Freelance Bookkeeper Tunbridge Wells :: Fenella Cubbon

My year end on one of my clients is 31st December. This is the yearly date their company chooses to produce the yearly Profit and Loss and Balance Sheet. These are usually done by a firm of chartered accountants. The Profit and Loss statement requires the total sales for the past year, the stock (goods that are going to be sold) at the end of the year less the stock at the start of the year. So I will be getting together a stock figure for our stock held at the end of the year (31st Dec 09). I will also draw up a list of creditors – people we owe money to at the end of the year, including what we owe to the government in VAT (Value Added Tax). The VAT rate goes up on 1st Jan 10 to 17.5% so I will be changing all the percentages on my simple spreadsheet to reflect this.

It seems easy to draw together year end information, but less easy to decide what information is useful to help the company make more money, or be more green etc. My client loves to see a comparison of weekly sales against the same week the year before. But there must be more or other information that would be useful. Perhaps the old fallbacks of margins, gross and net profit should be calculated each week. Cash flow is another piece of information that is essential. Cash flow for a small business means literally the money the company has in its current account to pay bills or to invest if there is a profit. Money from sales will come in to the current account and go out as well. Keeping a grip on this flow of money is essential for small businesses and is know as its cash flow.