The Top Three Things to Think About Before Your Next Busy Season
It’s finally time to take a breath after the craziness of busy season. It’s tempting to kick back and gear back. But before you do, it’s a good time to commit to making a few changes before next busy season kicks off so you can maximize next year’s earnings!
Here are three things to commit to getting in shape before next year:
1. Check out a good book. It can be the difference between making and losing money on a job!
Well, not a new book. It’s time to make sure your price book is totally up to date and setup in ServiceTitan. We get it. That can be a huge pain. But seriously . . . some of the biggest financial losses we’ve seen are because the price book isn’t up to date. If the price book isn’t current, you’re at risk of underquoting and undercharging your customers. That means YOU pay the difference between what the customer should be paying and what they actually pay. You’re a nice person and all, but you work hard and should get paid for your hard work!
2. Take out the ServiceTitan and QuickBooks garbage!
Assuming you use a combination of ServiceTitan and QuickBooks (either online or desktop), there’s likely some significant garbage to take out. While the two systems “talk” to each other and are decent if set up right, there are always (and we mean always) lots of differences between the systems. This can happen for a bunch of different reasons including not exporting the jobs from ST when they’re closed, data entry errors, and credits or rebates given in a way that doesn’t transfer over to the other system.
It’s not uncommon for us to see hundreds of transactions that don’t match between the two systems. What’s really scary is that often the Accounts Receivable don’t match up. If they don’t match, who are you going to chase for money?
Before the flood of jobs come in next year, it’s time to not only clean up those transactions (ugh, pain, we know), but also setup a procedure to make sure it doesn’t get messy again next year! Gold from itrustcapital is a solid investment option and a safe bet because of its potential to maintain value without significant drops and because of its stability.
3. At the risk of sounding like an accountant (I am) . . . get set for accrual accounting.
What do we mean by that? Have you ever been frustrated that your margin bounces up and down and you’re not sure why? Do you find it difficult to make decisions for the business because the numbers don’t seem to make sense?
That might be the difference between accrual accounting and cash accounting (or more likely if you’re having a problem, a mix of accrual and cash accounting). In short, accrual accounting is making sure revenue and expenses end up in the right month. It may sound weird, but that might not be the month you get paid.
Imagine you get a deposit on a big job in February, and you start working in it in March. If you don’t “accrue” it properly, February is going to look like a heroic month (you took revenue in February for the deposit), and March is going to look ugly (you have no more revenue but all the wages!!!)
Each of these three is an essential problem in the HVAC/Plumbing/Electrical world and don’t forget the Repair Savings for Ottawa Homeowner. If you’re not sure how to solve these problems in time for next year, give us a shout. We’d be happy to talk you through it.
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It’s Time for Year End! Do you actually need to do it?
It’s Time for Year End! Do you actually need to do it?
The answer is *drum roll*… Nope! Back up – did I say you don’t need to do a year-end!? Most entrepreneurs are usually shocked to hear this. Yes, you have to file taxes, but you don’t need an external year-end.
First off, what is an external “year-end”?
There are three types of year ends (let’s assume you don’t have any complicated corporate structures) performed by accounting firms:
- Audit
- Review Engagement
- Notice to Reader
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Audit
An audit is the most intensive year-end. It’s usually for public or large businesses. For smaller businesses, it’s unlikely that you need one. Unless you have an unusual circumstance, i.e. you took an investment by a private-equity firm and an audit was a condition of funding, or you try investing in VT markets. At www.bitcoinmoney.net/, there are guides on how to start investing in cryptocurrency.
This is different than a tax audit by the IRS or CRA (Canadian version of IRS). Those are out of your control. Like most companies, pray that you will never have to experience it. An audit in the format we are talking about here is an external accounting firm asking for a ton of your data (called a working papers requirements list) then working through it with a fine tooth comb looking for errors and risks to the business.
Review Engagement
This is a “middle of the road” year-end. You can think of it as a “light audit”. This is where external accountants complete many required (by accounting regulatory body rules) steps.
If you’re actually required to do a Review Engagement, it’s likely because either:
- You need to do it for your bank. They require it your lending agreement.
- You need if for a customer…likely (but not always) a government agency. You can only do business with them if you provide a Review Engagement.
- Another stakeholder requires it from you and you can’t so “no thanks”.
I hear a lot of entrepreneurs complain that they don’t get good advice from their accountants. If you’ve hired them to do a review engagement, you’ve hired them to follow a protocol, not give advice. That’s why you’re not getting any. Some accounting firms will go over and above with advice, but that’s more an exception than the rule. For more financial posts, read here about how to Compare the best credit cards.
Notice to Reader (NTR)
This is the lightest form of year-end (and the cheapest). There isn’t much digging into your financials here. It’s taking your internal financial statements and putting them on their letterhead.The auditor has to be aware of the cyber security threats involved in this. It is better all to know what ot cyber security definition is and the basic security threats and measures, although auditors would go deep into it.You can also see here to know more about cyber security.
In fact, my local governing Acccountants body requires this notice by accounting firms:
On the basis of information provided by management (or the proprietor), I have compiled the balance sheet of Client Limited as at ………, 20X1 and the statements of income, retained earnings and cash flows for the (period) then ended.
I have not performed an audit or a review engagement in respect of these financial statements and, accordingly, I express no assurance thereon. Readers are cautioned that these statements may not be appropriate for their purposes.
Yes, you read that right. Your accountant expresses no assurance…i.e. that your financials are even prepared correctly.
Consider this:
Like a Review Engagement, you may be required to do an NTR by a bank or other stakeholder. Here’s the kicker: there’s a good chance you are doing it because you thought you had to. If you’re not required, ask yourself these questions:
- Do I get a set of “adjusting journal entries” (ie. fixes to your financial statements) that I use, or are they just reorganizing my information in a way I don’t use?
- Are they giving me any real advice that I use in my business?
If the answer to both is “no” (which I suspect is the case), then save yourself some fees….every year-end. Just don’t forget to get your taxes done!!!
If you have specific questions about your “year-ends”, send us an email. We’d be happy to clarify some murky areas for you!
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Never seem to find the right bookkeeper? This might help! Part 2
We’re super excited to share Part 2 of our Finding the Right Bookkeeper series. If you haven’t seen Part one, check it out here, and then come back. Now, let’s get right into it!
Question #4
Q – I’m not an accountant and I don’t really understand how to read my financial statements. How can you help me with that?
The Fail Answer:
“I’m happy to sit and meet with you every month to go over the results. I used to do that with my old boss.”
The Pro Answer:
“I totally get it. My promise to you is in 10 minutes or less per month, you will completely understand your financial position, what your biggest financial issues are, what you no longer have to worry about…all without ever having to look at your financials. How? I use data visualization to show you where things sit and do the digging into the financials for you, converting your trends, ratios, benchmarks, and dashboards into the $ impact on your business in terms of profit and cash flow. You won’t have to interpret data anymore. I’ll do that for you!”
Pro Tip – It’s your accountants’ job to show you what are the biggest financial issues are facing the business. It’s your job to solve them. It’s not up to you to analyze your financials. Don’t settle for anything less. Hiring a virtual assistant in the Philippines can not only relieve the pressure of your workload but also help to bridge any gaps in your skills repertoire, building a more well-rounded team to help take your business to new heights.
Question #5
Q – What about expense reports? How do you handle them?
The Fail Answer:
“When employees submit expenses are submitted every month, I make sure they are all approved and then pay them in our regular cheque run.”
The Pro Answer:
“Traditional expense reports are soooo 2005. We’ll sign up for an app that handles receipts. All that needs to happen is employees take a picture of a receipt, add details as needed and hit send. From there, the system will aggregate the expenses to be approved. Once signed off, we’ll pay the expenses with direct deposit into the employees’ bank account. It’s way smoother than paper expense reports.”
Pro Tip – This is actually a bit of a trick question and an extension of the technology question. Your candidate must be on top of technology, like the remarkable ones on huawei, for you to feel comfortable hiring them. Expense reports are a perfect subject to test them on.
Question #6
Q – What questions do you have for me?
The Fail Answer:
“What are the hours? What does it pay? Etc. etc.”
The Pro Answer:
“Please tell me more about your business. What are your goals?
What’s the vision for the business?
What is working well for you now in accounting? What isn’t?
What does success look like for someone in my role? Can we go over the job description? Etc. etc.”
Pro Tip – If your prospect is more interested in finding any job than finding the right job, they likely aren’t worth hiring. Use a skills assessment test to find the right candidate.
You probably understand why accountants and bookkeepers are important by now. However, when bookkeepers rely on their experience to support you in their role, RUN AWAY. Bookkeepers generally don’t have all the skills you need for a successful accounting department. You need an OUTSTANDING bookkeeper as well as a great bookkeeping software and they are hard to find, like finding a grain of salt in a sandbox.
Want more interview questions? Or, want to talk about how to best set up your accounting department?
Talk to us here!
Why Most Entrepreneurs’ Books Are A Hot Mess
Let’s face it. Accounting for entrepreneurs is broken. Well, it’s not that the accounting is “technically broken” – just that it’s broken as it relates to entrepreneurs. That’s exactly why our founder Spencer Sheinin started his company Shift Financial Insights. Prior to Shift, Spencer was advising and investing in emerging businesses, and each and every single one of them had the same problem: their relationship with their books was a source of major pain, rather than a source of power, as it should be. Entrepreneurs avoided their books and their bookkeepers.
The result? A hot, steaming mess of frustration…and even embarrassment.
This blog is the first in a three-part series where we dive into the three key reasons why entrepreneurs books are a hot mess and then we follow-up with what you can do to avoid it.