When did you last check your data?

Aug 28, 2020 | Fintech Friday

There will be lots of businesses out there that have moved to cloud accounting in recent years. At the very minimum they should be benefiting from automated bank feeds and a streamlined reconciliation process, which most of the software options provide… but what’s next?

In practice, you should be able to pull reports from your software in real time, to give you practical information – such as an estimated corporation tax figure, VAT liability, available bank balance, list of who owes you money and who you owe money to – all of which are crucial to manage cashflow and allow you to plan for the future. But as the old adage goes… put rubbish in – get rubbish out.

When was the last time you checked your data? Have you considered the implications if you don’t?

Not only does poor data impact your financial resources, it also negatively impacts your efficiency, productivity, and credibility – wasting time, money and energy to put it right.

Here are 3 of the most common issues we see time and time again which result in bad data, and which have serious implications for what you get out of the software.

Multi-coded contacts – This means transactions with the same supplier/contact that are coded to different nominals in your accounts, and/or that have different VAT rates applied. As a result of multi-coded contacts, your P&L might not highlight your spending correctly – so you lose some control over it. And, as a worst case scenario, it means you’re not claiming VAT where perhaps you could, or that you’re not claiming tax relief where it would otherwise be available.

Incorrect details – Things like wrong date, wrong due date, transposed numbers etc. would all impact the financial statements and the use of any additional technology that relies on that data. For example, wrong due dates would mean poor results from automated credit control, inaccurate payment runs and cashflow reporting.

Duplicated transactions – Duplication happens most often when you’ve entered several invoices into your software that look like they could be the same thing e.g. similar dates / amounts / references. We often see transactions dealt with as bank payments as well as via an invoice, so the cost is effectively logged twice. It can also happen when the payment is reconciled before the invoice is received and entered. This can start to create potential problems – increasing your costs and reducing your VAT liability incorrectly.

Errors can be useful though, if you can learn from them. They can identify weaknesses in your processes or gaps in knowledge that can be easily fixed with a bit of accounting wizardry. We have a whole host of tips and tricks, alongside our detailed knowledge of apps, that can help you get faster, more accurate and more relevant data going forward.

Good quality core data gives you many more options for high level finance function improvements such as automating credit control and cash flow forecasting. Accurate data also means:

  • accurate predictions
  • reduced financial risk
  • more effective planning
  • increased profitability
  • streamlined processes (automation, automation, automation)
  • cashflow visibility

How good is your data?

For those businesses on Xero, not already taking advantage of Harold Sharp’s outsourced (bookkeeping) services, we are offering to produce a free “data health score”, produced by running one of our diagnostic tools over your Xero data. This will raise possible issues in certain areas, and will highlight where further assistance is required – see our digital advisory data offering.

Click here to contact our team and request your free digital health score.

How can we help?

Our dedicated digital advisory team has access to specialist diagnostic software which can help spot potential issues. Our team can help you understand the diagnostic reports and help fix any problems, if that’s what you need. We offer this support in 3 different ways – click here to find out more about our digital advisory data offering.