Cleaning up your business records, and what the numbers then show

The first step is collection. Accounting exports, spreadsheets, invoice books, supplier slips, bank statements and photographs all come into one place. Nothing needs to be tidy before you send it.

Next comes reconciliation. Every invoice and every cost is checked against the bank statements, because the bank is the one record that cannot be edited after the fact. Duplicates are removed, missing invoices are flagged, and costs are matched to the job, product or customer they belong to wherever the records allow.

Finally, the records are structured so they can be reported on: consistent names for customers and job types, costs linked to the work they were for, and a clear line between direct costs and overheads.

• Collect every source of records into one place
• Reconcile income and costs to the bank statements
• Remove duplicates and list what is missing
• Link costs to jobs, products or customers
• Separate direct costs from overheads

Total profit hides the detail that matters. A business can be profitable overall while one type of work quietly loses money every month, funded by the work that pays.

Splitting margin by job type, product or customer shows which is which. The analysis takes revenue, subtracts the direct costs of materials, labour, travel and subcontractors, and shows the margin left for each group. Where overhead recovery matters, as it does for most contractors, a share of overhead is added per productive hour so the comparison is fair.

The result is usually simple to read and hard to argue with: the work to grow, the work to reprice, and the work to stop accepting.

A cleanup only pays off if the records stay clean. That means a short routine, done every month, by someone who knows exactly what to do.

The monthly report is built to be read in five minutes: revenue, direct cost and margin by group, cash in and out, and what is owed to the business. The routine behind it covers capturing invoices and slips against the right job, reconciling to the bank, and following up overdue accounts. Staff training is available so the routine does not depend on you.

• Capture invoices and supplier slips against the right job or customer
• Reconcile to the bank statement at month-end
• Review the one-page report: revenue, cost, margin, cash, debtors
• Follow up overdue accounts in writing

This is not bookkeeping and it does not replace your accountant. Your bookkeeper keeps the ledgers and your accountant prepares the financial statements and tax returns. The cleanup makes the same underlying records useful for running the business day to day.

In practice the two support each other. Cleaner records make your accountant's year-end faster, and their chart of accounts can be used as the starting point for the structure. If there is no bookkeeping in place at all, I will say so and tell you what kind of help to look for before going further.

Business records contain personal information about customers, staff and suppliers. They are used only for your engagement, stored securely, and handled in line with the Protection of Personal Information Act. They are never shared or sold.

Records can be sent however is easiest for you: email, WhatsApp, a shared folder or read-only access to your accounting software. At the end of the engagement, you decide what is kept and what is returned or deleted.