It is quite common to invoice a customer with terms of “30 days or net monthly account”. Small customers will be expected to pay within 30 days, while large customers will be expected to pay at the end of the month following the month of the invoice, so an invoice sent in April 2018 would be settled by 31 May 2018.
Large companies do it this way because they may receive several invoices from a supplier, and will want to settle all of them with a single payment when they do their computerised cheque run. It would therefore be a good idea for the supplier to have sent a statement at the start of May listing all outstanding invoices. Typically the cheque run would be about the 25th of the month, which is the date of this posting. If you give credit and have debts to collect, then you might like to have a discussion with us. Most accountants are also general business advisors as well.
The “net” in “net monthly account” has “nett” as an alternative spelling.
Archives for May 2018
We are going to aim to process the bank statements of half our clients using full Optical Character Recognition, and the other half using our hybrid system of Optical Number Recognition and Narrative Prediction. We will use NP on those bank statements where the narrative is fairly repetitive, which we call low entropy narratives. We will use full OCR when the narrative is more variable, or high entropy narratives. There are in addition a few rare bank statements where much of the narrative is practically meaningless, for which we will use NP.
There is still scope to develop a better Narrative Prediction system in the area of payments of multiples of 10 or 100 pounds, which we will work on. The OCR system will be customised to be able to deal better with bank statements from specific banks.
It should be remembered that NP is useful for some handwritten records, and it is also the backup system to OCR. Of course, if we are only using OCR on high entropy narrative, it may be objected that NP is less useful as a backup system. The answer to this is that there can be sub-populations of narratives with distinctly lower entropy where NP is still useful.
For the foreseeable future, we expect that an irreducible portion of our bank statement processing will use ONR/NP. The rest will use full OCR, but a significant portion of the rest will rely on NP as the backup system. Let’s guess that these portions will turn out to be about one third each.
P60s for the income tax year ended 5 April 2018 should be handed to employees by 31 May 2018. They may need them for various reasons.
Many employees will have received their P60s just after 19 April after last year’s payroll has been closed down.
Value Added Tax returns for the quarter ended 30 April 2018 should be submitted by 7 June 2018, and any payment which is due should be made electronically by the same date.
When we use optical character recognition to scan bank statements, we require the accounts clerk to identify the columns each time a batch of bank statements is loaded. We might have let the software try to do this, but getting the user to do it provides more certainty. Quite a few of our bank statements can be rather faint, and clients often tick or annotate the bank statements.
We use an onscreen display which resembles a blink comparator to show each scanned statement. The computer “reads” the bank statement and highlights any numbers which are obviously wrong by reference to the running total so that the user can fix them straight away. If absolutely everything were wrong, then in effect the user would be typing the bank statement directly onto the screen, so this is a system which doesn’t actually need OCR as anything more than a very helpful auxiliary system. If a bank statement were utterly unscannable, then we have a system for typing the numbers in by the column in a single sweep, so there are two levels of backup to the primary OCR system when we are scanning numbers.
Narratives may also be scanned in, but our system will reject anything which looks wrong. The clerk can then run a Narrative Prediction routine which guesses missing narratives, and can then overtype the guesses that are wrong. If narratives are typed in, then autocomplete is available, but the clerk can also reprogram the function keys F1 … F10 to generate useful narratives, and this reprogramming is also remembered next year, so in effect all our clients have their own private keyboard. This gives four ways to enter narrative, namely OCR, Narrative Prediction, reprogrammed keys and old-fashioned typing (with autocomplete), so there are three levels of backup.
Some client records resemble handwritten bank statements, and these are typed in by the column in the order numbers, dates and narratives. After entering numbers and dates, we can still use Narrative Prediction to have a go at guessing the narratives, and this is often right first time, particularly with handwritten narrative which tends to be more repetitive and therefore easier to predict. Thus we have a system of Narrative Prediction which can deal with more than just machine-generated bank statements, and we are very pleased with this.
Dates can be scanned by OCR, and anything unscannable can be filled in by interpolation if it is not material. We only need to type in the day, and the month and the year are copied down automatically. We can do date entry under the assumption that each new date is later than the previous one, or under the assumption that it falls within the same month until we say otherwise. When we type in a pile of invoices, we just batch them by the month and enter the day. Often one of the function keys can enter the narrative, but if not, we type it in and have autocomplete to help out. The number does have to be typed in. With VAT invoices, we batch them by supplier, and we can often skip narrative entry because the software will fill in any blank narratives when we estimate the value.
This system has been developed over several years and is more than just another OCR system. The emphasis is on grabbing the data on a spreadsheet by whatever means does the job the best. Once the data is on a spreadsheet in a standard format, processing is all-electronic and quick to do. The clerk may need to update a mapping table in order to code up any new narratives, but there is a macro to look up the narrative on the Internet which will help out.
Auxiliary data analysis, such as that needed for an overdrawn director’s current account, is easy to do by copying from the ledger to a specialist spreadsheet. Working papers can be generated on the side. This is a system produced by an accountant from the inside looking out, and it satisfies the Law of Requisite Variety. Client records arrive in all shapes and sizes, but we can now deal effectively with all of them.
Small private companies with a year end of 31 August 2017 and into their second or later year of existence should submit their accounts to Companies House by 31 May 2018 in order to avoid a Late Filing Penalty.
Up to now we have been using optical character recognition on bank statements, but we only scan dates and numbers, which makes the job a bit easier. To enter narratives, we enter a few, run a Narrative Prediction routine to guess the rest, and then overtype the guesses that are wrong. Sometimes NP works really well, and at other times it doesn’t.
We are upgrading to a hybrid system where we use full OCR to scan narratives as well as dates and numbers. The accounts clerk then goes through the narratives to check them. If a narrative needs changing, the clerk can run a tidy up routine which does this. As an example, a narrative which reads “DD Acme Trading Co” is tidied to read just “Acme Trading Co”. A narrative with weird characters is just deleted on the assumption that something has gone wrong with the OCR system. All narratives below the active line are processed at once by the routine.
When the clerk comes to a blank line, the NP routine is run to fill it in along with all other blank lines below the active line. If any narrative is then wrong it will need to be overtyped. The clerk has autocomplete to help out, and can also reprogram the function keys F1 .. F10 to produce key narratives.
The NP and tidy up routines may both need to be run more than once, and can be run in any order. Most narratives will have been scanned correctly by OCR, and this is just a matter of making adjustments. Cheque book stubs will need to be typed in separately, but these are becoming rare.
It should be remembered that the NP routine is also useful to deal with handwritten records that happen to resemble bank statements. We enter by the column all the numbers, all the dates, a few narratives, run NP, and then overtype to make any corrections. In our opinion, it would be foolish to develop an OCR system and overlook NP.
In statistical terms, dates have low entropy which is amenable to inventing things to process them. Numbers have high entropy so we need direct scanning by OCR. Narratives have variable entropy for which a hybrid OCR/NP system is appropriate. If the client has ticked and written all over the bank statements, our system will go on working, albeit a bit more slowly, and will not push us over any metaphorical cliff edge.
If lots of numbers are scanned wrongly due to the presence of extraneous ticks and annotations, then the computer-assisted blink comparator will sort it out. If lots of narratives are scanned wrongly, then they will be deleted and NP will be used to fill in the gaps in the first round, and the clerk can check and overtype in the second round. If lots of dates are scanned wrongly, they will be deleted and simple interpolation will be used to replace them. If the bank statements are of poor quality, then the job may take longer, but not longer out of all proportion. This is called graceful degradation.
It can happen sometimes that when you are an employer, you have not actually made any wage or salary payments for a PAYE month such as the month from 6 April to 5 May 2018. In that case you must submit electronically an Employer Payment Summary as a NIL return by 19 May. This is too easy to overlook.
If you engage a local accountant and business advisor or a payroll bureau to do your wages, then this will be taken care of. In our case we keep a diary and do a batch of payrolls at about the same time each month. Our payroll files are bright yellow like the old P30BC booklet so we do not overlook them.
Construction Industry Scheme returns for the month from 6 April to 5 May 2018 should be submitted online by 19 May. This includes NIL returns.
It is only too easy to get caught out by the need to submit a NIL return when no payments to subcontractors have been made. If you engage a local accountant to do your CIS returns, then this will be taken care of. In our case we keep a diary and do a batch of work at about the same time each month. We aim to be the Carlisle accountants that businesses will turn to for a range of advice and services.
If your company had a deadline of 30 April 2018 for the submission of its accounts to Companies House, and this deadline has been missed, then you still have something to play for, and you should contact Carlisle accountants such as David Porthouse and Co at once. You will incur a penalty of £150, but this penalty rises to £375 after 31 May 2018 if you still haven’t submitted your accounts. These penalties are £300 and £750 if you miss the deadline two years’ running. We can readily prepare and submit your accounts within the month if you contact us straight away.