14th March 2017
To many, bookkeeping is just a process which is applied to all businesses and to some extent, they are right. But what makes each set of books intriguing and engaging to us bookkeepers and accountants, is a combination of the business demands of the sector they operate within, combined with the nuances which make each individual business unique…
Different sectors require different approaches to bookkeeping – and attitude of bookkeeper! There are different demands on cashflow – and indeed, cash flows differently, too. Some of the distinctly different sectors that come to mind are:
Construction is a well-known, text book example for trainee bookkeepers. This sector is governed by the CIS – Construction Industry Scheme which sees contractors deduct money from a subcontractor’s payments and pass it directly to HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance. A very efficient system but, if you’re new to the sector, the mismatch between payment you receive and the payment you expect can be a shock!
If you make products, you may have a seasonal trend that affects your cashflow, so you need to make sure it doesn’t lead to a ‘feast or famine’ situation. So, if you’re in the chocolate industry, for instance, make sure you produce more than just Advent calendars!
Additionally, you need to proactively manage the purchase of any components, equipment and machinery. Although this likely signals an exciting in your business, these investments demand up-front expenditure, likely to be well before you see the return in revenue once the products are on sale.
Likewise, stock and inventory management can be a challenge regardless of industry. Whether you manufacture or trade in tea, shoes or greetings cards, you’re likely to experience upfront costs for stock which you need to store before you can enjoy the revenue. So again, cashflow needs to be managed carefully.
Heritage craft businesses
Being in bookkeeping, on one hand, I’m glad to say that ‘creativity’ is not something I get involved in! But on the other hand, I truly admire creative people and those who work with their hands. But one thing I have noticed is that creative people are usually supreme at designing and making things, but their ability to manage paperwork can be limited! So, if you’re one of these types of people, I do recommend that you keep everything & throw away nothing!
Consultants are an interesting group of people. Everything is usually very much in order and everything has its place. They know what they need and what they need to achieve it. This means that they recognise quickly when they need an external perspective or a certain task or role is not within their skillset – and they get outside help. So, for Nicki Paddy & Co, our remit with consultants and consultancy businesses is usually crystal clear!
So, you see? One size doesn’t really fit all and busienss demands can vary significantly. But luckily here at Nicki Paddy & Co, we’ve worked in and with so many different types of organization, that we can adapt to whatever it is you need – and if you are unsure, we can provide you with some guidance. You can get in contact here.