Million Impossible Features

Using Sage to beat the Credit Crunch

In the current climate, knowing your numbers is more important than ever and in this article we hope to show that by using a computerised accounting system such as Sage coupled with the services of a qualified bookkeeper can help you negotiate the uncertain times ahead. The old adage "Cash is King" is particularly apt at present and keeping a close eye on your bank account is absolutely vital.

Sage accounts has an improved cashflow forecast feature you can anticipate any problems that may arise through late payments from your customers.

It also has an excellent credit control feature which allows you to easily find out who owes you money and the age of the debt.

You need to make sure you have a system for chasing overdue invoices and Sage can provide great benefit by producing statements of accounts to send out at the end of each month together with a suite of letters available to chase non payment. All contact with the customer is recorded with any payment promised carried forward into the cashflow forecast. There is also a diary system so that you can follow up the "cheque is in the post" excuse.

On the suppliers side with Sage 50 Accounts you can prioritise who you are going to pay, when and how much, giving you more control of your cashflow.

Perhaps the most important number every business should know is "break-even". This is when the income from sales of products or services is equal to the costs of producing that product or service or put another way that time in the month when you can breathe a sigh of relief because you've sold enough to pay everyone and any further profit is yours.

Again in the current climate you need to know this so that you can make business decisions such as "can I offer a discount to conclude a specific deal?"

Sage Financial Forecasting can help produce detailed cashflow, profit and loss and Balance Sheet forecasts and can allow you to explore those "what if?" scenarios (e.g. what if cost of raw materials increase?) and see what effect they will have on both your bank balance and break-even figure.

Detailed forecasts together with assumptions and ratios are very useful in managing your business and an absolute necessity if you are looking to ask the bank manager for additional finance to help you through.

If you are registered for VAT, Sage makes the processing of your VAT Return a relatively simple routine task. Like any computer package, you still need to use it correctly. Careful planning and commitment is required to enable it to really add value.

Here are a few hints to help you get the best out of Sage

• Unless you have sufficient accounts knowledge, seek assistance from a qualified bookkeeper or accountant to set-up your accounts structure and enter your opening balances. Choose someone who is competent with computerised accounts as just being a bookkeeper or accountant doesn't make them a Sage expert.
• Consider how you want to track your sales and expenses. The Chart Of Accounts can be quickly customised so you can divide up your sales into types of product or service, or even by agent. Similarly, your expenses can be split into categories relevant to your business. It's not just there to comply with the reporting requirements of Companies House.
• Most office staff can be easily trained to enter invoices and manage the sales and purchase ledgers.
• Many of our clients use their own staff for the day to day tasks but use our services to oversee the operation on a weekly or monthly basis and to perform the more complex tasks. This saves a great deal of time at year-end.
• The bank account should be reconciled at least on a monthly basis and Sage has a great facility for doing this. However, to perform this task easily, you need to make sure that transactions are recorded with the correct references. Failing to do this correctly is one of the main reasons why a company's accounts get out of hand, leading to larger than necessary accountancy bills.
• If you struggle to interpret your Profit and Loss Account or Balance Sheet, call on a bookkeeper to explain it in plain English and give you a clearer picture of the assets, liabilities and net worth of your business. They can also perform aged debtor and creditor analysis to aid prompt payment of your invoices and ensure that incoming orders are not delayed due to late payments to suppliers.

Contact Dales Bookkeeping

To find out how we can add value to your investment and to arrange a free consultation, please visit

Call Roy Clements
MICB CB.Dip PM.Dip
01473 463741
07742 146011
www.dalesbookkeeping.co.uk
enquiries@dalesbookkeeping.co.uk