Accounting is key to the health and success of your business. Making errors, many of which can easily be avoided, can lead to an inaccurate picture of your business affairs, theft, and fines from HMRC. Here are three common accounting errors to avoid.
Checks and balances
There are many reasons to ensure that there are appropriate checks and balances on certain financial roles and functions in your business. Not having appropriate safeguards in place can leave you open to insider fraud and increased risk of payment diversion fraud. UK Finance estimates that £50 million was lost to payment diversion fraud in 2022.
Changes to payment details should be checked with suppliers in person or on the phone with a known contact. Multi-step authorisation for payments above a certain threshold is also a good way to lower the risk of insider fraud.
Overstating revenue
A business that is overstating revenue is usually doing so because they are issuing late invoices and are using bank feeds for data entry. Doing this can have serious consequences, leading to overpayment of tax and a completely inaccurate understanding of the health of your business.
This can be avoided through implementing proper workflows. If this is something your business struggles with, then a Gloucester business coach such as www.randall-payne.co.uk/services/business-advisory/business-coaching might be able to get you back on track.
Changes to a closed period
Making changes to a closed period is sometimes necessary but can be risky for many reasons, especially if final figures have already been posted and management accounts have been run. If you do so after you have made a tax return to HMRC, you will have to create an amended tax return. You will also need to start the closing process again.