It's hardly the stuff that dreams are made of. Not exactly the adrenaline-fuelled rollercoaster ride that makes us leap out of bed in the morning saying "Yes! Today, I finally get to do my accounting!"
If you're a company director, you probably want to spend your time on more exciting pursuits, like growing your business and driving it towards success.
And yet, there's no escaping it. It's a legal obligation to do your bookkeeping within imposed deadlines or face heavy penalties.
The good news is that there are modern solutions that make it simpler for you to organize your accounting and make the bookkeeping process so much more efficient.
So, if you're fed up with your accounting chores eating into your evenings, weekends and holidays, here's how you can stop that happening. Read on for four helpful tips on how to save yourself precious time making sure all your numbers add up.
Tip #1: outsource your bookkeeping
Accounting is a science, a professional trade all to itself. It needs to be learned, but not everyone is a master of numbers, calculations and spreadsheets. If number-crunching is not your forte, why not bring in an expert from outside? Call in a chartered accountant, a certified pro who can take the problem off your hands.
💡 Good to know: only a licensed, accredited accountant with formal qualifications, experience and membership of a professional body is legally qualified to handle a company's accounts and dealings with tax authorities.
Such accredited accountants are known as CPAs (Certified Public Accountant in the US; Chartered Professional Accountant in Canada) or Chartered Accountants (in the UK). In France, they're called 'experts-comptables'. An 'accountant' (in France, a 'comptable') is a job title in itself and they can give you advice on simple issues, but without the accredited licence, they are legally unqualified to file tax returns and financial reports.
In any case, it's usually wise to delegate accounting as your company grows. Most SMEs fall under what are known in France as the "real normal tax system" or "real simplified tax system" (respectively 'le régime réel normal d’imposition' and 'le régime réel simplifié d’imposition'). Both of these systems demand strict accounting obligations and require the following:
- up-to-date company ledgers (accounts books);
- annual accounts including a Balance Sheet, Profit and Loss Account and all relevant accounting appendices.
A certain level of expertise is necessary to satisfy these legal obligations. If you're not familiar with calculating write-offs or assets, you're likely to make mistakes and certain to spend plenty of time doing them. So, if you can, let an expert handle them.
It's worth bearing in mind that an external, certified accountant is a strategic asset for a company. His or her job goes much further than simply doing sums and keeping your books in order. An experienced, qualified accountant can help in a number of other domains: human resources (drawing up work contracts), tax (advising you on how to best exploit your fiscal payments) and legal affairs (drawing up your company statutes and client/supplier contracts).
Tip #2: 'little-and-often' is better than 'all-at-once'
Estimates and invoices make up part of the daily routine for many business owners, as do business expenses.
💡 Remember that you are legally obliged to record all of your incoming and outgoing payments in your company's financial ledger, regardless of which tax system you are bound by. This is also the case for micro-enterprises that benefit from a simplified tax system.
Every cent coming in or going out needs to be accounted for in your revenue and purchasing ledgers. It's not a great idea to enter all this information at the last minute. If possible, set aside some time each or each week to get the job done progressively as you go.
Yes, these tiny little tasks are a pain. But they're less of a pain that doing them all at once, just before deadline day. Doing a little and doing it often will save you a considerable amount of time in the long run.
The same goes for your accountant if you decide to outsource. They probably won't appreciate a last-minute rush, so make sure you hand them all the documents they'll need as and when you get them. A CPA worthy of the title will no doubt remind you of this!
Tip #3 : Automate your accounting documents
The paperwork associated with accounting can build up quickly on your desk: ledgers, inventory, invoices, expense reports and purchase orders are just some of the documents you need to keep your books in order. The problem is you're not even allowed to get rid of it all.
Legally, you're required to keep your records for 10 years. A whole decade's worth of paperwork takes up considerable space; that's a lot of ring binders and filing cabinets. And if you do receive a visit from the tax inspectors, it can take some time to find the slips and pages they'll ask you for.
Surely there's a less archaic, more 21st Century way of doing things?
Of course there is!
There are digital solutions available today that do your organizing for you, based on the principle of automated digitization: turning something analog into something digital. Thanks to such technology, you no longer even need to write or sign some documents by hand. Everything is kept in a digital database and you can pluck the necessary paperwork from your archives with a click or two of a mouse.
These digitized documents have the same probative value - the same legal authority - as their paper ancestors.
You do still need to guarantee these documents are authentic and valid, which is why you should be careful when it comes to choosing which accounting or billing software you want to trust with your documentation. Make sure the solution you choose possesses the technical features (like electronic signatures, for example) that are necessary for your paperwork to be reliable and fraud-proof.
Some solutions, like those proposed by Qonto, certify your digital receipts. In other words, your e-documents have the same legal value as your old paper documents. You can breathe easy when the URSSAF or inland revenue come knocking.
💡 Important: a 2015 French law made it obligatory to send dematerialized invoices - non-paper bills - when contracting for public institutions. This 'e-billing' requirement is likely to be extended to B2B transactions (between private companies that are subject to VAT) by 2025.
It's no longer a question of whether to embrace automated digitization, it's now a question of when.
Tip #4: act fast and act early to avoid unpaid bills
Unpaid bills can be a serious burden for businesses.
For one thing they can have a serious negative impact on a company's treasury. Let them build up and you may struggle to meet your own payments, such as employee salaries, taxes, social charges or business expenses that are essential if a company is to function. Not taking rapid action can threaten the financial stability of a business.
Another potential negative consequence is the time that unpaid bills will make you waste on your accounting.
An unpaid bill can be one of the following:
- a doubtful debt is a debt that has gone unpaid for a long period of time and is likely to remain unpaid;
- a bad debt is one that will never be paid (for instance, a customer goes bankrupt).
These above kinds of debt need to be treated in a certain manner when entering them into your bookkeeping. For example, a bad debt needs to be justified by a certificate that proves the debt is unrecoverable. It's another headache you could do without.
So how can you avoid unpaid debts?
The key is prevention rather than cure.
Before taking on a new customer (and particularly if it's a big account) do a little digging to find out about their financial situation and solvency. You are well within your rights to:
- seek certified, key information about a company on the official Trade Register Companies. In this database you can find out about a potential customer's legal representative and statutes, its capital, turnover and profit statements. It's worth noting that some accounts may be subject to a confidentiality clause.
- ask the potential customer to provide you with written proof that they have no debts and respect payment deadlines.
If it's too late for such due diligence and you've already signed a contract, there are still options open to you if you're worried about whether a customer can pay what they owe.
- Start with an informal reminder. The debt might simply be a result of someone forgetting to pay or being off sick. It would be a shame to spoil good relations with a client over a misunderstanding.
- If this reminder goes unanswered, you can issue the debtor with a formal notice. In the majority of cases, such a letter is enough to unblock the situation.
- If that doesn't work, you can start taking legal action to recover the debt. When the amount owed is not too exorbitant, this will usually result in an order for payment procedure, which is relatively simple, quick and inexpensive.
Few people will tell you that accounting is fun (with all due respect to the CPAs out there - to each their own!). But it doesn't have to be such an ordeal. The tips above are designed to make the bookkeeping process smoother and more manageable. With the suitable organization in place and the adoption of modern tools designed specifically to help, you can save considerable time.
What you do with that time is your business and, ultimately, your business is what's most important to you. It's equally as important to Qonto, which is why we will continue to develop the tools and the partnerships that will help you stay on top of your accounting with expediency and efficiency.