5 Accounting Resolutions to Make this Year

Another year and a timely resolution to focus on your financials, it can be a really good year and it all starts with understanding your accounts.

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” wrote Mr. Micawber in Charles Dickens’ David Copperfield.

We can all learn a bit from the simplicity of Micawber’s accounting. And while resolutions are often hard to keep, (only 8% of us actually achieve our new years’ resolution), here are 5 resolutions to keep you focused on your business.

1. Review last year’s figures

Whether you submit your return at the end of the calendar year or mid-way through it, now is a good time to look at your accounts and see if the figures all add up. You can use the calendar year to look back at seasonal peaks and troughs; analyse who paid what when and look for anomalies that you might have missed last year.

Your accounting software package will allow you to produce reports that you can talk through with your accountant.

2. Make a plan for getting money in

One of the Key Performance Indicators (KPIs) that I asked readers to examine at the end of last year was Accounts Receivable Turnover. This is key for monitoring cash flow as it measures the rate at which you collect on your outstanding accounts.

It is, by far, one of the best reports that an accounting software package produces. You can dig deep into the figures and see when exactly people pay you. This is something that you definitely need to keep a close eye on. Knowledge allows you manage the collection and your cashflow.

3. Ensure you meet your tax deadlines

One thing that we often see here at AG Associates is business owners starting off with the best of intentions to pay VAT, PRSI and all things tax related on-time. But business life gets busy and customer demands must be met. Cash-flow may not be as it should be (see resolution no.2) and suddenly you’re behind with filing.

Late filing brings all kind of complications from late fees, interest and penalties. It could also bring you to the attention of Revenue with an audit ensuing. This is one resolution that I encourage you to keep.

4. Set KPIs

How do you know if you’re ahead, behind or staying the same? Benchmarks and in accounting terms, Key Performance Indicators (KPIs). This is the time of year to set KPIs. They need not be complicated at the outset. They can be as simple as managing Debtor Days, like Resolution 2 above. Another one to set is to tell you whether you are pricing your goods or services correctly. Your gross profit margin should be enough to cover fixed expenses, in particular your costs associated with making the product or delivering the service.

There are other more complex ones which I advise you to add to your KPI arsenal. Your accountant can help out here but start with small ones. What gets measured gets done.

5. Get an accounting software package

Whether you look at a desk-based package or a cloud-based package, let 2017 be the year you automate your finances if you don’t already have one. You can connect your bank details, your credit card details and allow users to view and use the software based on permissions. It creates an amazing amount of efficiency in your business once its set up. Our preferred package is Sage but find one that suits your needs.

If you’d like to talk to us about anything in this article, please feel free to contact us. We can help keep your business in shape this year.

AG Associates is an accounting practice that specialises in affordable accounting and payroll solutions for the SME business owner. It also offers training on accounting software. For further information please contact Angela at Unit 11, Eastgate Way, Little Island, Cork. 021 4824723 or angela@agassociates.ie