Using your accounts to manage your business

Do you ever wonder how some businesses are able to use their accounts to help them manage and improve profitability?  In this short video, I will give you an approach that will change how you think about, and how you use, your accounts.

I’m Jim Cahill of AccountsPLUS. I provide CFO/FD services to Engineering and Construction companies.


You may have heard of the idea of a feedback loop, sometimes called the engineers feedback loop.

In Lean and Business Improvement Circles its called PDSA which gives a better idea of what its about.   PDSA stands for Plan Do Study Act.

When using PDSA you start by making a plan for what you want to achieve – that’s the P.

They you carry out the plan by doing something – that’s the D.

On completion of your work, you study what happened – that’s the S. In studying you want to find out if you got the results you expected and if not why not.

Finally, armed with the knowledge that you have gained, you act – the A. You use the information to make changes – either in your plan or in how you are executing the plan.

So now you can see why it’s a feedback loop and by using this in your business you learn about what’s working and what doesn’t work and you apply that knowledge.

Linking PDSA to Accounts

So how does that tie back to accounts.

At the start of a period, usually a year but it can be some other period, you create a financial plan for the period. This is your P. I have a separate article on planning or budgeting.

Then you operate the business – executing the plan – this is your D.

Next step, you get management accounts – this is the feedback from your business – and you study these. This is the S. I have another article on designing your accounts to get good information.
Were your assumptions correct? Did you get the results you expected? If not, why not? So you develop your understanding of what’s happening in your business.

Finally, you make decisions about what actions, if any, you need to take and you take those actions – your A. I also have an article on carrying out improvement projects.

In order for the above steps to work, you need to have regular and reliable management accounts. These accounts should be designed to provide you with analysis that will help you analyze your performance.


That’s the sort of work that I do. Helping clients identify what they need from their accounts and putting in place the procedures that will give the information and finally helping them analyze the results and implement the improvement strategies.

If you feel this would be of benefit to you, feel free to contact me by phone 086 2323525 or email

I hope this was helpful and thanks for watching.


Most Common Problems with Product Costs

I find that one of the most common problems with clients is that they are not confident in the product costs for their products or services.

If the products costs are wrong then their product prices may be incorrect.  They could be too expensive,  losing them business, or possibly they could be losing profits by undercharging.

My first work as an accountant was in manufacturing plants where we used the best product costing methodologies.

Since starting to work as an independent accountant offering part time controller services, I have helped clients in construction, engineering, manufacturing and service develop and improve their costing approaches.

Over the years, I have seen 5 common problems.

The client doesn’t prepare an annual budget

When we are preparing product costs, what we are trying to do is to allocate the total business costs across the product range.

To do that, we need to know what the total product costs for the business will be for whatever period we are working with.

When we finish our costing exercise, the total of all of the product costs that we plan on making should tie back to the total costs we expect to incur.

That is our key check – our key control.

We need to start of with a reliable budget for the year.

To see how I recommend you prepare a budget, you can look at this article on Predicting Business Costs.

How to fix this problem

Best practice for all clients is to prepare an annual budget.

If your business is small, then this will be a fairly easy task.

If your business is larger or more complex, then it’s slightly more difficult but also more important and you really need to do it.   The greater the complexity, the greater the benefits you will get from doing it.

It should be possible to develop a spreadsheet that can be updated from year to year.

The client doesn’t know what is actually being used to make the product

Many clients are not using their accounts for management purposes.   Their accounts exist solely to comply with requirements.

They have a figure for the materials purchased but they don’t always know how much material is used for each different product.

They may have a document which tells what should be used in making the product in a perfect world.   They don’t always have easily accessible information about what is actually happening in the real world.

They need information showing how much of each of the various raw materials are used to make each of their different products.

If they have a controlled product, say a food product, they must keep data for traceability but it may not available to help with management support.

how to fix this problem

Every product should have a bill of materials.  This is essentially a recipe.

What a bill of materials is telling you is not what is in the product but what gets used to make one of the products.

The bill of material should reflect normal waste and normal working practices.  What you want is to identify the average quantities needed for a good production item.

Client ignores waste or scrap

In some cases, the production process is generating waste or scrap but the client was ignoring this.

Let’s say, the client buys in timber to make chairs but the moisture content of some of the timber is too high.  That timber has to be discarded.

However, it may not be possible to send the timber back to get credit.  Maybe the supplier is overseas or maybe the supplier is arguing that the timber was not stored as recommended so the supplier is passing on the responsibility.

In any event, the cost of the unusable timber is a real cost to the manufacturer.

He/she may not be able to pass any or all of that cost on to the customer.  But he/she has a timber cost that they need to be aware of.    At a minimum, they should have an improvement project to try to reduce the losses due to substandard raw material.

Another example could be where the manufacturer has to trim a raw material, let’s say meat, of fat or bone.  The raw material is natural so the amount of trimmings can vary from batch to batch.

We understand that there will always be some trimmings.  What we need to do is identify a reasonable average and use that in our costings.

We should be saying something like “for every 100kg of meat we buy, we use 95kg in the process”.  The cost that we have to bear and pass on to customers is the cost of the 100kg.

how to fix this.

Ideally, you would have a system where raw materials are issued to a batch and at the end of the production period (day, week, month) you can identify the normal usage for each completed item.

If you don’t have that detail, you should still be able to quantify how much  raw materials were used and compare that to what you think should have been used.

The difference will quantify your scrap or waste and you should have programmes in place to reduce this.

Client using inaccurate input costs

When you are preparing costs, you need to have a good handle on what the inputs are costing.

Ideally, you will track the costs of each input and know if they are going up or down and how they compare to historical costs.

In some cases, clients though they know what the inputs were costing but they had not kept up to date with recent changes.

how to fix this

You should either have a product code for each raw material and should track the costs for each order or invoice.

You should have a list of current prices for each of your raw material items.

Client charging for unused production capacity

At the top of this article, we said that we are trying to spread our actual production costs over all of the products that we are producing.

However, if we are a start up and the business is not fully loaded then it may not be sensible to try to pass the costs of our unused manufacturing resources on to our existing customers.

Let’s say, our plant can do 1800 production hours in the year.  But we are only selling 50% of our capacity.

If we are competing with other factories who are working to full capacity, then our costs for our output should be higher than theirs.  However, if we have higher costs and there is no difference in the products, then a sensible customer would buy off the competitor as its cheaper.

We may have to bear the cost of the unused capacity until such time as we can get the sales up to a point where we are using the full capacity.

However, if we have a unique product that has benefits that the competing product does not have, then we may be able to charge more.

That’s an issue we should be aware of and have a proper discussion about internally.

How to fix this

When preparing your budget, you need to be able to express your production output as a percentage of your capacity.  Where there is significant unused capacity, you should be aware of that.

Then you can have the conversation about whether or not you can pass that cost on, or not, to your customers.


These five are the most common costing problems that I have come across.

You should review your own situation and see if any of these are relevant to you.

If you have any comments, you can leave them below.  If you have any questions, please feel free to email me.


What is a VIES Return?

Over the past year, I have been getting questions from clients about VIES. Typically, the client has received a letter from Revenue advising them that they should be submitting a VIES Return. But the clients typically don’t know what VIES is and have no idea how to make a VIES return.

At this stage, I have significant experience with VIES. Having worked with larger companies in the past I was very familiar with filing VIES returns. More recently, a lot of my current SME clients have asked for help with the VIES filing.

What is VIES

VIES is an abbreviation for VAT information Exchange System. It is an EU system and applies to any business that sells to other EU states.

Where a supplier sells goods or services to another EU country they can apply the zero rate to the supply of goods or service. In order to ensure that this zero rating is not abused the supplier must make reports showing the VAT number of the customer and the value of supplies.

This information is shared between EU tax authorities and the relevant authorities can make checks to ensure the zero rate was correctly applied.

What to do if you are selling to a customer in another EU State

If you sell to a VAT Registered customer in another EU state, you do not have to charge VAT if certain conditions are met.

Verify that your Intra EU EU Customer is VAT Registered

An intra EU sale is a sale from one EU country to a customer in another EU Country so its within the EU.

Where you are selling to a customer in another EU State, you must first verify if that customer is VAT registered.

To do that you go to a website and enter the customers VAT number. The website is this one

You enter the customer VAT number and country and your own VAT number and country.

You will receive a message to let you know if the customer VAT number is valid or not. If it is valid, the message will include a reference number which you should keep as proof that you performed the check.

Once you have confirmed that the customer’s VAT number is valid, you can apply zero rate VAT to the customer.

Other Conditions

There are some conditions for this to be applied correctly.
• Your invoice should include the customers VAT number and your own VAT number.
• Your invoice should state that reverse charge VAT is being applied.

Showing EU Sales on your VAT3

When completing your VAT3 return, there are some question to be answered.

These ask if you have sales of goods to other EU countries or sales of services to other EU countries or purchases of goods from other EU countries or purchases of supplies from other EU countries.

If you answered yes to the questions about sales of goods or supplies then you have to file a VIES return.

Typically, if you get the letter from Revenue asking you to submit a VIES return, it means that you ticked the box saying that you had sales of goods or services to other EU Countries but you haven’t submitted a VIES return.

How to file a VIES Return

The easiest way to file a VIES return is using ROS.

Firstly gather a list of your sales to customers in other EU countries.

Identify the VAT number for each country and the total value of Sales for each customer.

If your accounting system supports it, you should record your customers VAT number on the system to make it easier to access it. You may be able to generate a VAT report that will show you the VAT numbers and value for all sales to other EU Countries.

Then, login into ROS and select complete a return online.

From there, chose tax type as VIES and chose the appropriate period.

Smaller business file VIES less frequently.

What is on a VIES return.

The VIES return lists the VAT numbers for all of your customers in other EU countries for the period of the return and shows the value of goods or services sold to that customer in that period.

What do the Authorities do with the VIES information

This information allows the tax authorities in the other states to check that the company exists and that they were entitled to be invoiced at the zero rate.

They can also check if your customer correctly accounted for VAT on the reverse charge basis.

Using Reverse charge, the customer should include a notional sale on their VAT return creating a liability for VAT and at the same time they claim notional VAT on the purchase from you.

As the VAT on the notional sale is the same as the notional VAT on the purchase from you, they don’t actually owe any VAT. However, they are showing that they did have an intra EU purchase.

In the past, some sellers would sell VAT free to a non-business customer from another EU State but entering an incorrect VAT number. Sometimes customers would supply the VAT number of a legitimate business who did not know that their VAT number was being used in this way.  In this way the non-registered customer avoided the cost of VAT.

With VIES, the VAT authorities are able to check if the seller applied VAT correctly.

The seller should have a valid VAT number for the customer and should be able to show that they checked the validity of each VAT number. If they can’t they they will be liable for the VAT.


For suppliers who have complied with all the requirements, filing a VIES is pretty straightforward. You just need to make sure that you have verified the VAT numbers and can show that you did that. If you have a lot of sales to other EU businesses, it would simplify reporting if your system allows you to create the report.
If you have only a few sales, then it should be easy to pull out the customer VAT numbers and Total Values.

Over to you

If you have any comments or questions on this, feel free to let me know. The best way to do that is to send me an email.

Managing Foreign Exchange – Preparing for Brexit

In the past few months, I have been getting more and more questions from exporting companies who are worried about the effects of Brexit on their businesses.

There are a number of areas that cause concern but two in particular are common for the companies I have been talking to.

Firstly, Sterling has weakened significantly since the Brexit vote.  That will either make Irish exports more expensive for UK customers or else will reduce the profit margin on the transactions for the Irish seller.

Secondly, the introduction of customs controls could cause delays at the points of entry into the UK resulting in delays in receiving payment or in deterioration in quality of perishable products.

In this article, I am going to talk about the issue of managing foreign exchange.

Back in my early years in employment, I worked for a large multi-national computer manufacturer and for a number of years I managed the treasury section which dealt with large foreign exchange transactions.

My employer provided me with one weeks intensive training to become expert in that area.  So I have some experience in that area.

It’s a little bit different for Irish SMEs, than for multinationals, in that their transactions are smaller and the don’t have the specialist skills or often the time to devote to what could be a very significant element of the business.

You might say that Sterling was never part of the Euro Zone so what’s different  now.  However, it is anticipated that there will be greater volatility in exchange rates in the future with Sterling expected to weaken and a weak sterling causes problems for Irish exporters.

However, there are a number of simple things that can be done.

Foreign Exchange – understanding the jargon

There are a few key phrases that you need to understand.

Transaction Risk

As a business you will be entering into transactions in foreign currency.  The Euro value of those transactions can vary betForween the time you entered into the transaction and the time you pay or get paid from the transaction.

Transaction risk relates to those possible exchange rate movements between contracting and completion.

For example, let’s say that you  agree to sell goods for Stg 50K when sterling is 1.125 =so at that point the sterling is worth € 56.250.  However, the sterling-euro rate is moving so if it takes 2 months to receive payment that sterling could have a different euro value.

For example, last August 50K of sterling was worth €54K while on 24 Jan it was worth 57.4K.  That’s a swing of €3.4K and, depending on the  size or profitability of your business, similar movements could have a big impact on your P&L.

Translation Risk

If you have assets or liabilities denominated in foreign currency then you have a translation risk.  These assets could be physical assets or investments.  The liabilities can be loans.

Translation risk arises as the value of these assets or liabilities in euro can vary with the exchange rate from one date to another.  The risk is that whenever you convert them back to Euro the Euro value could be significantly different to when you acquired the asset or liability.

In my experience, translation risks are not significant for most SMEs.


At its simplest, hedging is taking action, usually by entering into financial contracts, to protect your business against currency movements and to protect the underlying profit margins of your business.

The decision on whether or not to hedge depends on a number of factors

  • Your attitude to risk
  • The level of certainty you have about your contracts
  • Time – how long are your typical payment cycles
  • The level of profitability in your business
  • Economic Risk

Understand your attitude to FX Risk

The first thing you need to do is to decide on what level of risk you are willing to carry.

To do that you will need to have a good understanding of your business.  How much foreign currency are you receiving in any period and how much will you be paying out?  How much foreign currency will you be holding at any point in time?

You need to understand the effect on your business that currency movements can have.  You should try to quantify how much your profit would change for each 1% in currency movement.

This is not an exact science.  You may not be able to make exact predictions for your sales but you should use your experience to make informed estimates.

You will not have full control over payment cycles but you will have a history to give you guidance.

Once you have an understanding of your business, you will be able to say how much foreign currency you are comfortable holding knowing that its value can move.

Typically, I get clients to prepare schedules of receipts and payments for each currency.  The time horizon for these depends on your ability to forecast with reasonable accuracy.

Anything greater than the amount of exposure you are comfortable with should be hedged.

Tools for Hedging

Foreign Currency Netting

If you have both receipts and payments in a foreign currency then they will cancel out to a degree and that netting provides you with a natural hedge.

A natural hedge is the reduction in risk that comes from the business’ normal way of working.

If we go back to the forecast of foreign currency receipts and payments mentioned above, you should net off the receipts against the payments leaving you with a net foreign currency exposure.

That is the amount that you have to manage.  The natural hedging looks after the offsetting receipts and payments.

Where you are netting of foreign currency inflows and outflow, you should consider using holding accounts for each foreign currency.  You will deal with the surplus/deficit using the other tools that you have.

If you have sales in Sterling, then you can create natural hedges by sourcing some of your expenses in Sterling.

Another action you could take to create a natural hedge would be to invoice in Euros.  This will eliminate the foreign exchange risk but create a different risk in that you have pushed the Foreign Exchange risk over onto your customer who could either push back on price or move to other suppliers who are happy to take the foreign exchange risk.

Even if your supplier is Irish, if they have costs are in Sterling it may suit them to invoice you in Sterling so that they can create their own natural hedge.

A useful tip for when you are calculating your exposures is to run a number of calculations of the euro value of the foreign currency using different exchange rates so that you better understand the impact of the exchange rates.

Spot Rates

Spot rate is the rate for immediate settlement of a foreign exchange conversion.  It is based on the supply and demand for the currencies at the time of the quote.  As a result, spot rates change frequently and sometimes dramatically.

If I receive 10k sterling today and I ask my bank to convert it today, the rate they will give me is the spot rate.

When you are dealing in spot rates, you have no certainty.  The rate you get will be the rate offered by the market when you are dealing.  You have no protection over your business margins.

If the rate happens to be favourable, you gain.  If the rate happens to be unfavourable, you lose.

Additionally, you have no commitments.  You have not entered a contract, in advance of the deal, to buy/sell foreign currency so you will not incur penalties if something happens and you cannot make the deal.  For example, the customer may be late in paying you or you find that you can use your foreign currency for some other purpose, say buying an asset or materials.

If you are comfortable with the risks and you have appropriate cash flow, it may be better to opt for spot rates and to be able to pick and choose when your convert your foreign currency.

Forward Contracts

A forward contract is an agreement to exchange currencies for a fixed exchange rate on a fixed date or sometimes within a fixed date range.  The rate used is called the forward rate.

Traders calculate the Forward rates by taking the current or spot rate and adjusting for the difference in the interest rates between the two currencies.

If I know that I will receive Stg 100K in 3 months’ time.  I can go to an FX trader and agree a forward rate.  In three month’s time, I will pay over the Stg 100k and receive an agreed amount of euros.

The way the forward rate is calculated it to treat the transaction as if I borrow Stg 100K now and repay it in three months when I receive my customer payments.   When I repay it I will be repaying the Stg 100K borrowed plus interest over the three months.

The Stg 100K I borrow now is assumed to be converted to Euros and put on deposit for three months.

Then in three months’ time, I will have the initial euro deposit plus three months of deposit interest.

The forward rate is calculated by taking the Sterling repayment in three months and dividing it by the euro deposit value in three months.

Effectively, this calculation is taking today’s rate and adjusting for the difference on interest rates between the currencies.

The forward rate is not a prediction of what the exchange rate will be in three months.

It cannot take into account unknown events that might influence the exchange rate such as a war breaking out somewhere, the USA imposing trade tariffs or indeed a country voting to leave the EU

Forward contracts provide certainty about the rate that you will receive and effectively firm up your profit margin.

You will not be able to benefit if the rate moves more favourably than the forward contract.

It’s a contract so you are obliged to honour it.  If you cancel it, you will pay a penalty which will equal the cost to the trader of having to make other arrangements.

FX Options

An FX option is like an insurance policy.  With an FX Option, you buy the right, without any obligation, to exchange a currency at an agreed future date at an agreed rate.

You pay a premium for the FX option.

You do not have to exercise the option – there is no obligation to do so.  Therefore, if the exchange rate is unfavourable on the future date, you can ignore the option but if the exchange rate is favourable you can choose to exercise the option.

The FX Option costs a premium.  You should factor that into the exchange rate to understand what percentage of your euros will go to pay the premium.

However, while fx options can be expensive they do provide certainty.

Foreign Exchange Management Policy

Now, having read down this far, you understand the risks.

You have learned how to quantify them by preparing the foreign currency projections for receipts and payments.

And you understand hedging and the basic tools for hedging.

Lets now look at what should be in a Foreign Exchange Management Policy.

There are four elements

1. Understand your FX Exposures

The first step in managing currency risk is to understand and quantify the actual and potential exposures that your business has.

This involves reviewing both your costs (both raw materials and overheads) and your revenues and preparing a schedule to establish your net exposure for each currency that you trade in.

2. Determine your Attitude to Risk

As a business you should agree and document your attitude to risk.

This means that you and your fellow directors, if any, should decide how much foreign exchange exposure you are willing to tolerate.

You may say that I can hold up to Stg 100K and bear the risk of that moving . Or it could be Stg 500K or Stg M or any other sterling amount.

Alternatively, you could say, my profit margins are so tight, that I cannot take any risk.

Whatever, the circumstances, you decide how much or how little risk you can take.

Make a decision on that and review it regularly – quarterly or annually.

3. Allocate Ownership, roles and Responsibilities

You need to decide who will do what and when.

Who will decide on the attitude to risk level?

Who will prepare the foreign exchange projections ie quantify the foreign exchange exposures?

Who will make the decisions on what hedging to do, if any?

Who will execute the agreed hedging decisions?

Document and approve those decisions and make sure they are communicated to the relevant personnel.

Depending on the size of the organisation, you may want to get board approval for the Policy.

If its an owner manager business, then this step is usually unnecessary.

4. Execute and Review the Policy

Once you have decided on the policy, put it into effect but always keep it under review.

Both external and internal circumstances can change.

Your profitability can improve or deteriorate, changing your appetite for risk.   You could win other business in local currency reducing the significance of your foreign currency business.  Competitors could enter the market forcing you to take more risks.

The possibilities are many so you need to keep it under review

Understand that you cannot totally eliminate risk

No matter what you do to minimise the risk, the currency could still move in such a way that you would have been better if you hadn’t done anything.

For example, if I decide to eliminate risk by entering into a forward contract to sell Stg 100K at 1.13.  I am happy if the exchange rate when the contract matures is higher than 1.13.  But if it is lower I lose.

So you have to understand the effect on your business of the various movement possibilities and accept that by eliminating a possible downside you are also eliminating a possible upside.

It really all about protecting the business.


The key elements of managing foreign exchange are to

  • understand your business and how its affected by FX movements.
  • Understand your own attitude to risk
  • Decide on how you will respond to the various possible scenarios
  • Follow through by implementing the policy as your carry out your business.

Over to you

This is a quick overview of foreign exchange for SMEs.  If you have any questions feel free to contact me by email.

If you are unsure how to prepare projections for your business, you may find my article on How to Prepare Financial Projections useful.

What KPIs should I use?

A question that I regularly get asked by business owners is “what KPIs should I use?”.  Most business owners are familiar with the idea of KPIs and they understand that they should have them but they are not sure where to start.

I have been working in management for over 20 years now – initially as an employee and in recent years as a business advisor.

My focus is on helping business owners improve their profits.  I have worked on many lean projects both as leader and as team member.  I am an approved Lean Advisor for Enterprise Ireland and have helped many SMEs implement Lean initiatives.

In almost all of those improvement projects, I  helped the business owners to select their KPIs.

Let me tell you how I approach this task.

What are KPIs?

KPI stands for Key Performance Indicators. They are quantifiable measurements, agreed upfront, that monitor the critical success factors for a business.

A well-managed business will have a clear vision of where it wants to be in the future.  Critical Success Factors are the building blocks that will enable the business to realise its vision.

The KPIs are those measures which provide feedback on whether or not the CSFs are being achieved.

For example, a business decides that it needs new products to satisfy market needs. Possible KPIs could be number of new products launched in a period or proportion of revenue generated from new products.

It is important to understand the difference between CSFs and KPIs.  The CSFs tell you what must be done for the business to be successful.  The KPIs tell you if those CSFs are being achieved.

I tend to think of KPIs as success criteria.  If I ask you how you will know if something is successful, you will tell me what needs to be checked to find the answer.  The KPIs provide evidence of success or lack of success.

Why are KPIs important?

We are all familiar with the phrase “what gets measured, gets done”.   Measuring something puts focus on it and gives you an objective way of determining if progress is being made.

KPIs are a key part of the visioning process.  If you don’t measure your KPIs, then you are less likely to realise your vision.  They provide focus and direction.

Using a phrase from the Lean Approach, KPIs are a voice of the business processes – they are the feedback from the processes.  They can be used to compare and assess your business, your processes and the performance of your team.

I think of them as the Vital Signs of your business.   They provide an early warning system for your business.  Many people refer to them as the components of the dashboard for your business.

What characteristics should KPIs have?

KPIs should cover Key Business Areas

Your KPIs need to cover the key business elements of Marketing, Operations, Innovation, Human Resources and Finance.  Some of these can be difficult to measure.  It is not always easy to measure innovation or culture

KPIs should be Measurable

We need to have hard data. We prefer not to have to rely on subjectivity or individual assessments.  It must be possible to quantify the things that we are measuring.

KPIs should be Visual

We want to be able to represent the results graphically.   If we can graph something we can see it.

KPIs should be Easy to Understand

Everyone involved in the business should be able to understand what we are measuring and why. To achieve that we must keep things simple.

Applying Two Perspectives to KPIs

I find it useful to think of KPIs as coming from two different perspectives.

From the definition above, you may be tempted to focus on improvement and development initiatives.  That’s fine.  These initiatives are likely to be key building blocks for getting to where you want to get to.

However, you must also take care of the day to day business.  If you don’t maintain profitability, you may not survive to reach your desired destination.

For that reason, I encourage clients to think in terms of Maintenance KPIs and Development KPIs.

Using Process Thinking for KPIs

When selecting KPIs its very useful to think in terms of processes.  In doing that, simple process maps can be very helpful.

Begin by identifying the starting position.  Then you move on to identify the key activities or operations that must be completed to bring you to your destination, the finishing position.

Some people just focus on the end point – the result.  If you have a project or process that will take time to complete, then you should be looking at interim measures that will let you know if you are on track.

Think in terms of predictor measures as well as result measures.  For example, lets assume that you sell a complex product and you know from experience that 20% of prospects will ask for a quote and of those quotes 25% will result in actual sales.

Let’s say that the product sells for 100K and you need to sell 20 this year.  We can deduce that we need to generate 80 quotes to make 20 sales.  We also know that we need to be talking with 400 prospects to achieve 80 quotes ie 20% of prospects.

You should consider having a KPI for the number of prospects identified and another for the number of quotes generated.  The number of prospects identified should be a good predictor of your sales.

Cascading KPIs

Most people accept that the average person can only focus on seven plus or minus two items at any point in time.   Practically this means that our set of KPIs will ideally number 7 +/- 2 ie 5 to 9.

For a total business then we should identify the 5-9 KPIs that will provide a good test of whether or not the business is on track to realise its vision.

However, we can also chunk that down to departments or processes and we can identify 5-9 KPIs for each department or process.

In a management team then we will have 5-9 overall KPIs.  But each member of the management team should have 5-9 KPIs for the areas that they are responsible for.

We can cascade this all the way down to the lowest level process and have KPIs for each process.  We should end up with KPIs for the overall business supported by KPIs for each department and for each critical development process and these will in turn be supported by fundamental processes.

Putting it into action – selecting KPIs

So we have had enough theory, lets see how that could work in practice.

Step 1 – agree the Vision

Firstly, I ask clients to create a vision of where they want to get to.  For every business this is different. It may involve products or markets or profitability or use of technology.

I challenge them to create a picture that will represent where they want to get to.

Step 2 – identify the building blocks

Once we know where they want to get to, I ask them to identify the building blocks.  What has to happen first for them to achieve their vision.

Step 3 – Project Plan for each building block

For each of the  building blocks, I want them to create a simple project plan – what has to happen, who is responsible for that and when must it be complete.

This project plan will provide me with KPI candidates.

Step 4 – Identify Key Ongoing business Processes

Additionally, I ask them to identify the key processes in their business.

This usually includes a marketing process, a sales process, a production or operations process, finance processes and other admin processes.

Step 5 – Identify key monitoring points for ongoing processes

I ask them to map out the processes and identify the key measurement points in each process.  We don’t want to just wait for the finish point – we want to be able to test within the process to ensure that each process is on track to deliver.

Step 6 – Prioritise your KPIs

You are likely to have come up with a list of many KPIs.  You now need to prioritise these so that you can identify a small number (5-9) of driver KPIs.

Ask yourself which of the candidate KPIs are most likely to help you  get the business to where you want it to go.

Step 7 – Document and Assign Responsibility

Once you have your KPIs identified you should document them.

What are you measuring?  Who will measure?  What exactly will be measured? How will they be measured?  Where will the results be posted?  Who will keep the measurements updated?

There should be no ambiguity.   If a key employee is hit by the proverbial bus, then there should be clear guidance available for someone else to step in and keep the KPI measurements up to date.

Step 8 – Measure and Publish

Publishing the KPIs is very important.  This makes the priorities of the business very clear to everyone. In traditional businesses, the measures – often in graphical format – will be posted on a white board in a location where everyone will be able to see.

In newer businesses, they can be published electronically – possibly by email, on a shared folder, on an internal website.  Sometimes businesses will run a powerpoint on a tv or monitor in an area where everyone can see them.


Updating KPIs

Once you work through and identify your KPIs, don’t assume that they will not change.

Every so often, you should be updating your business vision.  When that happens you are likely to identify new CSFs and in turn you will have to identify new KPIs.

There tends to be more consistency about the maintenance KPIs.  But even there, if a business is going through a wobbly patch, they may want to edit the KPIs to prioritise something new.

Say for example, that you have found a problem with incoming raw materials in recent weeks.  You may decide to test incoming quality for a while until the incoming quality is restored to the standard that you expect.

The incoming quality test could be added to the list of KPIs until you are satisfied that the problem has been permanently resolved.

Linking KPIs to your accounts

If you want to use your accounts strategically, then you should organise your accounts so that, where possible, information regarding KPIs is highlighted and readily available.

For example, a professional services client told me that he had set a goal of increasing his retainer fee income to being 50% of his total fee income.   A KPI for him then should be the percentage of fee income revenue over total revenue.

At that point, he was not distinguishing his retainer fee income from other income.  However, his accounting systems were well capable of doing that.  So, we created some new fee categories for him.

Now when he runs his profit and loss, his fee income is already analysed by the various categories and he doesn’t to do any further work to get his key meaurement.

By making the KPIs so visible it really emphasised it and he reached his 50% target much faster than he expected to.

Linking KPIs to Improvement Projects

With well-selected KPIs you have put in place a mechanism to let you know when you are not meeting your targets.

Once you know that you are not meeting a target – either maintenance or development – you know you need to improve.

The KPIs are identifying an improvement opportunity for you.  You should immediately initiate an improvement project to bring the KPI back to where it should be.

KPIs in practice

KPIs for a Manufacturing Company

A manufacturing company that had an aging product line with one major, and several minor customers, was looking to identify its KPIs.

They decided that they needed to develop some new products and to find some new customers so that they were less dependant on one major customer.  They also identified that their product costs were high compared to their competitors.

They decided on the following KPIs

  • % of Turnover spent on new product development
  • The number of proposals to new customers
  • The efficiency of their production process – actual output: expected output
  • The value of raw material scrapped
  • The value of raw materials rejected due to poor quality
  • % of on time delivery
  • Number of customer complaints

KPIs for a Drinks Distribution Company

A drinks distribution company had very healthy market share and profitability.  However, they detected a trend towards people buying in off-licences for home drinking.  Their share of the off-licence business was small so they set a goal of increasing the % of their sales to off-licences.

However, they were disappointed in the progress that they were making towards that goal. They reviewed what they were doing and realised that the main KPI for sales people was € value of overall sales.

What was happening was that sales people knew that the best way of hitting their sales targets was to sell big orders to chains and supermarkets but not to the target independent off-licenses.

So they changed the KPIs for Sales People so that Sales % to off-licences became more important.  Immediately a shift was noticed and within one year, they were close to achieving their target.


For your business, your KPIs are like the dash of your car.

You need to decide what you want to achieve and how you will do that.  Then you put in place KPIs that will measure progress towards your goals while also ensuring that your existing business processes continue to perform well.

It main take a bit of time to explore and finalise your KPIs. Realise that this time should be viewed as an investment in realising your vision.

Over to you!

If you have any questions about this article, feel free to contact me.

If you would like to have a discussion about KPIs let me know.  I would be delighted to help.

Form of Business – Sole Trader v Limited Company

Which form of business?

If you are starting out in Business, you have several decisions to make.  A key decision is to decide which form of business to use.  Will you trade as a sole trader or will you  trade through a company?

You may not fully understand the difference between the two forms of business or the consequences of choosing one option over the other.  This can make the decision difficult for you.

Over the years while practising as an accountant, I have been asked about this issue many times.  Here is the advice that I give to my clients.

Firstly, what is the difference between a Sole Trader and a Limited Company

A sole trader means that you are trading as an individual i.e. yourself.  A company is a separate legal entity that is created for the purpose of carrying on an activity usually a trade.

In law, a company is a legal person and is separate from the owner(s).   This means that a company can enter into contracts and can sue or be sued.

As a sole trader, when you carry on your trade the other person is trading with you as an individual.  If the business goes bust, you will be liable for the full debts of the business.

As a company, you, and possibly others, will own shares in a company which carries on the trade.  This company can, and usually does, have limited liability so your personal liability is limited to the amount you invested in in shares of the company.

If the company goes bust, it will be liable for the full debts that is has and if the company cannot pay those debts the debtors cannot follow you for any more than you invested unless you have given personal guarantees over the debt of the company.

A sole trader will have to register as a trader with the Revenue Commissioners and will have to file an annual income tax return.   If the sales exceed certain limits, you will have to register for VAT.  If you have employees, you will have to register as an employer for PAYE.

There is more detail on VAT in this blog post What do you need to know about VAT.

A company will have to register with the Companies Registrations Office (CRO).  The company will also have to register for taxes with the Revenue Commissioners and will have to file an annual corporation tax return.   If the sales exceed certain limits, the company will have to register for VAT.  If the company has employees it will have to register as an employer for PAYE.

If you have a company and are working in the business yourself, then you are an employee of the company.

How do you decide on Sole Trader or Company

Do you intend to retain profits in the business?

In the early stages of many businesses, the owner leaves profits in the business to build up working capital.

Where the taxable profits are greater than what the owner plans to take out of the business by way of salary, then it’s usually better for the business to incorporate i.e. trade as a company.

The reason for this is that a sole trader pays tax on all the profits, but a company owner will only pay income tax on salaries or dividends taken from the business.

For a company, tax is levied at 12.5%, in most cases, on the taxable profits and the owner will also pay income tax on any salary or dividend taken from the company.

In a situation then, where profits are retained in the business, the combined tax paid is usually lower when trading as a company and in that situation operating as a company may be best.

Note, however, that if the company is a service company there may be a 15% surcharge on undistributed profits. This applies to accountants, architects, etc.

However, there are other factors that should also be considered.

Do you plan on investing in a pension?

Tax Relief on pension contributions is more restricted for sole traders than for company directors. If an individual wants to maximise a pension fund then it may be best to trade as a limited company.

What is your exit plan from the business?

Generally speaking, having a company is better for transferring ownership to children as you can allocate shares to the children.

In the unwanted event of failure, can you bear the liabilities

In businesses where there is a risk to the owner from significant claims against the business, then Limited Liability companies are best.

For example, if the liability for product failure would be high, then consider trading as a company.

Are there any specific rules or restriction for your business sector?

For some businesses, laws or regulations may not allow the business to be carried on by an incorporated entity. For example, it appears that while doctors can practice as unlimited liability companies, the GMS only awards contracts to individual doctors.

Do you plan on investing in Property?

In almost all cases, it is better to have investment property owned personally so as not to have a double tax charge.

If an investment property is sold by an individual the individual will pay capital gains tax on any gain.

If the investment property is sold by a company, the company will pay capital gains tax on any gain.  However, if the owner wishes to take the gain out of the company then he/she will pay income tax on the salary or dividend.

Raising investment Capital

Some tax incentives require the business to be incorporated so if you plan on raising funds under  the Employment and Investment Incentive Scheme (formerly known as BES) then you will have to have a company.

Tax incentives for Business Startups

There are more tax incentives for companies than for individuals.

Certain companies are exempted from Corporation Tax and/or Capital Gains Tax in each of the first three years to the extent that their tax charge from qualifying trading activities does not exceed €40,000.   More on this on the Revenue  website here.

There is marginal relief where the tax charge falls between €40,000 and €60,000. In other words, a company can generate up to €320,000 in taxable profits each year, at the current tax rate of 12.5%, for three years without paying any corporation tax.

Conditions apply which seek to ensure that it is only new businesses that qualify rather than businesses being transferred from another Irish entity or businesses being moved to a limited company from a sole trader/ partnership.


The information in this article is not intended to be a comprehensive overview of all the issues relating to deciding which form of business to use.  This is presented as guidance to help you decide if you need more detailed advice. You should seek professional advice before making any significant decisions.

If you have any questions, be sure to let me know by emailing me at jim (at) accountsplus (dot) ie.


Tax Allowable Deductions

Are you claiming all of your allowable expenses when doing your taxes?

Most people know about the PAYE tax credit and the Earned Income Tax Credit.  They also know about Pension allowances and Medical Expenses.

Not as many know about what the Revenue call Flat Rate Expense Allowances.

Flat Rate Expenses

Flat-rate expenses are those that cover the cost of equipment your employee needs for work. This equipment may include tools, uniforms and stationery.

These are costs that an employee incurs in performing the duties of their employment, and the costs must be directly related to the nature of their employment. Flat-rate expenses are available to a wide range of occupations.

The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees (usually trade union officials). All employees of the class or group in question can then claim the agreed deduction in their own tax credits.

For example, shop assistants can claim an allowance of 121 for expenses.  I bet not too many of those are claimed.

Flat-rate expenses are one of the most common reliefs that are never claimed for. In 2013 for example, (the most recent year that I can find figures for) about 571,000 people successfully claimed these expenses, worth a total of €71 million.  But we don’t know how many people haven’t claimed.

As of todays date these are the expenses that are available.

What you should do

Scan the list of occupations below and see if your occupation is listed.  If it is, how much is the expense.  Then check are you claiming that.

If not consider, submitting and amended tax return.


2017 2016 2015 2014 2013
Agricultural Advisers (employed by Teagasc) 671 671 671 671 671
Archaeologists:  (Civil Service) 127 127 127  127  127
Architects employed by
     (a) Civil Service 127  127  127  127  127
     (b) Local Authorities 127  127  127  127  127
Airline Cabin Crews 64  64  64  64  64
Bar trade:  Employees 93  93  93  93  93
Building Industry
     Bricklayer 175  175  175  175  175
     Fitter mechanic, plasterer 103  103  103  103  103
     Electrician 153  153  153  153  153
     Mason, roofer slater, tiler, floor layer, stone cutter 120  120  120  120  120
     Driver, scaffolder, sheeter, steel erector 52  52  52  52  52
     Professionals:  engineers, surveyors, etc. 33  33  33  33  33
     General operatives (labourers etc. incl. Public Sector) 97  97  97  97  97
Bus, rail and road operatives in
Bus Atha Cliath, Bus Eireann and Iarnod Eireann 160  160  160  160  160
Cardiac Technicians
     Female 212  212  212  212  212
     Male 107  107  107  107  107
Carpentry and joinery trades
     Cabinet makers, Carpenters, Joiners 220  220  220  220  220
     Painters, Polishers, Upholsterers, Wood Cutting Machinists 140  140  140  140  140
Civil Service
     Architectural Technologists & Assistants 166  166  166  166  166
     Clerks of Works (incl. Senior  and District Inspectors) 142  142  142  142  142
     Engineering Technicians for Archaeologists, Architects, Engineers and Surveyors 166  166  166  166  166
Park Rangers and constables employed by the Office of Public Works 77 77 77 77 77
Clergymen (Church of Ireland) 127  127  127  127  127
Consultants (hospital) 695 695 695 695 695
Note:  Deduction includes subscription to the Irish Medical Council
 Obliged to supply and launder their own white uniforms 160  160  160  160  160
Defence Forces Personnel
(All enlisted personnel not in receipt of Uniform Replenishment Allowance) 150 150 150
Dentists in employment 376  376  376  376  376
Dockers 73   73   73   73   73
Doctors  (hospital, including consultants) 695  695  695  695  695
Note:  Deduction includes subscription to the Irish Medical Council.
Draughtsmen (Local Authority) 133  133  133  133  133
Driving Instructors 125 125 125 125 125
Note: This amount represents an annual allocation of half the biannual statutory ADI fee payable to the Road Safety Authority
Engineers employed by:
     (a)  Civil Service 166 166 166 166 166
     (b)  Local Authorities 127  127  127  127  127
     (c)  Eircom, Coillte, OPW 166  166  166  166  166
Engineering Industry [and Electrical Industry from 1997/98]
 Skilled workers who bear the full cost of own tools and overalls 331 331 331 331 331
 Semi-skilled workers who bear the full cost of own tools and overalls 254 254 254 254 254
All unskilled workers and skilled or semi-skilled workers who do not bear the full cost of own tools and overalls 219 219 219 219 219
Firefighters       Full-time 272  272  272  272  272
Firefighters       Part-time 407 407 407 407 407
Fishermen in Employment 318 318 318 318 318
Foresters employed by Coillte 166 166 166 166 166
Freelance actors chargeable to PAYE 750 750 750 750
Grooms (Racehorse Training) 294 294 294 294 294
Home Helps (Employed directly or indirectly by Health Boards) 256 256 256 256 256
Hospitals      Domestic Staff:
     To include general operatives, porters, drivers, drivers, attendants, domestics, laundry operatives, cooks, catering supervisors, waitresses, catering staff, kitchen porters
(a)  who are responsible for providing and laundering their own uniforms. 353 353 353 353 353
(b) who are obliged to launder       the uniforms supplied 185 185 185 185 185
(c)  whose uniforms are supplied and laundered free 93 93 93 93 93
Hotel industry
     Head hall porter 90  90  90  90  90
     Hall porter 64  64  64  64  64
     Head waiter 127  127  127  127  127
     Waiter 80  97  97  97  97
     Waitress 80 80  64  64  64
     Chef 97  97  97  97  97
     Manager 191  191  191  191  191
     Assistant Manager 127  127  127  127  127
     Trainee Manager 78  78  78  78  78
     Kitchen Porter 21  21  21  21  21
Journalists, including those in public relations area of journalism 381  381  381  381  381
Journalists who receive expense allowances from their employers 153  153  153  153  153
Local Authorities
     Executive Chemists 115  115  115  115  115
     Parks Superintendents 40  40  40  40  40
     Town Planners 115  115  115  115  115
Mining Industry
     (a)miners/shift bosses underground, mill process workers/shift bosses and steam cleaners 1312 1312 1312 1312 1312
     (surface workers) 655 655 655 655 655
Motor repair and motor assembly trades
Assembly workers, greasers, storemen and general workers
     (a)  who bear the full cost of own tools and overalls 52  52  52  52  52
     (b)  who do not bear the full cost of own tools and overalls 42  42  42  42  42
Fitters and mechanics
     (a)  who bear the full cost of  own tools and overalls 85 85 85 85 85
(b) who do not bear the full cost of own tools and overalls 42  42  42  42  42
Panel Beaters (See Panel Beaters/Sheet Metal Workers
     (a)  where obliged to supply and launder their own uniforms 733 733 733 733 733
     (b)  where obliged to supply their own uniforms but laundered free 638  638  638  638  638
     (c)  where obliged to launder the uniforms supplied 353 353 353 353 353
     (d)  where uniforms are supplied and laundered by hospital 258  258  258  258  258
Nurses:  Short Term Contracts through an Agency.  Additional Amount Due 80 80 80 80 80
Nursing Assistants(including attendants, orderlies and nurses’ aides)
     (a)  where obliged to supply and launder their own uniforms 526  526  526  526  526
     (b)  where obliged to supply their own uniforms but laundered free 440  440  440  440  440
     (c)  where obliged to launder the uniforms supplied 234  234  234  234  234
      (d)  where uniforms are supplied and laundered by hospital 93  93  93  93  93
Occupational Therapists
     (a)  where obliged to supply and launder their own uniforms 217  217  217  217  217
     (b)  where obliged to supply their own uniforms but laundered free 153  153  153  153  153
     (c)  where uniforms are supplied and laundered by hospital 52  52  52  52  52
Optometrists/Dispensing Opticians in employment
Registration Fee – once off fee paid initially in year 1 250 250 250 250 250
Retention Fee – payable in 1st year and each subsequent year 285 285 285 285 285
Restoration Fee – payable to re-register with the Opticians Board 279 270 270 270 270
Dispensing Opticians
Registration Fee – once off fee paid initially in year 1 200 200 200 200 200
Retention Fee – payable in 1st year and each subsequent year 225 225 225 225 225
Restoration Fee – payable to re-register with the Opticians Board 215 215 215 215 215
Panel Beaters / Sheet metal Workers
     (a)  Who bear full cost of own tools and overalls 78  78  78  78  78
     (b)  Who do not bear full cost of own tools and overalls 40  40  40  40  40
Pharmacists 400 400 400 400 400
Pharmaceutical Assistants (formerly known as Assistant Pharmacists) 200 200 200 200 200
NOTE These amounts represent the Annual Retention Fee payable to the PSI
     (a)  where obliged to supply and launder their own uniforms 381  381  381  381  381
      (b)  where obliged to supply their own uniforms but laundered free 318  318  318  318  318
     (c)  where uniforms are supplied and laundered by hospital 64  64  64  64  64
Pilots (Airline Pilots Association) 275  275  275  275  275
Plumbing trades
Plumber (non-welder) 177  177  177  177  177
Plumber-welder 205  205  205  205  205
Pipe fitter-welder 205  205  205  205  205
Printing Bookbinding and allied trades
     Bookbinders (Hand) 109  109  109  109  109
     Bookbinders (Others) 97  97  97  97  97
     Compositors, linotype and monotype operators 121  121  121  121  121
     Copy Holders, photo lithographers, photo engravers and workers in T and E section of newspapers 114  114  114  114  114
     Monotype caster attendants, stereotypes and machine minders 135  135  135  135  135
Readers and revisers 100  100  100  100  100
Rotary machine minders and assistants 150  150  150  150  150
Others (e.g. cutters, dispatchers, rulers, warehousemen) 90  90  90  90  90
Professional Valuers in the Valuation Office 680 680 680 680 680
     (a)  where obliged to supply and launder their own white uniforms 242  242  242  242  242
      (b)  where obliged to supply their own white uniforms but laundered free 143  143  143  143  143
     (c)  where white uniforms are supplied and laundered by hospital 73  73  73  73  73
Respiratory & Pulmonary Function Technicians 191  191  191  191  191
RTE National Symphony Orchestra 2476 2,476 2,476 2,476 2,476
RTE Concert Orchestra 2476 2,476 2,476 2,476 2,476
British Merchant Navy
Foreign-going trade:
(a)  First class passenger and cargo liners.
      Master 318  318  318  318  318
      Chief officer, chief engineer, other  officers, including pursers 318  318  318  318  318
      Chief steward 318  318  318  318  318
      Assistant steward 244  244  244  244  244
      Carpenter 194  194  194  194  194
      Other ranks 148  148  148  148  148
(b)  Cargo-vessels, tankers, ferries
      Master 318  318  318  318  318
      Chief officer, chief      engineer, other officers, including pursers 318  318  318  318  318
      Chief steward 318  318  318  318  318
      Assistant steward 244  244  244  244  244
      Carpenter 194  194  194  194  194
      Other ranks 148  148  148  148  148
British home or coasting trade:
      Master 318  318  318  318  318
      Chief officer, chief      engineer, other officers, including pursers 318  318  318  318  318
      Chief steward 318  318  318  318  318
      Assistant steward 244  244  244  244  244
      Carpenter 194  194  194  194  194
      Other ranks 148  148  148  148  148
Mercantile marine officers and crews of Irish ships
Foreign-going trade: cargo vessels
       Master 98  98  98  98  98
       Chief officer, chief engineer, radio officer 90  90  90  90  90
       Other officers including pursers 73  73  73  73  73
       Chief steward 73  73  73  73  73
       Assistant steward 55  55  55  55  55
       Carpenter (to include tools) 55  55  55  55  55
       Other ranks, including boys 37  37  37  37  37
Home trade:
(a)  Cross channel and continental
      Master 98  98  98  98  98
      Chief officer, chief engineer, radio officer 90  90  90  90  90
      Other officers, including pursers 73  73  73  73  73
      Chief steward 73  73  73  73  73
      Assistant steward 55  55  55  55  55
      Carpenter (to include tools) 55  55  55  55  55
      Other ranks including boys 37  37  37  37  37
(b)  Coasting vessels
      Master 98  98  98  98  98
      Chief officer, chief engineer, radio officer 90  90  90  90  90
      Other officers,
      including pursers 73  73  73  73  73
      Chief steward 73  73  73  73  73
      Assistant steward 55  55  55  55  55
      Carpenter (to include tools) 55  55  55  55  55
      Other ranks, including boys 37  37  37  37  37
Shop Assistants
(including supermarket staff, general shop workers, drapery and footwear assistants) 121  121  121  121  121
Surveyors  employed by:
     Local Authorities 127  127  127  127  127
     Civil Service 127 127 127 127 127
     Coillte 127  127  127  127  127
     Teachers [excluding guidance counsellors, third-level academic staff and physical education teachers]
     School principals 608 608 608 608 608
     Other teachers 518 518 518 518 518
     Part-time teacher (on full hours) 518 518 518 518 518
     Part-time (not on full hours) 279 279 279 279 279
Guidance Counsellors
     (a)  employed full-time in second level schools 518 518 518 518 518
(b)  engaged mainly in teaching general subjects but also doing part-time guidance counselling (additional allowance) 126 126 126 126 126
Third level academic staff
     Professor, Heads of         Schools/Departments 608 608 608 608 608
     Senior lecturer 518 518 518 518 518
     College lecturer 518 518 518 518 518
     Assistant lecturer 518 518 518 518 518
     Part-time lecturer (on full hours) 518 518 518 518 518
     Part-time lecturer (not on full hours) 279 279 279 279 279
Physical education teachers (teacher must hold qualification in physical education)
     (a)  fully engaged in teaching P.E. 518 518 518 518 518
     (b)  engaged mainly in teaching general subjects but also doing part-time P.E. (additional allowance) 126 126 126 126 126
NOTE: Teachers who are employed by the Department of Education may also claim a deduction in respect of the subscription to the Teacher’s Council of Ireland
Veterinary Surgeons in Employment
Employed vets who incur, and are not reimbursed the cost of the Registration Fee to the Veterinary Council 621 621 621 621 621
Employed vets who do not incur, or are reimbursed the cost of the Registration Fee to the Veterinary Council 171 171 171 171 171
Veterinary Nurses
Where obliged to supply and launder their own uniforms 400 400 400 400 400
Where obliged to launder the uniforms supplied 150 150 150 150 150

Flat rate expenses can be claimed when completing your annual income tax return.

If you have any comments or questions on this post, feel free to contact me.

Understanding Financial Statements

Do you understand financial statements and how they relate to each other?

Over the years, I have developed and delivered workshops on Finance for non-financial managers.  As part of those, I developed some simple scenarios to explain the key points.

This series of videos uses those scenarios to explain what each of the three main statements does – Balance Sheet, Profit and Loss and Cashflow Statement – and how they relate to each other.

Video 1 lasts about 9 mins and introduces the scenarios and the key ideas

Video 2 lasts about 4 minutes and introduces a new element to further explain the ideas.

Video 3 lasts about 6 minutes and adds another element.

Video 4 lasts just over 4 minutes.

If you have any comments or questions, please feel free to get in touch with me.



How to calculate your breakeven point

One thing I am often asked about is how to calculate your breakeven point.

Video on how to calculate breakeven (6 min)

Other relevant articles

If this topic is relevant for you, you may  also be interested in the following blog posts.

The nuts and bolts of accounting

How to prepare financial projections

How much does it cost you to open your doors

If y0u have any comments or questions, please let me know.


Reducing the cost of preparing your Annual Accounts

Reducing the cost of preparing your Annual Accounts

Are you conscious of your business costs and do you want to reduce the cost of getting your annual accounts and tax done.  It’s a common issue and one I will address in this article.

As you may know, I am a qualified accountant with many years of experience.  When I worked in management positions in industry, we always used external accountants for the audit and tax work.  In that role, I was very focussed on keeping costs down.

Now, in practice, I work with a wide range of clients.  In a surprising number of cases, these clients were paying more for accounts than they need have.  This not because they were being overcharged. It’s because of what they were asking the accountant to do.

Are you asking your accountant to do work you could do cheaper?

When you send you accounting records to your accountant, are they well organised? Are you asking your accountant to organise the information he/she is receiving?

Like you, your accountant is running a business and will have to charge you for that work.  Why not either do it yourself or have one of your staff do it.  If you have no staff, investigate if can you outsource it to someone who will charge less than your accountant.

Do you send in information that is incomplete?

Your accountant starts working, then realises he/she doesn’t have all they need.  They request that from you and then wait to receive it.   This is just inefficient.

You know that when you stop and start a job, you lose time because you have to have to get back up to speed every time you get back to the job.

It’s the same for accountants.  If a job is broken up and I don’t look at it for a couple of weeks, I have to invest an extra bit of time refreshing myself on where I was.

Do you send in information in piecemeal fashion?

Maybe you think think that I have some of the information so I’ll send that in and I will send in the rest when its ready.

This is the same as sending in incomplete records and is inefficient.

Do you send in information that contains errors?

If you send in errors the accountant must find and fix them.  If you find and fix them before you send the information in, the job will take the accountant less time.

Do you check your accounting records?

When I get information from a client, I have to check it first, before I start working on the accounts, to make sure that its right ie complete and accurate.

Accounts call this type of work reconciling, but basically its just proving that the numbers are reliable.

With accounting software now, it’s easy for the client to do some, if not all, of these checks.  You can do bank reconciliations and you can do checks on the customer and the supplier balances.

Do you use accounting software?

For an accountant, getting information that is already entered into a reasonable system is much better than getting the raw data.  The accountant will be just have to review and analyse it, making some corrections.

It doesn’t take as much time and I know that I prefer that sort of work.

Do you use cloud accounting?

Cloud accounting can be a big help.  The accountant can review the records during the year and maybe give your feedback on the quality of the records earlier in the year.

The software will make you organise the information and you can do many of the reconciliaations yourself.

Cloud Accounting Software lets the accountant work remotely.  I have clients using Xero and Kashflow and we can have Skype calls to review accounts and discuss issues.  This saves me from having to travel to the clients premises which reduces the cost.

Are you making your accountant do data entry work?

Data Entry can be done cheaper in most cases by an entry level admin person.   Even if your accountant puts a junior staff member on the job, they will still want to recover the wage cost and overhead cost of that staff member and they will want to make a margin on it.

You must have access to someone who can do data entry cheaper.

Do you leave it to the last minute to send in your information?

If this is the case, the accountant may have to work overtime – evenings or weekends. That’s going to cost more money.  Staff have to be paid overtime.  It’s also more difficult to do a good job as there may not be time to find full answers to any questions the accountant raises.

Does your accountant do an audit even though you are below the audit exemption threshold?

Some clients like getting an audit done because it gives them more comfort about the numbers.  However, auditing is very regulated and the auditor will have to compile lots forms to satisfy the auditing regulations.   You could ask your accountant to review the accounts without going through a full audit.

Are you using an expensive firm for all your accounting work?

Larger firms tend to have high overheads and therefore have to charge more.  I know some clients who split up the work into different areas and use different firms for different elements.

For example, if your accounting records are good and you are just getting the accounts done for compliance purpose, you could get a smaller, possibly cheaper firm to do the accounts.  If you need more sophisticated tax or maybe corporate finance advice, you could have a different firm advising you on that.


For many client’s there are a number of things that they could to reduce the cost.  However, depending on your circumstances, you may not want to take on some of this extra work.  However, you need to think it through.  There may be other cheaper ways of getting it done through using part-time admin or book-keeping staff.

Don’t think your accountant will resent this.

I prefer working with clients to help them use their accounts to improve and grow the business.  I feel that I can be much more effective if I am working on analysis and advice than if I am doing data entry or filing/organising.  I also find it much more enjoyable working on providing analysis and advice.

Next time, you notice yourself resisting or resenting the accountants fee, use my checklist to see if you could do anything to reduce the fee.

Your Turn

This article is based on my own experience working with clients.  If you have any comments or feedback, I would love to hear it.  Feel free to leave a comment or send me an email.