Working desk

Slummocky is a great word, isn’t it. I (re?)discovered it when reading Stella Gibbons’ “Nightingale Wood”. To be slummocky is to behave in an indolent or careless way, and a slummock is a slovenly person.

Now, of course, I’m NOT slovenly or careless or indolent. But I tell you what I have been doing, and that’s letting the admin slide.

Not the invoices: no, of course not. I’m not actually stupid, and I would like my money to come in nice and regularly, thank you. And we all know that I run my accounts and do my tax return almost obscenely promptly every year.

But there are other things: deeper, darker, murkier things, which must be done when you’re running your own business. Things like Bank Reconciliations. And like all admin or indeed everyday things, they are far better done regularly, in small doses, rather than in one great slummocky lump when you have started to panic about the huge bulk of them waiting to engulf you …

Bank reconciliations

The basic principle of the bank reconciliation is that you go through your accounts and your bank statement, and make sure they match up. A bit like the old-fashioned practice of balancing your cheque book – and we all do it to some extent, I’m sure, popping in to check the bank account online and make sure there are no unusual or incorrect transactions.

My friend Aly Mead at Silicon Bullet has written a great article on this subject; it’s particularly good to read the article if you do your accounts in Sage or a system like that. I run my accounts via a spreadsheet (which I do keep scrupulously up to date) recording invoices raised and paid on one sheet and payments and charges on another.

Basically, I turn these two sheets into one long list of incomings and outgoings, listed by transaction date (i.e. the date the invoice was paid or payment made) (Spreadsheet A) and then I download a spreadsheet version of my bank statement (Spreadsheet B), and compare the two. I write the line number of the item on Spreadsheet A into a column on Spreadsheet B and vice versa, and then I rather satisfyingly colour them in green. In a basic version, the two look like this:

Bank reconciliation example

Even though the entries aren’t quite in the same order, I have matched them all up, and the running total is the same for both. I pop the accounts spreadsheet into the same order as the bank account spreadsheet at the end (I do this by sorting the spreadsheet by that column) and the two should match up.

Keeping up with the admin

If you do this every month, it’s simple. It’s like housework and ironing and all those other chores (actually, I never do ironing, but that’s probably for another time). I only have between 20 and about 35 transactions per month. Which is fine when it’s one or two months, not so great when it’s … erm … nine.

And there are always little tweaky issues. I have missed putting a couple of payments in the right place on my main in/out spreadsheet, and forgot to record the info about a mystery payment, all resolved with the client a couple of months ago. I’ve also forgotten to pay myself back for membership of a website that I paid for using my own credit card. There is probably only one little issue per month, but when there are a few months to go through …

The other thing I’ve been a bit lax about is moving payments from other places. I have a PayPal account and a few regulars and one-off clients pay me by PayPal. I used to withdraw each payment immediately to my bank account, so it created one line on my bank statement which matched at most one in and one out on my accounts spreadsheet. But I’ve let these build up before withdrawing, which means I’ve got one line on my bank statement which matches five or six sets of incomings and fees on my accounts spreadsheet.

That will be changing, too.

Reforming my ways

I wrote this article to remind myself how hideous it is doing your bank reconciliation if you leave it too long. It’s taken me a good few hours and given me a thumbing headache. Don’t be slummocky: little and often wins through!

Do share any tips you have for making yourself do this stuff, by the way!