Institute of Certified Bookkeepers

A Different View - Tell Them

Many clients would value an outside view, your view, as to what is happening in their business. (Acknowledging that some do not)!

You have a skill set and a perspective on what changes and how those changes will impact the business.

Phase 1: The First Conversation

However, to start when you are not sure they want to requires little steps.

If the business management is not expecting the work to have been done and hasn’t been introduced to the concept of you providing the advice, it may be unwise to dive in head first and to dive in too deep.

But you are seeing things in the numbers and thinking it would be good to pass this information on. It may be a gradual series of conversations and development of that information over a period of time.

An Example – Pay Increases

Maybe the award rates for payroll of staff have just increased, or if pay rises have been advised: it is worth quantifying the total difference on payroll maybe for each pay period or each month, quarter or year.

This would include the affect the pay rise has on the total cost of remuneration: Yes the fortnightly net pay amount but also the timing of each month’s/quarter’s PAYG Withholding amount. Include the amount of Super that now needs to be paid, the increase in the Workers Compensation premium and how much closer to the Payroll tax threshold they may be, or the increase in Payroll tax as well.

 New PayrollPrevious Payroll
Estimated Net Pays per pay period    
PAYG Withholding to be paid (each month / quarter)    
Total Superannuation to be paid (each month / quarter)    
Payroll Tax to be paid (each Month)    
(or noting that payroll tax will need to be paid when Gross remuneration reaches $x, you are now at $y)    
Workers Compensation Premium (Annual Cost)    
Total per month    
Total per year    

The above table provides the cold empirical differences

This could lead to a conversation about whether the increased costs can be absorbed in current trading or what increase must occur.

If you are feeling adventurous you could take this conversation one step forward.

Discuss How the Changes Affect Profit

Again we would advise little steps and gradual information if management is not used to you providing this information.

 2016 with New PaysActual 2015 P&L
Total Wages    
Total Superannuation    
Total Workcover    
Total Payroll Tax    
Total remuneration costs    
Additional Costs in 2016 compared to 2015    

Starting the conversation can be intimidating; our advice is to gradually develop the normal conversations you are having now. You should already be getting the business management to approve the reports (the BAS) and authorise payments before they are submitted. Add the information above to the first reports and draw their attention to the information about the differences.

Supplier Costs

Bookkeepers tend to be the ones most intensely dealing with supplier invoices. Suppliers sometimes slip in (accidentally of course) an increase to their standard charges without seeking consent or maybe without even advising of the change. When you observe the increase, bring it to management’s notice. Before you are involved in paying an invoice that has increased charges ensure that you have been authorised to pay the increased amount. This provokes the conversation about how the increased charge will affect your business.

 $Previous Payroll
Previous charge per unit / time / delivery    
New Charge per unit    
Increase $    
Total increase to costs per year from this suppliers increase    

Again, if you are feeling adventurous, develop this conversation into a discussion on how much more the business needs to charge to ensure they are making at least the same amount of money.

Should You do This?

We believe that every bookkeeper is in the role of noting changes to business costs. Therefore you should ensure that management is aware of changes. If you are responsible for making payments to the suppliers we believe it is your obligation to ensure management authorises the payments and specifically authorises any payment where there is a change to the costs from the suppliers.

If you are specifically instructed not to take any notice to changes to costs but are instructed to process the invoices received and the payroll advised, we believe you must ensure that the invoices and payments are still authorised by an appropriate part of management.

Continuing from above, we offer some thoughts on how to give your clients a different view of their business.

Phase 2 - Reporting Trends You See

The Scenario: your role is typically historical bookkeeping: you process the bank feeds or from statements, you allocate to codes, you check the GST, you produce the numbers for the BAS.

How do I begin to get involved in providing more information to management?

Each time you have an opportunity to provide a “required” report to management, provide them with the supporting reports but also provide them with something that tells them about the business.

You have produced the BAS, therefore the numbers have been verified.

  • Provide them with a Profit & Loss Spreadsheet report – a month by month trend that they can see their level of income trending over the year, compared to their costs trending over the year.
  • Provide them with a Profit & Loss comparison report – how does this month compare to the same month last year, how did this quarter compare to the same quarter last year, how is this year to data comparing to the same period last year.

Be adventurous; highlight the items that you believe show some real differences in what is going on in the business (if there are any). If it is all the same then let them know it looks the same as last month, quarter, year.

The scenario: the business accounting is active bookkeeping – full live accrual accounting, debtors system and maybe creditors system.

Arguably this makes it easier to provide additional information that the owner should be aware of. Provide them with the Aged Debtors list, highlighting slow or problem accounts. Provide them with an aged suppliers list (this becomes more important if you are actively managing cashflow).

This leads to the early reports and information that you can provide for cashflow management (next month)

Today’s Cash vs Tomorrow’s Cash

In my early days of running a business I used a very simple cashflow spreadsheet to tell me whether I needed to take some different course of action. When does the current cash run out?

Cash balance in the bank……

Schedule of known payments

  • then in date order for 2 to 3 months out list
    • Regular monthly payments
    • Rent
    • Leases
    • Monthly service charges
    • Monthly subscriptions
  • Include payroll into the date order
    • Each fortnights net pay
    • Each months / quarters BAS
  • Build in the regular tax payments due
    • The PAYGW amount might be easily predicted
    • The GST BAS amount might need to be reviewed regularly

The spreadsheet lists the date, the amount of each payment and the running balance of the cash account. Because you have no Inflow here, the sheet shows when the cash runs out. It concentrates the thinking to ensuring money is being received.

A Difference View - Tell Them

This deals with that business who is managing their cashflow on a daily basis.

Next Step

Business who have a cash working capital that allows a bigger picture to be considered or alternatively can predict with some degree of accuracy the likely cash inflow should move to a longer term, more comprehensive prediction of the trend of the cash balance. Initially spreadsheets may be the tool to use. We quickly moved beyond doing this by spreadsheet to embracing cashflow management tools like Calxa.

Many people predict cashflow based on Profit & Loss only. The Profit & Loss not taking into account the timing of income compared to when it is received nor the actual timing of payments can cause problems.


  • Updated: 11th November, 2015