MONEY SHOP


Our financial plumber, David Gummer, offers timely advice on year ends. M


any of you will have your year end at the end of March. I thought I would write a very


dry piece about this exciting time of year (sic) I know figures are very dull but they do give


you an insight into where your business is at this point. Sadly, figures can never lie. Although you can interpret them in whatever you want!


I am boring and have all the figures up to date


throughout the year so at the end of the year all I have to do is put the finish touches to it.


The hardest part of this process is valuing


the stock. The new stock that is anything that is less than 2 years old needs to be valued at 100% at cost. After that we do it on a sliding scale. I am sure many smaller shops like ours have pieces of stock that are really old. It is a good idea to write off any stock that is more than 5 years old. It may not keep your stock clean but it is a fair reflection on its value!


Before I start collating this year’s figures, I get


out the bound accounts from last year to have a look at the costs for the previous two years. This will tell me if I have been doing my job properly!


Whilst, I have no control of the customers that


come through the door, I do have control of where I get my energy from, my telephone and of course to check what my accountants charged.


If there is a huge hike in any of these, I look at


the reasons why. Obviously there may have been one off expenses like redecoration or a new computer. This should be reflected in the company report, so that anyone reading the accounts can understand what has happened. Obviously big companies often write long company reports. It is worth remembering that


22 • FOOTWEAR TODAY • MARCH/APRIL 2017


the Lord’s Prayer is 66 words, the Ten Commandments 179 words and 286 words in the Gettysburg address.


Less is more here.Keep it short concise and


deliberate! No one is going to read vast swathes of text that is off the point!


I produce a profit and loss summary so that I


know exactly what has been spent. I do not work out things like depreciation, but it gives me a good idea what the figures will look like when they come back. It also tells me what to expect once the books are collated. It means there are very view surprises.


When I look at the sales figures I look at what


percentage each supplier contribute to these. I know this is very dry now. Each supplier should give you a return above what you have paid them! If you have paid a supplier £10,000 and you have had a return of £8,000 that is bad news if on the other hand the return has been £15,000 or more that is very satisfactory. This includes the stock still on the shelf.


I know people just give their figures to their


accountant to work out for them. That is absolutely fine, but do read what they send you back. If you struggle with getting to grips with these figures, get someone to help you. Obviously, you cannot change what has happened, but in tough economic times every saving you make that does not impact on the running of your business is worth doing!


I have a check list including all the accountant


needs to be able to do the books. In simple terms they need to see your sales figures, your invoices and credit notes and your supplier statements as well as your petty cash and your expenses.


Good and accurate record keeping keeps your


accountancy bill low, as their costs are a reflection on the time the accountant takes to do the accounts and the number of questions he/she need to ask. You are paying for their expertise, but try to make it as easy as possible.


When the figures come back, before you sign


them it is worth checking them, as even accountants make mistakes! Obviously, make sure you have maximised your income for your shareholders - and that means ensuring that you pay the right tax, not too much but not too little!


I hope that this article has not cured your


insomnia! It is part of running an effective business.


In conclusion my biggest recommendation is


keep all your admin up to date throughout the year as this will save you lots of time at year end. I delivered my accounts for approval on Monday 3rd April.


I promise a less dry article next month.


You deserve a drink and maybe a treat (I am not buying though!) if you reached the end of this!!!


If you would like David to look at your business costs, he promises that if he cannot save you any money you pay him nothing. But for every pound he saves, you pay him 15 pence.


If you want to learn more, email David on david@fdickinsonfootwear


.fdickinsonfootwear .co.uk,


call 01229 580654, or visit www


.co.uk


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