When it comes to accounting, take advantage of technology, but keep communicating
Franchising has a rich history of passionate females leading both as franchisees and franchisors. These women are experts in their field and provide innovative products and services to their many and varied customer bases. But to help make these franchises even more successful, it’s important to look after the numbers.
Statistics show maths is one of the least popular subjects at school. However, a little understanding in the business world goes a long way, so it’s important to manage your accounts carefully - and the good news is that help is at hand.
One of the great developments in recent years is online accountancy software. It can streamline processes and free up time while providing instant insight on marketing spend or monthly profit and loss at the touch of a button. It’s designed to be intuitive and easy to use, so well worth the investment required.
In addition, with the HMRC Making Tax Digital initiative on the horizon, if you’re not using online accountancy software such as Xero or QuickBooks Online you’ll need to start doing so very soon.
If kept updated regularly, online accountancy software means at your year-end, bar one or two electronic documents you need to send to your accountant, you’ll already be up to date. We advise all new businesses to start as they mean to go on and begin by accounting online.
For older franchised businesses, moving online should be straightforward, as free training is provided by QuickBooks and Xero. d&t also provides free, personalised set-up and training for our partners, as we know it’s the most efficient way to manage accounts and keep accounting costs down.
One thing to consider is where there are timing differences between invoicing and work completed that need to be adjusted for. This may occur in a tuition business, where work is invoiced and payment collected upfront, but for accounting purposes, it needs to be recorded out throughout the year.
These adjustments are called journals and unless you’re confident posting them, they’re best left to your accountant to adjust, verify and put the figures into context throughout the year.
Adding further value
At d&t, we add further value because we work with many franchise brands we know what’s normal for your sector. This might mean we can advise where gross profit is not quite where it should be, so sales or purchases prices could be reviewed, or bulk discounts negotiated to remain competitive.
Overheads can also then be reviewed and acted on in a timely manner if they’re going over budget.
Here’s where it’s important to keep communicating with your accountant. Brilliant as it is, accountancy software can only do so much. It doesn’t record information that doesn’t go through your bank account, such as mileage or ‘use of home’ expenses, which can help you save tax, so understanding where these items fit can be helpful.
More importantly, your accountant can help when it comes to the timing of investment decisions, such as taking on new employees. Or they can advise how to acquire a new vehicle in the most tax-efficient way.
Talk is cheap and having these discussions with your accountant in good time can save in the long run.
So when it comes to accounting, take advantage of technology, but keep communicating. In this way, your franchise can maximise profitability while you continue to enjoy doing the job you love.
Renata Selley is the senior relationship manager at d&t.