I've just taken on my first client and I'm clueless about where to start. I've already had sleepless nights and am wondering whether to just ask him to find someone more experienced. Basically his acccounts are a mess. He has been trading for two years, he has been doing his own inputting onto sage and its a mess. His accounts are out by sometimes over 40k! He only uses sales and purchases and one bank account, has no suppliers set up even though he uses them and gets invoiced, yet there are random nominal accounts with amounts in that he has no idea what he has done. His VAT has all been done wrong and he had a huge bill- apparently until his accountant has sorted this out none of his month/year ends can be done. I sat for five hours looking and trying to work out how to fix it and get it to a point where I can start inputting his data properly and I just feel completely clueless.
He gave me bank statements and I couldnt reconcile them with anything he had put on sage as nothing matched! I'm reluctant to turn down my first client but Ive gotten so anxious over not being able to fix it :(
I agree with Matt. We all get these clients especially at the start of our new careers and that's because we start off offering cheap rates and giving our services away. The people who are interested in a cheap job are cheap clients. As Matt say go back to him and say the job is a mess and that's fine but you will have to start from scratch. Ask for £500up front so you can start straight away, if it all falls into place and there's any left you will refund him or put it against next month's bill. He'll either walk or pay you. If he pays you let him know that it does not mean you are a miracle worker, any gaps in information is down to him, start from the beginning and note any missing stuff/queries as you go along and email him with these. Chances are he'll look for another cheap bookkeeper anyway.
I would definitely get some money up-front from this new client.
If they agree to continue with you, and this was a verbal discussion, then I would confirm everything that was discussed in writing; email is a good source of communication as you have a record of exactly what has been agreed. For example, I was informed by a client that they had decided that they wanted me to change accounting software part way through the year (nightmare!!!!), I explained what work would be required i.e. that I would need to migrate the information from one accounts software to the other. As this was discussed verbally in a meeting I emailed the client once I returned home detailing everything that we discussed in that meeting and what action we both agreed to. Once the work had started I also emailed the client to confirm that I had start work on transferring the transactions and to let them know roughly when I expected to have completed the work (although in your case you could give an up-date periodically on how many hour worked so far and where you're up-to, and then they have some idea how far their £500.00 (if that's what you agree) will stretch).
I would also suggest taking a back-up of Sage before you do anything, and make sure you keep this as a record of the condition of the accounts before you re-worked them; then I would start with reconciling the bank statements, matching the transactions to the paperwork so you know what paperwork you have and what you don't and checking that you are happy with how they have posted the transaction (If you change a transaction make a note of this change). I would also open an account headed 'uncategorised expenditure', then if you have a transaction on the bank statement which isn't on the accounts already, and you don't have a receipt/invoice for this, then you can post this to that nominal account so that, once you have brought the bank reconciliation up-to-date, you can print this report and ask the client to supply the paperwork.
By the sound of it you may have transactions on the bank account nominal which don't appear on the bank statements? I think I would leave these as un-reconciled on the accounts, match the paperwork to these transactions keeping them together, and then ask the client to tell you how he paid them so you can then amend the transaction accordingly.
I would also set up all the new suppliers so that new invoice's can be posted to the purchase ledger rather than directly to the bank account as a bank payment, which I assume is how the client has been doing it?
If you do take this client on this could be good experience for you; just stay confident that you know what you are doing and do it your way and get some money up-front and make note's where you can so you know what you have done and why!!!
