Francois Marais

What does monthly accounting or bookkeeping entail? This blog is inspired by my wife asking me last night what I still have to do for a new accounting client in Somerset West. (My wife will definitely not be joining me in the Helderberg accounting business as with the web design business.)

So what does monthly accounting or bookkeeping entail ? Firstly let me mention that I perform all work myself and very seldom outsource even data capturing to junior staff like one would find at many accounting or bookkeeping firms in Somerset West. This may change in future once I have more monthly accounting clients who require that I offer a 100% outsourced function.

The lowest rate in the industry for data capturing I have come accross in the bookkeeping industry for data capturing (Gordsbay bookkeeper) is R160 per hour. It should be no surprise that many business owners themselves or via their staff choose to do the menial tasks like data capturing themselves. I have spend a lot of time training bookkeepers or various accounting programs over the years.

Sage Once accounting , now being called Sage Business Accounting (Second name change in less than a year) has made mass data capturing and accounting a lot easier and quicker. (Firstly you can import your bank statements directly into your cash book). The system is very user friendly with words like received and paid being used instead of debits and credits. When training bookkeepers I still draw T Tables and explain the double entry system of accounting and where debits and credits of certain transactions are posted. With Sage Accounting you can also map transactions which repeat every day, week or month. These transactions automatically then feed and get allocated into the cash books and simply needs to be reviewed.

Whether I do all the books or wether I training someone I like to start with the debtors of a business because this very directly affects the cash flow of a business. Explaining debits and credits with debtors and creditors processing is very easy because debtors are debited and creditors are credited on the initial transaction, well mostly. From there it is easier to explain secondary transactions. Very few businesses can afford to outsource the invoicing function of a business. What you might find is that the client does the invoicing but expects you to do the cash book capturing the receipts from customers while processing the bank statements.

For me the first most important accuracy check when doing monthly accounting or bookkeeping work is that the bank account as per bank statement balances with the cash books of the business. Some businesses have more than one bank account. Some businesses like another accounting client from Somerset West have multiple petty cash accounts. (The different staff working in different locations have different projects for which they require petty cash) .

So far the very basics have been covered. What one needs to achieve with your accounting system is that you are able to timeously send out monthly statements so that your clients can pay you within their terms. Having a correct age analysis helps to quickly identify problem customers.

So far I have described the very basics of accounting. Whether performing the monthly bookkeeping function partially or 100% myself when doing monthly accounting work I have to consider the following as well ( and co manage with management of the business) .

• Business owners needs to understand the gross profit and overhead expense of their business and for this accurate up to date accounting records are needed. This information is vital in making pricing decisions. Concepts like "Gross for net" -see footnote must be understood.
• VAT needs to be accounted for correctly and returns lodged in time
• VAT payments often heavily impacts cash flow and need to be budgeted for
• Provisional tax need to be paid every six months (This needs to be included in the budget)
• Not submitting Tax return in time will lead to expensive penalties and interest being levied
• Employees tax and UIF need to be deducted and  paid to SARS monthly
• The annual return of earnings for the Workmens Compensation fund needs to be submitted
• Suspense or clearing accounts need to be cleared. (Balances on the balance sheet (both debits and credits) need to reflect an actual Asset, Liability or Equity of the business.)
• Special consideration should be given to monthly cut off / the provision for accruals procedures so that monthly management accounts reflect the true performance of a business. When these figures are small and or remain the same on a month to month basis they can be considered / accounted for on an annual basis. If business owners and their bookkeepers understand their gross profit figures and fixed overhead structure a flash report can replace complete monthly management accounts.

So there is a little more than just processing transactions accurately and in time on a monthly basis. It needs to be done in order to manage the other factors mentioned. No wonder SARS made provision for the Turnover tax system for micro businesses.