Royal Bank of Scotland : Guest blog: Accounting for entrepreneurs

Having a solid financial infrastructure in place has never been more important. Whether you're looking for investment, need management information to understand how your business is performing or simply want to reduce your time spent on admin tasks, having accurate real-time accounting information is vital.

With so many businesses actively pursuing funding, competition for investment is exceptionally high - meaning financier decision-making can come down to the smallest detail. However, separating the businesses that succeed from the businesses that fail, there's almost always one common differentiator; having accurate and detailed financial information to hand is becoming a pivotal factor in the investment equation.

Lenders and investors expect detailed information with regards to cash flow, growth projections and profitability. If you can't pull together the data in a timely manner, you run the risk of losing credibility. Modern online accounting services can make a huge difference - enabling businesses to access key data and live projections at the click of a button, and produce the reports required by lenders and investors on a real-time basis.

Proper accounting processes can benefit a number of day-to-day business activities, not just the acquisition of funding. Understanding your financial model, and how it changes on a daily basis, allows you to make informed decisions to impact your cash flow and profitability immediately. It is important to understand where you are spending money in order to assess whether you are getting a good return on marketing spend for example. Another key factor is to ensure that you are collecting cash from customers within the required payment periods.

If you don't keep on top of your bookkeeping, you also run the risk of filing incorrect VAT returns, which can be really damaging when you consider penalties, interest and time spent on admin. Having a smooth accounting process in place will stand your business in good stead with HMRC when it comes to responding to queries in an accurate and timely manner.

In business, time is always a crucial factor, particularly for smaller companies. At KPMG Enterprise, we often find that when we first take on customers, they have been spending their weekdays working and their evenings and weekends dealing with paperwork. Although this can be laborious soul-destroying work, it is vital to maintain up to-date records, and make sure that information is reconciled to bank statements.

At KPMG Enterprise, we deal with all of the bookkeeping and bank reconciliation work for our clients because we see how important it is to do this work properly, and understand just how much of our customers' productive time is consumed dealing with this type of work. Small business owners spend around 20% of their time dealing with accounting so it is imperative these processes are streamlined. Getting the bookkeeping under control allows business owners to reclaim their social life in order to devote more time to growing and developing the business.

Entrepreneurs accept that starting a business is hard work, but it should also be fun. Admin tasks are certainly not fun, and there is a danger of individuals becoming disheartened and losing motivation as they spend time on areas that, in this day and age, can be streamlined, automated and outsourced at low cost.

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