Apologies as I know everyone will be super busy but I would be grateful if anyone could give me any direction to my query.
I have recently taken over a client who manufactures soft furnishings. The previous accounts don't show any opening or closing stock suggesting that stock figures have never been taken but they do however show Outwork? I have no idea what this relates to and I have never come across it in accounts.
I would grateful if anyone is able to offer any light on this
Many thanks
Valerie
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Hi Valeire Yep Doug is right, as far as I'm aware. Subcontracting. Common (well it was a million years ago!) in the cloth factories.
Be interested to hear if it's where we expect in the accounts.
Did you send the professional etiquette letter to the previous Accountant when you took over? You can use this as an excuse to check you have everything and ask about this specifically. Most are helpful on handover once they've been paid!!
-- Edited by Cheshire on Monday 22nd of January 2018 09:36:23 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
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How bizarre ð
Yes, itâs in the Cost of Sales along with Purchases but no other Opening/ Closing stock figures.
This ladyâs work is all freelance to various companies which clearly accounts for her Sales so what on earth is this offset. Iâm very confused ð
Sadly I donât think Iâll get much response from the accountant. After sending a clearance letter, it took 3 emails and 2 phone calls before I finally got the paperwork!
Valerie
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Ah, just re-read your replies. Having a blonde moment! (Iâm not even blonde).
Outwork as in sourcing the work out to someone else and paying them. Hence the inclusion in Cost of Sales.
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You need to have a meeting with her and get as much info about her business and how she undertakes her business, ie the processes from start to finish. Start with the 'tell me about your business' question as that can have them rabbiting on for hours and all you need to do is intersperse it with the odd question.
Plus I would be ringing the accountant again, as often as it takes to find out why ther is no stock in the books. What quals does this person have? (Does the rest of it all look correct?)
When you say manufacture soft furnishing, is she (or rather someone else) just running up a pile of material into cushion covers and the like, so in reality the only stock she holds is a few bits plus a pile of material? Does she have a retail unit or lots of finished goods?
I have blond moments too and I'm not blonde neither!! I was for a while....and it's true they have more fun!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Yes she is really just working a sewing machine to produce curtains etc but it is a really lucrative little business. She does have a workshop but she is ordering material for each client as she needs it so probably holding very little as stock.
As you suggest, I will have a chat with her to clear it up but I do remember she had someone doing some work for her when she was busy so that probably makes sense.
Have a great day
Thanks
Valerie
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Ah right, I did ponder on whether she only ordered material only when she has an order, rather than carrying bales of material, position later last night! Makes sense then why she doesn't have a stock figure as it would be minimal and nil value under lower of cost and NRV.
Are you doing the bookkeeping and the Accounts or just the Accounts?
Worth getting a copy of an invoice for the outwork.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I've now got figures for the outsourcing and discovered that the clients pay for the material etc and send it to her so this is an even more lucrative business than I first thought!
She works in a little workshop that I can see from my home. Who would have thought these little cottage industries could do so well!! I've seen so called big Managing Directors not earning this money.
Quite impressed, I just wish I could sew!.
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
