Paying Attention to Expenses

One of the biggest killers of small businesses is neglecting to keep track of expenses. This often leads business owners to overspend on unnecessary items, or worse: not having enough money to cover necessary costs. The key to overcoming this habit is creating a budget, and sticking to it.

This will help you identify areas where you’re overspending, so that you can make the appropriate changes. For example, if your business spends too much on travel expenses, then consider having meetings via Zoom or Teams instead of in-person whenever possible.

Working with an accountant is a great way to keep you accountable when it comes to  your finances. This person can help you create a budget, and  assist you with making financial decisions on behalf of your business.

Having someone who assures that things are done correctly is a lifesaver for many small businesses, especially those with little experience in managing their own finances.

2 – Paying Too Much for Office Space

Another common mistake that business owners make is spending too much on office space. This can be a major issue, especially if your business isn’t generating a lot of revenue yet.

There are several ways to avoid overspending on office space. For starters, consider working from home until your business is more established. You could also look into renting  office space on a shared basis, or taking out a flexible contract with a coworking space. This means you won’t have to worry about forking out for furniture and equipment, and you’ll have the flexibility to pay for less space when things are slow.

3 – A DIY Attitude

Doing everything yourself saves money, right?

Wrong.

Many small business owners try to do things on their own,  but this can be a huge waste of time and money. In some cases, you may end up doing more damage than good. This is especially true when it comes to financial matters – unless you’re an accountant or bookkeeper, there’s no reason for you to handle all  the financial tasks for your business.

Hiring professionals to help you with bookkeeping, accounting and other financial matters can save you a lot of time and money in the long run. Not only will you have more time to focus on what you’re truly good at, but you’ll also have peace of mind knowing that everything is being handled correctly.

4 – Lax Invoicing and Billing Practices

Another bad financial habit that can hurt your business is lax invoicing and billing practices. This happens when you don’t send out invoices in a timely manner, or when you don’t follow up on unpaid bills.

Both of these things can lead to money being left on the table, which is obviously not ideal  for any small business.

To make sure that you don’t fall victim to this bad habit, it’s a good idea to create an invoicing and billing schedule. This ensures that your bills are sent out on time each month, without fail. It also helps you avoid forgetting about overdue bills, so that you can follow up with clients in a timely manner.

You may want to consider hiring an accountant or bookkeeper to help you with this task, as it’s something that can easily be overlooked by busy business owners. A simple mistake like forgetting to send out invoices on time could cost your business thousands of dollars each year – money that could have been spent on paying bills, marketing your business, or hiring new staff.

Final Thoughts

Make sure to avoid these bad financial habits if you want your business to succeed! Implementing a budget, working with professionals, and sending out invoices on time are all great ways to keep your finances in check. Remember that over time, good habits compound to  provide great results!

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get business moving in the right direction, then we’d love to hear from you.

Call Paul or Emma on 01902 212937

#growthriveprosper

How To Overcome Fear And Correctly Price Your Services

Pricing your services correctly is one of the most difficult parts of being a small business owner. On the one hand, you understandably want to price yourself competitively, but you don’t want to sell yourself short, either. Profit, cash flow and confidence are all important considerations when pricing your services.

So here are five key steps to help you get it right.

Step 1: Calculate Your Costs

Even if you have a very capital light business, there are always costs associated with running your own business. There are two types of costs: direct and indirect.

Direct costs are the costs that go directly towards providing services for your clients, such as project materials or project-specific software, employee wages and your own wage.

Indirect costs are more general costs that are necessary to run your business, such as:

  • Rent
  • Internet
  • Phone Contract
  • Devices
  • Marketing costs
  • Website
  • Accounting services
  • Legal services
  • Insurance

You need to make sure that you charge your customers enough to cover all of the above expenses and make a profit on top of that.

Step 2: Identify Your USP

Your unique selling point (USP) will help you to price your services appropriately. If you’re competing based on price, then affordability will be the name of the game. However, if your USP is based around quality service or your specific expertise, you will be able to charge significantly more. If your clients are investing in you because you’ll add value to their business, then they will be much less likely to question you on price.

Step 3: Market Research

It’s important to know how much your competitors are charging, because this will tell you how much prospective clients are willing to pay. Seek out your competitors via Google as well as marketplaces such as UpWork and Fiverr. Remember, however, that the latter sites often feature many providers willing to sell themselves short in order to get started. Pay attention to their target customers, level of experience and location.

Remember that if you’re providing something that your competitors lack, you will be able to charge more than they do, so long as you are able to properly articulate this added value.

It’s also a good idea to try and get some feedback from your network or even conduct a focus group to gain insight around pricing.

Step 4: Consider Hourly vs Flat Fees

Some small business owners charge by the hour whilst others prefer flat fees. The correct path often depends on your industry and also your level of experience. If you know exactly how much time a certain project will take you, then a flat fee might be best, whilst if you’re unsure then it may be better to go down the hourly route.

If you’re just starting out, then you may get faster at your work as time goes on. In this case, flat fees make sure that you’re not punished for becoming more efficient!

In order to calculate an hourly rate, consider the number of hours you want to work per week and multiply that by 52. Then, subtract holiday and sick time to calculate the number of hours you’ll actually work.

After that, calculate your billable hours – i.e., the number of hours that directly generate revenue. Billable hours represent time spent on client work, whereas non-billable hours are the ones spent on admin, marketing, paperwork, and the like.

Next, divide your total expenses by your billable hours. This will give you a break-even hourly rate. Then, multiply this figure by your desired profit margin to find out how much to charge per hour.

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Paul or Emma on 01902 212937

#growthriveprosper

How To Avoid Making Silly Mistakes So Your Clients Will Pay On Time

Having loads of jobs booked into the diary and being busy in your business is all well and good, but if you’re finding it tough to get clients to pay – your cash flow can quickly run dry!

Keeping on top of cash flow is crucial to any business. With better processes in place to collect in that all-important cash, however, you can find it flows into your business much more readily, helping keep you afloat.

These few tips could have an immediate impact in helping improve cash flow – and release the stranglehold it has on your business.

Check if they can pay!

This might not be appropriate for smaller jobs, but if you’ve bagged a big contract worth a good wedge of cash, there’s something you need to do before breaking out a celebratory drink to two.

Check they can pay!

As much as you might want to make this mega sale, if a customer is unable or unlikely to pay on time you have to ask yourself if it’s worth it. Just think of the repercussions for your business if you throw loads of money, time and effort at a job to have nothing come back.

We would suggest you conduct a credit check as a sensible precaution, or request references from other companies who have supplied them with services, before entering into a contract.

Just as a potential client might want to vet their suppliers, it’s perfectly reasonable when large sums are on the line that you also vet the client!

If you’re left in any doubt as to whether you’ll be paid, and paid in a timely manner, you have to make an informed decision as to whether to proceed.

Set out clear payment terms

This should be embedded in any tradesman’s sales process – but we often find it’s not.

MAKE SURE IT’S CRYSTAL CLEAR WHEN PAYMENT IS EXPECTED!

Including clear-cut payment terms when you book in a job will help both you and your customer. The customer will know they need to have the readies at the ready and you know when that payment should hit your bank account.

If you’re working with larger businesses, this might involve a bit of negotiation. They might expect a 60-day agreement from suppliers, for example, but if this is unmanageable from your perspective, make sure this is ironed out and agreeable terms are reached before the order form is signed.

Get it down in black and white that you expect payment within 14, 30 or 45 days of invoice depending on the agreement made, or even request part-payment up front.

If everyone knows where they stand, it should make it more difficult to wriggle out of payment when it’s due.

Send out invoices – promptly!

Do you wait until the end of the month to send your invoices?

Why?!

As soon as a job is completed, finalise the paperwork and pass the invoice for payment.

So many trades businesses put off their invoicing and do a job-lot at the end of the month but this could mean you’re waiting unnecessarily for cash to come in.

If you complete a job in the first week of a month, waiting until the end of the month to invoice with 30-day terms means you’re effectively offering the client 60 days to pay.

Ensure accuracy

Don’t give a client reason to delay!

Make sure all your invoices are clearly set out and above all – accurate. Give your customers no reason to query anything, otherwise you’re giving them a prime excuse to not pay.

Also, make sure you’re sending it to the right person, department or place!

Offer a reminder rather than chasing debts

It’s probably not a job you relish, but credit control is a necessary evil when it comes to managing cash flow. Don’t leave it until the due date (or after) to remind clients that their payment is outstanding.

A friendly reminder a week before the deadline by email or telephone can work wonders. It also stops you feeling like you’re chasing for overdue debts so takes away all the awkwardness.

An email could be worded as simply as:

Dear X,

This is a polite reminder that payment of invoice no. XXX for [details of work completed] is due within the next two weeks as per our agreed payment terms.

We would appreciate it if you could schedule this for prompt payment by the due date.

Thank you in advance and best regards,

Do you have a procedure, or penalties in place for non-payment?

You should have a procedure in place for payment – sending invoices is the most basic form of this. But what do you do when a customer persistently fails to pay?

As with our advice to set clear payment terms, we also suggest you set out in your contract terms and conditions what will happen if you do not receive payment on time.

  • Will they receive reminder notices?
  • Are extra charges incurred if an invoice is not settled within a set time limit?
  • Will they face legal proceedings?

Make sure these processes are in place and act on them if necessary.

Offer incentives for swift payment

Everyone likes to save money, and you can use this to your advantage.

Offer a discount for payment up-front or early payment of your invoice. You might be surprised how attractive this can be to a customer! Think about a parking ticket – do you pay within 14 days when it’s £60, or wait until it doubles?

But why should you drop your price, I hear you say?

Think of it this way. The benefits of a client paying promptly can far outweigh the small loss you make on offering the reduction. It will also save you the cost and hassle of chasing monies in the long run.

Make it easy to pay

You might prefer your customers to pay you a certain way, by bank transfer for example. But does that suit all of your customers?

Ask them how they prefer to pay and do what you can to fit in with them.

Perhaps they don’t like online banking.

Perhaps they’re a business with a payment system that isn’t in sync with yours.

Being flexible on how people pay can prevent costly delays to seeing the cash in your account. The easier you make it for them, the better it will be for you.

Do you have to wait for completion?

Do you find jobs often leave you out of pocket?

It might be a time-consuming project, or one that has to be completed in phases.

Maybe you’ll need to invest in tools, resources, materials or even additional labour.

If this is the case, think about creating a payment plan so you don’t have to wait to complete the work before getting paid.

Ask for 50% payment up front to cover costs followed by the remaining 50% on completion. Or for longer-term projects, break down the total into a monthly fee for the lifetime of the project, rather than charging one lump sum at the beginning or the end. Paying little and often can help both parties manage the financial burden of a high-value item better.

Prepare for pinch-points

Do you have months where you’re run off your feet, but then see dips in workload at other times?

Landscaping work is in high demand in the warmer months, for example, whereas plumbers tend to be busy in winter when burst pipes and dodgy boilers need emergency attention.

Planning how to manage the low-points in terms of cash flow is vital if you’re going to survive.

Think about how you can still keep orders coming in during the slower periods.

Could you offer a promotion on certain work, for example? Or, could you diversify what you offer to fill the gap?

If none of these work for you, you need to find a way of stockpiling the profits in the good times, to see you through the lean.

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Emma or Paul on 01902 212937

#growthriveprosper

How To Make More Money With Less Clients In Your Beauty Salon

The more clients you have in your salon, the more money you’ll make – isn’t that right?

Actually, that’s not always the case. If you’re filling your diary with appointments but aren’t seeing big results in turnover and profit, you might need to switch the way you think about how you charge, and who you attract.

Like everything in life, you should consider whether quality is better than quantity, even with customers! So, what kind of customer do you have at the moment?

Are you cheaper or better?

Are your current customers coming to you because you’re cheaper than other salons? Or are they coming to you because they get a superior service? Competing on price doesn’t always bring you loyal customers who value what you do and, for longevity in a business, it’s the loyal customers you need who will keep coming back.

Some salons have customers who drive miles after moving to return as they prefer the service they’re used to than those more local.

Those who are willing to pay a little more, or put themselves out to get to you because they see the value in what you’re offering, are more likely to stay – and spend a bit extra.

What’s the average spend?

Ask yourself, how much is the average spend of the clients that come in? If each person through the door spends around £30 then, yes, you need a lot of clients to cover costs and make a profit. But how about if each client through the door spent around £100?  You could halve your workload and still be better off!

Whether they pay more for individual treatments, spend longer with you each visit to have more treatments or increase the amount they pay with product purchases, think about how you can raise the minimum spend of each customer.

If you’re thinking those big spenders aren’t out there, think again! Beauty is big business these days and there are plenty of stories out there about astronomical amounts being spent on treatments that help women look and feel good.

The Daily Mail shared a story recently about women who spend more on skincare than they do on their mortgage https://www.dailymail.co.uk/femail/article-7866393/Meet-women-admit-spend-skincare-mortgage.html, and this one about a Birmingham mum who spends £1,000 each month on beauty treatments for her and her three daughters https://www.dailymail.co.uk/femail/article-7638531/Mother-spends-1-000-month-beauty-treatments-three-daughters.html.

OK, so these might be the extremes, but studies suggest women are spending more than ever on their appearance.

The Sun quoted in March that women who dye their hair spend around £100 every 45 days to freshen up their colour according to a poll and, on average, we spend more than £3,000 a year on beauty treatments, including manicures and tanning. https://www.thesun.co.uk/fabulous/11255983/beauty-treatment-home-lockdown/

Tweak your service to attract higher value clients

I’ve had this conversation with many of the beauty and wellbeing business owners I work with, from hairdressers to holistic therapists, getting them thinking about increasing the minimum spend of their customers rather than increasing customer numbers. As a result, they’ve all implemented simple changes in their business that have enabled them to attract higher value clients, rather than chase for higher footfall.

So, how can you attract those cash-rich clients who are willing to invest more?

The key is to consider what these higher value clients want from their salon experience and align your service to offer this, whether it’s making it more personal, ensuring their customer journey from booking to completion is seamless and pleasant, creating the right ambience in your salon or using superior products. Small tweaks in the way you run your business can vastly improve the customer experience. If customers feel great about their overall experience, they’ll see the value in paying a higher price.

I cover this in greater detail here: ‘Attract quality clients to your beauty business with these 10 simple tips’.

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Emma or Paul on 01902 212937

#growthriveprosper

Why Great Accountants Don’t Love Pubs

OK, you’ve got me. We accountants can be quite partial to a tipple in our local, so the title of this article might be a little misleading.

I for one class myself as a bit of a real ale connoisseur, so I happen to like pubs quite a lot – as a punter. But as clients? I think it’s fair to say that I’m in the minority of accountants who would class a pub as a dream customer.

In the accounting world licensed premises, from traditional locals to trendy micro-pubs, can be considered troublesome. Managing a public house’s accounts is certainly a specialist area. It can be time intensive and holds potentially greater risks and complications than other businesses.

I do it because I’m not one to shy away from a challenge and I believe the humble inn needs our support.  I believe Britain without the Great British pub would be a much poorer place, who’s with me?! So, I’m willing to put in that extra bit of effort to help keep them afloat if I can.

If you’re in the licensed trade, however, I thought it might be helpful to hear from an accountant’s perspective why pubs might be blacklisted from our books. If I can also offer some tips along the way on how to make yourself a more appealing prospective client, I hope you find it useful.

It’s a tough trade

There’s no doubt it’s a tough industry to succeed in. In the last three years, more than 3,000 pubs have closed – that’s 3 pubs closing their doors for good every day. Much of this has been blamed on the tax pressures pubs face, with £1 out of every £3 spent in a pub being paid out to the tax man. 

These gloomy statistics have spawned the ‘Long Live the Local’ campaign [LINK: https://www.longlivethelocal.pub/] backed by an alliance of pubs, brewers and industry bodies determined to save the lowly local from its depressing demise.

Their petition to prevent the loss of the local led to Chancellor Phillip Hammond temporarily freezing beer duty in 2018. This temporary reprieve may have helped in the short term, but the suspension will be lifted in February this year and a beer duty increase is planned which will impact pub profits once again.

For many accountants, they consider it a risk too far to take on a business operating in such a volatile marketplace where closure and bankruptcy are seemingly commonplace.

My tips:

As with any business, knowing and understanding the numbers (including tax liabilities) is imperative to success. Working closely with an accountant, from the outset if possible, to formulate a robust business plan and keep on top of monthly cash flow is critical in achieving financial success.

Publicans aren’t always business people

This leads me on to my next point. Accountants are understandably wary of taking on publicans who don’t display a fundamental understanding of business and the necessity of financial planning.

An accounting colleague once regaled to me a story of a gentleman about to give up a £40k job to run a pub without employing due diligence in business planning. Within half an hour, my number-crunching friend had picked apart the potential profits and explained how he would be lucky to make a net profit of £12-13k. 

You may be fantastic with people, know your ale, even be a mean marketer, but if you lack a basic understanding of business processes and principles it probably won’t be enough. This is why many accountants will ask a multitude of qualifying questions before agreeing to take you on as a client. They know from experience that when a business hits difficult times, they may spend an inordinate amount of time trying to help and may ultimately not get paid.

My tips:

  • Before you plunge into pulling a pint behind your own bar, have a read of this article [LINK: http://www.accountssuperhero.com/hero-tips.asp?id=62&title=How-to-avoid-failure-in-your-first-year-as-a-start-up] which sets out some of the reasons a business fails in its first year. Make sure your head, rather than your heart, is firmly in control when deciding if this is something you can make work.
  • Don’t expect to go it alone. You WILL need to employ professional services such as stocktakers and accountants. Make sure you have the right support in place and have factored in the costs for outsourced support.
  • If you’re already up and running and finding things challenging – seek help quickly. The quicker you can identify areas to improve the more likely you are to turn things around.

Balancing cash records

Wherever businesses deal mainly in cash, the recording and balancing of income needs to be recorded accurately and closely monitored. Accountants know how challenging balancing cash takings can be in any business. With a busy bar, there are other factors to also take into consideration. There is an expectation that till errors will most certainly happen, especially during busy periods. Throw into the mix that a lot of the staff in charge of cash handling are casual or temporary, often young and inexperienced, might not be the best at recording or (dare I say) even the most trustworthy – and you have a bubbling pot of trouble.

This is why it’s a commonly quoted reason for accountants not wanting to take on pubs as clients.

My tips:

  • Make sure you have strict processes in place to show evidence of takings. This includes:
    • Ensure till Z readings are printed at the end of every shift – and keep them!
    • Make sure any till errors are noted down as they happen. It doesn’t have to be an arduous task, a simple post-it note with an explanation popped into the till will suffice. This can then be attached to the Z reading to allow the cash balance to be adjusted as appropriate.
    • Record cash counts on a daily basis and, where possible, ensure the till balancing is done by someone other than the bar staff.
  • Record all cash payments made out of the takings prior to banking.
  • Only offer customers ‘tabs’ for the evening. Make sure all debts are paid before balancing the tills.
  • Choose staff carefully and make sure there is regular monitoring in place.
  • Train all staff thoroughly in cash record keeping and till error procedures – and also in managing wet stock.

Managing wet stock

Managing drink stock in a pub is a whole can of worms in itself. It’s far too easy to see profits literally poured down the drain, or people’s necks if you’re not careful. A publican who thinks he’s entitled to his free tipple or can offer freebies as he pleases. Staff who undercharge their friends or take liberties with their own drinks. Wastage such as spilled drinks, incorrect pours and even line-clean or barrel change pull-offs all impact the profit margin and if mishandled can cause serious issues.

Mismatched stock to profit records can cause accountants undue headaches, which again gives them a reason to say no thanks to pubs’ custom.

My tips:

  • I always recommend that pub clients have a regular wet stock check by an experienced pub stocktaker who should balance the stock with purchases and sales in the period.  This will highlight any stock losses which can then be investigated and nipped in the bud.
  • Thorough wastage records should also be kept, including spillages and staff errors. Make sure there is a recording sheet and staff know how and when to use it.
  • If you do offer discounts or freebies, record these too so you can track just how much this might be impacting profits.

Poor PR

This isn’t something I’ve encountered myself, but it is a reason fellow accountants have ceased working with pubs – so I thought it worthy of mention.

The accountant isn’t always a publican’s most popular person. We may have to give bad news on costs that require payment, or pick pub owners up on financial issues that need to be resolved (record keeping or mishandled stock, for example). We also charge for our services, and the more problematic the accounts, the more time we have to spend putting things right which can incur further costs. The disadvantage with *some* pub landlords is, they can be quite outspoken when upset. The last thing any businessman (including accountants) needs is bad local PR, with a well-known local figure bad-mouthing their service across the district because they feel disgruntled.

My tips:

My tip in this case would be to the accountants rather than the pub managers! If you foster a good working relationship with a pub, as you should with any client, bad PR should never be an issue. Support them in setting their business plan and financial procedures up well in the first place, keep lines of communication open and make sure they understand the cost implications of your work (especially anything additional to that initially agreed) and there shouldn’t be cause to complain – to you or about you.

Regardless of all the above, and although I accept they are not always the easiest businesses to account for, I enjoy working with pubs. The key is in making sure the financial recording procedures are in place and maintained. I’ve found taking the time to get that right initially pays dividends in the long run.

With my pub clients, I make sure the cash is balanced monthly at least, we keep a tight control on costs – especially payroll, and monitor stock regularly. I also ensure clients recognise that running a pub is not a license to print money (as some seem to believe)! A well-run pub with little or no food will rarely make more that 10% net profit, and a badly run pub will probably make a loss.

Having a good working relationship with an accountant, however, can often make the difference between success and failure.

At Get Smart Accountants we work with our clients to drive growth and help them achieve their dreams.

If you’d like some advice or support to get your business moving in the right direction, then we’d love to hear from you.

Call Emma or Paul on 01902 212937

#growthriveprosper

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