Good cash flow is the backbone of any business. For smaller businesses, mistakes and omissions in billing can be disastrous. A missed disbursement can significantly eat into the profit on a file. Going back to a client to ask for further money after a file has settled is often not possible, respectful or professional. Therefore, when you are preparing your client’s balancing statement and bill of costs, it is of vital importance to have an up to date ledger card to hand.
Let’s say, for example, you are preparing to close an Estate. You have your ledger card and file to hand and are calculating the fees and outlays due to the office then paying the balance to the beneficiaries. Everything seems in order and your fees of €3000 are a welcome boost to the office account. So what happens a week later when you realise that €500 of funeral meal expenses had been paid as an office disbursement but hadn’t been written up at the time you were closing off the file? Do you ask every beneficiary to return a percentage of their bequest? Unlikely; what actually happens is you have to write off the disbursement against your fees, and suddenly you’ve lost the equivalent of a staff member’s weekly wage in income. A costly mistake.
Not every missed disbursement might be so significant, but they all add up. Over the course of a year, thousands of euros of irrecoverable outlays could be written off against your income, seriously eating into your business profits and cash flow.
So how can you guard against these losses? Simple – ensure your accounts are kept up to date and reconciled regularly to ensure the accuracy of the postings.
If you use EAS for Land Registry transactions, print off your transactions for your bookkeeper to log. Put systems in place to guarantee that disbursements paid to third parties such as Search Agents are not overlooked. Make sure that office account cheque books are posted daily and the office bank account is reconciled at least monthly to verify the amounts posted and to catch any overlooked payments.
For peace of mind, you can engage the help of professional legal bookkeeping experts CBS Ltd. Click here to visit their website and view the full range of legal accounting services they offer.