David Porthouse & Co

Carlisle Accountants

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81 Larch Drive, Carlisle CA3 9FJ

Archives for September 2019

The Cheque Run round about Wednesday 25 September 2019

 
It is quite common to invoice a customer with terms of “30 days or nett 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 August 2019 would be settled by Monday 30 September 2019. Obviously, the average settlement time will be 45 days, but this is OK if the customer’s credit is good.

Large companies insist on doing it this way because they may receive several invoices from a supplier during a month, and will want to settle all of them with a single payment when they do their monthly computerised cheque run. It would therefore be a good idea for the supplier to have sent a statement at the start of September listing all outstanding invoices. Typically the cheque run would be about the 25th of the month, which is today.

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 advisers as well. Some large companies rely upon a cynical calculus of bargaining power when they take ages to settle invoices, and you need to know what to do about this.

The “nett” in “nett monthly account” has “net” as an alternative spelling.

A Hybrid OCR/NP System

 
In order to process bank statement narratives using optical character recognition, we will be using a multi-stage system which we call OCR/narrative prediction. The stages are:

(1) Scan the bank statements using OCR. After narratives are scanned, we process them to remove clutter from the leading and trailing parts. For example, if the narrative says “1rect deb1t payment to David Porthouse and Co on 18 Sep” then the initial stage will be to recognise that this should be amended to read “Direct debit payment …”. However, the leading bit of verbosity can be removed altogether and the trailing date is also redundant, so our software will amend this to just “David Porthouse and Co”.

(2) Compare this to last year’s narratives, where we might find “David Porthouse”. The narrative will then be amended to say just “David Porthouse”. A variety of narratives such as “David Porthouse & Co” or “David Porthouse Ltd” will all be cut down to read just “David Porthouse”.

(3) If a narrative is not in last year’s lexicon, then it needs to be perfect to survive, such as letters only. Otherwise it is deleted.

(4) Deleted narratives are then predicted based upon numeric values. For example, if we had a large number of payments of 41.33 to David Porthouse, then we can predict that the next payment of 41.33 will also be to David Porthouse even if we cannot scan the narrative because it falls on a paper crease or has been scribbled over.

(5) Reprogram the function keys F1 to F10 with the commonest narratives encountered so far. Then the clerk needs to inspect each narrative and overtype it with the correct narrative if required. Overtyping can often use a function key rather than having to type it all in. If we need to type it, autocomplete often helps.

When we reprogram the function keys, we try to ensure that F7 is some type of telephone expense, and key F9 is some type of motor expense. This makes the system more useable.

This system has plenty of graceful degradation and backup systems. OCR and NP are both capable of getting it right first time, but in cases where they don’t, we have other systems which take a little longer, but never disproportionately longer. We can use this system on handwritten records which resemble bank statements. OCR will be useless, but the rest of the system is still there. We can use it where we need to type in invoices one at a time, because while OCR and NP are both useless as they stand, NP has a secondary action of reprogramming the function keys in bulk which can be helpful. It can be arranged that if the client drives a Diesel, then key F9 will generate “Diesel fuel”, while if the client drives a petrol-engined vehicle then F9 will generate “Petrol”.

All the keys on our keyboard are covered in stickers which are normally white lettering on black. Keys 3, R and F are reversed-art black on yellow and in the dates column they generate the dates 3, 13 and 23 respectively with month and year being copied down automatically. Keys 6, U and J are reversed-art black on white and generate 6, 16 and 26 in the dates column. We can whiz through a pile of receipts for petrol with this system. Key F9 is reversed-art black on yellow so it looks the colour of petrol.

USPs and Distinctive Products

 
One thing we advise clients is to try to have a Unique Selling Proposition. This is something which gives competitive edge which rival businesses cannot copy. Our USP is our use of lots of new technology. We are now using a hybrid optical character recognition/narrative prediction system to process bank statements which nobody else has.

Failing that, try to have a Distinctive Product which fixes you in the minds of your customers. Our primary DP is our use of customised colourful accounts and VAT reports. We also send a lot of colourful e-mails and have spreadsheet proformas to be able to produce them. Internally we tend to colour-code anything and everything in a consistent manner. Blue is companies, red is sole traders, gold is partnerships, green is VAT and yellow is PAYE. So if somebody has some VAT to pay, we send them a green notice with the payment details generated on a spreadsheet. The VAT report we send them has a generally greenish appearance to it, and we do use green stamps!

There is not necessarily a sharp distinction between the USP and the DP. What you do should be either impossible to copy, or at least quite difficult. Try to have one of each. Some of our use of colour has a definite purpose, and some is just for fun.

When we mail out accounts, we use colourful stamps to match the season. Summer stamps have eagles and aeroplanes. September and October stamps tend to have autumnal themes like owls and trees. November stamps will be themed by the Night Mail, which is a Carlisle-centred theme. It’s Star Wars for Christmas. We will be using plain stamps in Lent, but even then it will be unusual denominations and then country definitives just after Lent.

We buy stamps online in batches of at least £50 so it’s post-free, and then assign them to the appropriate time of year. The Post Office supplies the stamps in folders of a type used by philatelists which are very handy for this. Greenish stamps are picked out and put in a separate folder. Often when signed accounts are handed back, we get our stamps back as well, and they go to charity.

Employer Payment Summary by Thursday 19 September 2019

 
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 August to 5 September 2019. In that case you must submit electronically an Employer Payment Summary as a NIL return by Thursday 19 September. This bureaucratic requirement is too easy to overlook.

If you engage a local accountant and business adviser 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. We colour-code all the taxes so green is VAT, red is income tax, blue is corporation tax and yellow is PAYE.

If you no longer want to have a payroll scheme, then you need to close it down in a formal way. You cannot just assume that you can stop sending in monthly returns.

CIS Returns to Thursday 5 September 2019

 
Construction Industry Scheme returns for the month from 6 August to 5 September 2019 should be submitted online by Thursday 19 September. 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 accountants for small business that you will turn to for a range of advice and services. Our payroll files are bright yellow so they are hard to overlook, and CIS files also have a green line around them so they are easy to pick out.

A Company which has Missed the 31 August 2019 Deadline

 
If your company had a deadline of Saturday 31 August 2019 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 Monday 30 September 2019 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.

Just stating the obvious, if you miss a deadline and incur a penalty, you still have the obligation of preparing and submitting accounts. That doesn’t go away and your penalty is just extra money you will need to pay.