3 Easy Ways to Check Your Own Book-keeping

Kirsty Young Business Tips

If you are carrying out your own book-keeping on accounting software, this may sound familiar!

  • You’ve done all the data entry.
  • You pat yourself on the back for a job well done.
  • You go to complete your tax return – but something doesn’t look right.
  • Or you’ve given it to your accountant – and they tell you things are wrong.
  • You experience frustration :- )

We’ll let you in on a big trade secret here:

Book-keeping is actually difficult and almost everyone, including professional book-keepers, make mistakes.

The trick is to know how to spot the mistakes to correct them.

In this short blog, we’ll share 3 quick tricks to help you check your own book-keeping, and spot errors yourself.

1. Check your ‘Accounts Payable’ (‘Creditors’) report in your accounting software

This report shows you how much money you owe to your suppliers. It can be a very simple place to spot errors.

The tell-tale signs of a problem in your book-keeping in this report will be:

    • Negative balances. Unless you’ve overpaid a supplier, no balance should be negative.
    • Positive balances that aren’t correct. You know you’ve paid your supplier, so the balance should be zero.

If you spot either of these errors, you should go into detail on those balances and investigate.

A common error here is you’ve paid something personally, rather than from the business bank account. (We’ve all done it!) All you need to do to correct that is pay the bill off using owner’s drawings or the directors loan account (usually).

2. Check your ‘Accounts Receivable’ (‘Debtors’) report in your accounting software

This report shows you how much money you are OWED from your customers or clients. If you have a cash-based business, the balance in this report should be NIL (as no one should owe you any money).

The red flags to look for are:

    • Negative balances. There shouldn’t be negative numbers unless your customer:
      • Is in credit due to a credit note
      • Has overpaid
      • Has paid in advance
    • Positive balances that aren’t correct. As before, you look at a balance and KNOW that the invoice has been paid.

For both of these red flag errors, you should investigate why these balances are wrong. Often you can just double click the balances on the report to drill down into the detail.

When investigating, look out for these common errors:

    • Allocating a payment to the wrong customer
    • Not paying an invoice off that was paid cash/to you personally
    • Receiving a payment into the bank that you’ve forgotten to raise an invoice for

3. Load up your Balance Sheet report in your software

We like balance sheets! This ‘overview’ report shows you the financial position of the company. It includes everything it owns and owes, from bank balances and money that customers owe you, to money owed to suppliers and finance companies.

Change the date of the balance sheet report to the date you know the bank balance should be correct, and then check the balance of the accounts.

    • Is your bank account balance in this report as per your bank statement on the same date?
    • If you have amounts showing as owed to staff or HMRC, are these correct?
    • If you have amounts showing as owed on a loan, is that correct?

Start investigating the transactions in these accounts if they are not correct.

There are actually a few ways to do this type of check. We just find for most non-accountants that the Balance Sheet is a good way to view this information.

I’m struggling with my book-keeping – help!

The time to act is now, before it gets really messy! Ask your accountant for help, or call for a paid book-keeping review with us. We’ll take a look at your books and offer advice on what to do next.

We also offer 1-2-1 book-keeping training to help you get to grips with everyday book-keeping for your business. We tailor the training to your skill levels, so even the most experienced can learn something new and become more efficient and effective.

Best of all, you don’t need to be a Heelan Assocs client, so it’s a great way for you to get the help and training you require, when you need it most.