A Story of Book Keeping

Once upon a time there lived a man who went to work every day and didn’t enjoy his job much.

One day the big nasty boss beckoned to him “come into my office Sugar” “don’t bring anything with you”

Alan meekly went into the boss’s office.  He was surprised to find that he was to be made redundant! Alan worried a little on his way home….. but then later in a pub as he drunk his brown and bitter split – he heard a man laugh – a very distinctive laugh and he turned to see who it was.  He didn’t know the man. But he got talking anyway turned out the man whose name was matt was some kind of finance guy and advised Alan to take his money and set up his own business.  What a great idea thought Alan and he went home to have a think,

6 months later Alan had indeed set up Sugarstream and was now happily going to work each day and selling his products quite nicely thankyou.

Each day he looked at his online banking so that each day he knew how much money he had in his account,   Having done his research Alan had also registered for VAT Alan was a clever man.

each quarter he added up his sales invoices vat and added up his suppliers invoices vat and took one from the other – whatever the sum was was what he gave the vat man – Alan was very pleased he had the vat sorted out because he’d heard such horror stories. After 6 months of trading Alan was becoming very busy and decided to take on a salesman to help him but he didn’t want to get embroiled in PAYE so he  took on a sub-contractor – it was agreed that the man Peter Jones would charge him for whatever time he spent on an agreed rate.  Easy peasy thought Alan.  Soon after, Peter had done so well that it was all he could do to keep up with bringing in the supplies for his products (he was now buying  them from the far east and Peter was saying he could sell them in Europe.  At this point Alan didn’t really have time to look at his vat so he gave it to Linda down the road to do – she had wanted a job and had a few hours to spare.  She told Alan she should just leave it all to her and it would be fine,  Fab he told everybody – what a clever man….

As time went on Sugarstream enjoyed more and more success Alan spent his days with clients and suppliers trying really hard to get the best deals and in the main he succeeded very well.  Linda employed a helper – even though she still only worked a few hours each week but she had all of that admin stuff under control and Alan had seen the vat returns so he was happy.

Alan had been buying more and more from the Far East – a particularly good contact in   Hong Kong was doing really well.  One day Mr Wang called Alan and offered him a special deal on product it was a big shipment – but it as a great buy price,  Alan decided that yes he should buy it – Peter could defiantly sell it so it was all good.

The product came into Manchester airport within the week – the usual notification came to Alans email but then he noticed the amount for Import VAT  it was higher than normal and he knew that would have to be paid before he could take over the shipment– Alan quickly checked the bank via his trusty online service – He had most of the cash so he paid that and thought he would pay the rest when more came in – his customers paid by bacs  and Linda hadn’t said there were any problems so he knew there would be more to come -–  he transferred the sum immediately.  What a clever man……

Alan called the agent and said just hold onto the shipment overnight and ill pay the rest tomorrow.  Tomorrow though nothing came into the bank and Alan didn’t realise til late in the afternoon.  He asked Lindas helper “has anything come in by way of cheques” dunno she said Linda isn’t here – Alan resolved to ask Linda tomorrow.

It took a week of Alan looking at his online banking to see that he could at last pay the VAT and take over his goods – He was a very happy man.

The next day Linda called him “we have the quarterly VAT to pay and there isn’t enough money and it has to be paid today”

Don’t be silly Alan thought we don’t pay vat on the last day that’s been paid.  “ill come into the office then” he said.  The vat was in fact due and so was a huge bill from the airfreight agent because by delaying the payment of import vat the goods were stored at the airport – a massive cost. That took most of his money so he asked Linda when will more be here – well tomorrow but then we have to pay these and redfaced she produced a whole pile of suppliers invoices… the amount they added up to way surpassed what would be in the bank.  Linda was scouting around her desk looking for “those invoices I sent out”

How do you record them Linda Alan asked – I write them in a book she replied how do you know who has paid he said er  I look at the bank statements …..

Alan didn’t feel very clever now……

Back in the pub he heard matt with the laugh and he said you’re  a finance guy what can I do  “matt said speak with your accountant,”  Alan didn’t really want to the accountant was his brother in law and he had only said yes to appease his sister….. anyway everybody knows accountants just add things up and charge you for it

Matt said – I can ask one to call you.

The next day a bright voice on the end of his phone said “hi my names Mike im a 2 partner chartered accountant from Warrington how can I help you ?”

Mike went see Alan and when he found there were no “books” he said brightly “

First of all you need to get your books in order – who is your bookkeeper>”

Alan replied

Bookkeeper? Oh you mean Linda –

Mike said – is she a book keeper

Well  she gives me a few hours each day and looks after the vat and invoice things.

How much money are you owed right now?

Erm ? ooo well er not much because all my clients are great payers

Ok how much money do you owe right now ?

Erm well  you’d have to ask Linda

Mike sighs (another one – he thought) ill send somebody tomorrow when she has finished she will call me and ill come back then we can get things moving and sorted for you.  When she comes tell her to sort out the VAT.

The next day she arrived “Hi Sue Bridgford – SBI Books”

The vat office were called first an arrangement to pay over time was agreed

Then she went through all the desks and all the filing cabinets and she took every bit of paper and put in huge piles on  a desk.  Then she got her laptop and began tap tap tapping – she asked for bank statements for cheque books  telephone numbers paying in books vat returns….she even asked him to bring in all the receipts for things he had bought at Tesco – he wasn’t quite sure why she wanted his weekly shopping bills but he brought them anyway. She went through everything giving back his weekly shopping receipts!  and she drank gallons of tea! Alan was scared of her…. One day they ran out of tea – what no tea she bellowed btw Alan how much do you spend on tea ? he didn’t have the faintest idea – shall tell you she asked – he looked blankly – upto 2 months ago you have spent £58.35 on tea and £36.74 on milk – toilet rolls – you have spent a huge  £188.37    How do you know that asked Alan

Because im a book keeper and its my job to find out. After 4 days Alan was sat in front of her in his office – she had the officious looking laptop in front of her and she was tapping on it and reams of paper were coming of the printer.

She put various papers in front of him. He was scared.

“ok this is what you owe”

This is what you are owed as of today

This is whose payments are very late and by how long

This what you have paid in vat and this is what you currently owe in vat

This is what you haven’t claimed but should’ve done so can do on the next return

And this is a list of your different supplies and how much you have spent on each

This is what you have in the bank now and this is what you should expect to have in the bank by month end

Alan was flabbergasted

If you’d ve had this info when you said yes to Mr. Wang you would’ve been able to plan better and would’ve saved yourself the huge airport storage cost and that’s only for starters – You can scrap your word document invoice and can produce  a better one  from within the accounts software from that you can see who owes what and when its due and if its late.

The scary one called the bright one and the following day he came into Alans office – he didn’t drink much tea he was a “water” man ok he said and he looked at the scary ones laptop.  I have all of this on my system now Alan so Ill go away and sift through it then ill tell you how your business is doing from a health point of view how it should look in the future and how you can make it perform better,  I will also tell you how to save money, and how much profits we can extract from your company.

After that we will meet with you each quarter to discuss your business and we will also set up currency accounts for you so that you can get the best from rates of exchange.  The bright one was like a fairy godmother not only had he sent the scary bookkeeper, but then he sent  a man called john who helped him save money by leasing him a car a man called Tony who delivered an all signing all dancing website and gave him tuition to boot – thus freeing up a little of Alans time for flying lessons,,,,. Another John who could support his newfound IT   Some bubbly girly who wasn’t quite as scary as the book keeper also came in to talk to him about health insurance….oh the joys of all this thought Alan – Im so clever……..

But he wasn’t as clever as the bright one for he was a member of a networking club and they worked on business referrals and he was the brightest man there for 2 whole weeks……. But only because the originator – some guy called matt was on holiday……

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