Revised: 27 July 2015 (simplified)
Each month the following activities need undertaking:
Note re use of internet banking.
When using internet banking to transfer money between bank accounts, ensure the description field contains details of which account the transfer is from, as well as which account the transfer is to. This ensures transfers can be followed easily when doing the monthly account keeping. Transfers to Owner's personal account are described as "From XYZ acc to Petty Cash".
Payment of Wages & Superannuation
Calculate payroll monthly (last working day) using CashFlow Manager (icon on desktop). Taxes are calulated using CashFlow Manager (CFM). Print off each staff member's payment record from CashFlow Manager to provide to them. Once all wages are calculated in CashFlow Manager, use the program to transfer the details to the payment section of CFM. CFM also produces monthly reports that can be printed off and placed in the blue Financial Records and Wagebook folders (main office).
Pay wages using Internet Banking (icon on desktop). The net wage is paid to each individual staff member's bank account from the "Delta Operating Account". Details regarding staff members pay rates, superannuation membership, taxation status, group certificates, TFNs and banking details may be accessed through the blue Wagebook folder, along with details on government regulations regarding PAYG, superannuation, tax rates etc.
Quarterly, the superannuation for each staff member is paid into the relevant superannuation account for each staff member. Once again, these are set up as direct deposits or regular BPay's in Delta's internet banking.
When bills arrive they should be stored in the main office filing cabinet in the hanging file marked "Payments Due". At least once a month all bills in the folder should be paid. Bills should be paid by BPay, electronic fund transfer or credit card using Delta's internet banking account where possible so that a clear paper trail exists. The date of phone credit card payments, where these are made, should be recorded on the invoice and if a confirmation number is issued, record that on the invoice as well. Once bills are paid they are filed into the hanging file labelled "Purchase Receipts" for use in the monthly record keeping.
Receipt of Monies
When cheques are received they should be recorded in the "Receivables" spreadsheet (icon on the desktop). This spreadsheet shows how much money is outstanding at any time. Most clients will pay directly. The remittance advice for each payment received should be stapled to Delta's copy of the client invoice that can be found in the "Invoices to Customers" hanging file in the filing cabinet. The two pages should then be transferred to the "Payments Recieved this Month" hanging file in the filing cabinet for use in the monthly record keeping.
Not all people who make direct deposit electronic fund transfers (EFTs) to Delta remember to fax or email through a remittance advice. Each month check each credit payment in the bank transactions to determine what it is.
Use the Delta tax invoice template in Exel to issue invoices. Fill in the date and assign an invoice number . This is important because it allows the dynamically linked "Receivables" spreadsheet to calculate days outstanding, so that reminders may be issued. Invoices may be for quoted work (most consulting) or for ''street trade" (some laboratory work). Most quoted work will have purchase order numbers and may have a schedule of payments. Fill in the purchase order number if you have one. This will speed up processing.
Fill in the address details of the customer and the details of the product or service. Remember to put in the number of individual items (1 in the case of a quoted consultancy) and a per unit price. This allows for things such as several samples etc or numbers of hours of a specific task to be separately priced. The spreasheet will calculate all totals and will add in the GST.
Save the file "Invoice XXXX" where XXXX are the last four digits of the invoice number. Once the file has been saved as a record, update the "Invgst" spreadsheet. The "Receivables" spreadsheets will update itself, allowing an ongoing record of the year's invoices and the total and period of outstanding payments to be generated.
Email the invoice, or post a paper copy, to the client. File a second copy in the "Invoices to Customers" hanging file in the filing cabinet.
To reduce cash flow 'hiccups', monthly, after the record keeping, check the "Receivables" spreadsheet. Allow it to update itself so that it can determine the date and calculate any outstanding invoices. Where invoices exceed 30 days, photocopy the invoices concerned (they are available from the "Invoices to Customers" hanging file in the filing cabinet), apply an 'Overdue - friendly reminder' sticker to each and post them to the clients. Any invoice more than 60 days overdue must also be accompanied by a letter to the client, advising them that Delta's invoicing system automatically downloads invoices to our collection agency as they reach 90 days. This letter is available as a template in Word and also in Outlook.
Record Keeping in CashFlow Manager (CFM)
Records are maintained monthly in CFM and these records are used to fill in the quarterly BAS statements and annual taxation return.
For the quarterly BAS, use reports from CashFlow Manager's BAS section to fill in the ATO online business portal software. Once the BAS is complete, examine the return to see how much money should be paid to the ATO, and pay it using BPay from Delta's internet banking facility. Print off the BAS return and write on it the date it was paid, ready to be incorporated into the next month's accounts. Because CFM records net wages into the monthly accounts rather than gross, the entirety of the BAS payment (GST, Staff PAYG, business PAYG) are entered into the next month's payments.
For the annual taxation return, some additional information is required. There are several pages in CashFlow Manager to help with depreciation of assets and annual summaries (which include, or exclude, GST as required for the taxation return).
Monthly entries into CashFlow Manager are generated from the following sources:
Sort all paper payment receipts by date before starting to record the accounts. Once all records are gathered, start bookkeeping.
Enter the transactions (including transfers) for each CFM bank account as shown on the monthly statements and tick off the relevant paper receipts. Any receipts left after all bank accounts have been processed have been paid out of Petty Cash, so record them on the page set aside for this account. The difference between the total cash receipts and and the amount transferred into Petty Cash for the month is recorded as Owner's Private Drawing for the month.
The main expense categories in CashFlow Manager are set up for ease of use in the annual taxation return. Details are of the Categories are founf in the blue "Financial Records" folder.
Maintaining Financial Records
Each month the paper receipts, tax invoices and other records are processed through CashFlow Manager. Once the account keeping for the month is finished, the payments records are placed in an envelope marked with the month and stored in the appropriate month's hanging file in the filing cabinet. The receivables records for the month are stapled together and placed in the Annual Revenue hanging file. At the end of the financial year the entire year's records are put into one packet along with printouts of the annual taxation return, the quarterly BAS sheets and other tax office records for the year and stored in the archive shelves in the laboratory. Financial records are retained for 5 years, then shredded.
The electronic records maintained in CashFlow Manager on the main network computer are backed up automatically to Dropbox.
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