Just wanted to check really if I am about things the right way.
I have a client who has given me a paying book and cheques stubs, very difficult to know what they are for, almost useless to be blunt, as some are blank stubs and paying sheets.
Also when looking at the bank statement, I have traced e.g chq no 35 then the amount is different on the bank statement. It almost makes what I am reading on the cheques stub unreliable, in fact they are unreliable as obviously they have been filled out with hast and carelessly.
I have posted all the client purchase invoices as I have actual invoices for these but there are a lot of outgoings that I am not sure what they are for eg cheques and cash withdrawals shown on bank statement that don't tie up to any receipts or invoices I have.
Also same with sales, no idea what they are for, it is for a shop business and it is just on the bank statment as money in no other record given to me (aarrggghhh!), which I would be worried to just assume that this is sales and the client gets a taxed on it incorrectly.
So far what I have done is passed all invoices (expenses and purch ) and they are on sage, I have streamline statements, so know that income is from sales.
I have made a list of dates and amounts of money in and money out where I am unsure what they are for.
I was thinking the best way to deal with this would to be to give the list to the client to see if they know.
Please let me know if this is a good way of dealing with this nightmare or if anyone has any better ways???
many thanks
-- Edited by lor on Monday 18th of October 2010 06:21:00 PM
Got a very similar scenario. My situation is compounded by poor bookkeeping by previous bookkeeper and clients inability to remember yesterday, let alone 10 months ago.
I really have no choice and am going down the route of compiling a statement of affairs and using incomplete record procedures to work out his profit etc.
you will be amazed at how many people run thier business like this - I remember years ago a client did not even bother to write on the chq book stubs!! Nightmare but these situations are good training for the future and make you more competent and more able to know what you do want to see from client books.
But why do they do that!! I have two that don't fill in their chq stubs and then look at me dumbfounded when I ask them what they are. Must have missed that day at school when they did mindreading! They do my head in!!
Sue, did you not get your crystal ball with your 'welcome to bookkeeping welcome pack'?!
Incomplete records are a pain. I have been known in the past to make the client contact the bank to get copies of all the cheques so that I can then see what they were for. The cost of that has been very effective in teaching them to write on the bloomin things in the first place!!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Hi I had a client like that for 2 years, never wrote in the cheq stubs, had to look at the bank statement to see what they were. Never invoiced his clients at all, only use to do a batch of hand written invoices when it was the VAT time, then he would ge them to me 6 weeks after the deadline for the VAT!!!!! I think we only ever got one VAT in on time, once I gave him all his VAT details etc and he told me he would do it on line, (this was before the days where it had to be on line), anyway when I checked the bank statement to see when the payment had come out it wasn't on there so I thought maybe he had done it through his personal account, but no he hadn't done it at all and waited 2 months to do it!!! He was very bad, never ever got all the purchases, always loads missing, maybe the dog had ate them! Mixed business account and personal account, had a very bad reputation for his work in the area, so eventually I ditched him, best thing I did!!!! I always use to tell the accountant exactly what had happened, so it didn't look bad on me, but they were full aware of how bad he was.
Obviously I am not saying yours is that bad Lor, but it will drive you mad in the end as they just don't listen!
HTH A
-- Edited by Amanda on Tuesday 19th of October 2010 11:20:33 AM
Hi I had a client like that for 2 years, never wrote in the cheq stubs, had to look at the bank statement to see what they were. Never invoiced his clients at all, only use to do a batch of hand written invoices when it was the VAT time, then he would ge them to me 6 weeks after the deadline for the VAT!!!!! I think we only ever got one VAT in on time, once I gave him all his VAT details etc and he told me he would do it on line, (this was before the days where it had to be on line), anyway when I checked the bank statement to see when the payment had come out it wasn't on there so I thought maybe he had done it through his personal account, but no he hadn't done it at all and waited 2 months to do it!!! He was very bad, never ever got all the purchases, always loads missing, maybe the dog had ate them! Mixed business account and personal account, had a very bad reputation for his work in the area, so eventually I ditched him, best thing I did!!!! I always use to tell the accountant exactly what had happened, so it didn't look bad on me, but they were full aware of how bad he was.
Obviously I am not saying yours is that bad Lor, but it will drive you mad in the end as they just don't listen!
HTH A
-- Edited by Amanda on Tuesday 19th of October 2010 11:20:33 AM
Amanda - mine is bad! it makes it really hard, but I have charged for the grief! Budget B like the idea of getting copies of cheques from the bank
also I don't think client means to do it, some people are dis-organised.
I haven't had a discussion with them yet, Think I may make a list of how they can improve lol, need a ream of paper! the conversation will be very soon though!
-- Edited by lor on Tuesday 19th of October 2010 04:02:28 PM
Have you considered asking the client to ring his key suppliers and request current statement or even a copy of their Sales ledger account. In my experience if the client doesn't fill in cheque stubs properly, they are likely to be just as slap-dash with invoices. Do the cheque stubs have the payee name written on them? Hopefully they do and it will help you reconcile creditors, identify missing invoices.
If they don't, I'd follow BB's advice - even though the client wont like it.
Re, the sales income, I appreciate you want to keep the clients tax low but if they don't keep proper records it's a good way to learn. If a receipt into the bank cant be proven to be a loan, capital introduced or supplier repayment then it pretty much has to be income, in my opinion. Similarly, unidentified payments I would class as drawings.
-- Edited by ADAS on Wednesday 20th of October 2010 11:08:08 AM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I agree with the above. Unidentified receipts should be treated as income, and payments as drawings. You have to take a hard line with some of these clients to be able to start getting them in order!
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Bit of a wild shot, but if your client works on a gross profit margin, and you have details of his purchases (although some invoices may be missing), you could see what the gross profit margin comes out as, given the income that you can identify. If the GP% is too low, could indicate missing income (or too many purchases). Just a thought to help test the work you've got.
thnk u for your replies, the client is se, good advice given. is it acceptable for me to for example if all i have is a chq stub saying £36 for shampoos, but no invoice or receipt then can i still put this through as expense?. but then i think it would be best practise to ask client to get copies as she doesn't always fill subs out correctly mmm
Have you considered asking the client to ring his key suppliers and request current statement or even a copy of their Sales ledger account. In my experience if the client doesn't fill in cheque stubs properly, they are likely to be just as slap-dash with invoices. Do the cheque stubs have the payee name written on them? Hopefully they do and it will help you reconcile creditors, identify missing invoices.
If they don't, I'd follow BB's advice - even though the client wont like it.
Re, the sales income, I appreciate you want to keep the clients tax low but if they don't keep proper records it's a good way to learn. If a receipt into the bank cant be proven to be a loan, capital introduced or supplier repayment then it pretty much has to be income, in my opinion. Similarly, unidentified payments I would class as drawings.
-- Edited by ADAS on Wednesday 20th of October 2010 11:08:08 AM
Agreed, any income that cannot not be proved otherwise, to not be income will need to be put as income and payments out of the bank that cannot be matched to anything, will be drawings, thank you for clearing that one up!. It is very difficult sometimes when things aren't don't correctly by clients, it's just finding the way around these things. This forum and people on it are invaluable, thank you!
They do my head in!!
