Bookkeeping: Comon issues and how to avoid them

Bookkeeping: Comon issues and how to avoid them

By Alfie Osborne

After 1 year at de Jong Phillips managing client's bookkeeping daily, I thought I would reveal my top 4 bookkeeping tips for anyone starting out in the world of bookkeeping. I will also touch on common issues I have come across during this first year and give my advice on how to avoid them.

Bank Balance Reconciliation

My first bookkeeping tip would be to check the balance in Xero at the end of each month.

Checking the balance at month-end allows you to check the balance to the monthly bank statement to ensure the balance you are comparing to is correct and it will also allow you to narrow it down to that month if there are any differences instead of leaving it for a few months and then trying to find out when the differences have occurred.

Check the statement balance against the balance in Xero.

If the statement balance does not match this will highlight any duplicate or missing transactions (look at bank reconciliation report in Xero). Here's a video I've made explaining this process and how to correct some common differences you may see.

 

Reconciliation Process

My next bookkeeping tip is to make sure that the bills are ‘matched’ during the Reconciliation process rather than the payment being treated as a ‘spend money’ transaction. This makes it easier to process your transactions in Xero as they will already have the information populated which allows you to know that the correct VAT treatment and account category has been applied.

Reconciling the bank transactions as a ‘spend money’ can be useful in some occasions for example, if there is no bill/invoice to reconcile it to or the receipt might have been misplaced or lost. Then this will allow you to reconcile the transaction directly in Xero.

At de Jong Phillips we ask our clients to upload all invoices to receiptbank so that we can match each transaction to a bill so that we can be assured that the VAT treatment and category have been appropriately reconciled, this also ensures that if HMRC was to perform a VAT review then we have all the documentation stored in Xero.

 

Review Aged Payables and Aged Receivables

Another bookkeeping tip would be to check the Aged payables at the end of each month. Checking this balance at the end of the month will help with credit control and improve cashflow as you can see what bills you need to pay now and in the future.

I would also check the Aged receivables at the end of each month. Checking this balance at the end of the month will improve your cashflow and give you a better understanding of which invoices have not been paid and need to be chased.

 

 

Automate your processing

My final bookkeeping tip is to automate your bookkeeping processing as much as possible. Investing time at the start into researching the software you are using to find out what they have to offer to make efficiency gains.

At de Jong Phillips we use Receiptbank and, with it's features like Receiptbank Fetch, it allows for the bookkeeping to be automated.

The loom attached explains how to automate Receipt bank and Xero to make sure your bookkeeping is as efficient as possible.

 

Do you want support with your Bookkeeping?

Having accurate, up-to-date records is so important when managing your business and good bookkeeping is at the core of this. For more bookkeeping tips, take a look here. And if you want to find out how we can help you improve the bookkeeping in your business, get in touch.

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