Getting Your Sales Ledger In Shape To See Your Cashflow Soar!
Want to maximise success for your business? Then getting to grips with your sales ledger is absolutely critical!
In essence, your sales ledger holds all the sales you’ve made as a business including the companies you’ve sold to, the amount each sale was worth, when payment was due and will allow you to identify any amounts still outstanding.
Without it, it would be extremely difficult to keep track of orders you’ve fulfilled and payments you’ve collected.
The dawn of digital accounting has made keeping an up-to-date sales ledger simple, which means there’s no excuse for keeping poor records!
Find out how keeping an up-to-date and accurate sales ledger will help you boost your cashflow.
Why your sales ledger is the key to all your accounting
Your sales ledger is crucial to your finances and accounting since it keeps record of all your sales.
Think about it this way, if you’re not making sales, how are you making money? And if you’re not making money, are you really in business?
An up-to-date sales ledger will tell you at a glance the total amounts you still have outstanding and which of your customers owes you money. What’s the point in making sales and accepting orders if you’re not getting paid?!
A sales ledger is the source document for the sales figure at the top of your income statement. If you’re ever paid a visit by an auditor, one thing they’ll be looking for is if the total sales amount you report is correct by cross referencing this with invoices in your sales ledger.
Sales ledgers are great for analysis and identifying issues. For example, you may notice an anomaly in your trend line analysis. Matching up the date with your sales ledger will give you insight to identify exactly what caused this anomaly.
Sorting your sales ledger data
Your sales ledger should include the name of companies you’ve sold to, sale date, invoice number, items sold, sale amounts, shipping costs, sales taxes and VAT as a bare minimum.
As your sales ledger is the source of all your sales data the level of detail kept here should be substantial enough to present a clear view of all sales related activities.
However, the detailed level of data kept in your sales ledger will be kept separate from your general ledger.
But the effectiveness of your sales ledger is only as good as the accuracy and formatting of the data you keep.
We can’t stress how important it is to have a uniform format for data entry for your sales ledger and we recommend including the company name exactly how it appears in Companies House. This means you’ll know exactly which company you’re referring to with each order and invoice and can easily crossmatch with other company data.
Including the company registration number of your customers is also critical for crossmatching with other company data as it serves as a unique identifier.
Not including all the relevant data we’ve mentioned in your sales ledger will mean you’re working with an incomplete image of your business finances which means you’ll be making decisions based on inaccurate data!
Integrating your sales ledger with smart tools
The push towards making tax digital (MTD) has been a gamechanger for businesses that have been open to change and technology!
Cloud accounting has opened so many doors to help us get more done and make more accurate decisions when it comes to our business finances.
Integrations between accountancy platforms and apps are pushing the boundaries and the right tech stack can transform businesses.
However, these integrations will only work if the data in your sales ledger is accurate and kept up-to-date.
The benefits of company matching for Check-it, Chase-it and Collect-it
Know-it works wonders for your business cashflow by automating the complete credit control process.
We’ve streamlined credit management by breaking it down into three simple steps; Check-it, Chase-it and Collect-it!
The Know-it platform will automatically match the companies in your sales ledger with credit data from Creditsafe and company information from Companies House and The Gazette. This will instantly give you a 360-degree view of companies you do business with.
Mitigating credit risk, reducing debtor days and boosting cashflow
Credit control is critical to healthy cashflow as it ensures you’re always paid for work you carry out.
Following the fundamentals will ensure a watertight credit control process that will significantly reduce the risk of not being paid and help your cashflow soar!
Credit checking your customers is the very first thing you should do when you accept a new order, even if you’ve previously done business with them.
This is because business credit reports can change frequently as they respond to real-time events regarding your client such as missed payments and CCJs.
Just because your client had a great credit score one month doesn’t mean it will remain that way throughout the year.
Keeping an accurate up to date sales ledger means Know-it can automatically show you the credit rating for each of your customers using Creditsafe data. The data we use in Check-it company credit reports is significant because it can predict almost 70% of all insolvencies up to 12 months in advance.
Check-it then goes a step further! When you sync your sales ledger in the platform we’ll automatically pull Unsecured Creditor Claims data regarding your customers.
You might be asking what is Unsecured Creditor Claims data and why do I need it?
Well, it’s actually a must-have when deciding credit limits and setting credit terms with your customers as it gives you the facility to identify losses suffered by your client as a result of their own customers going into liquidation or administration.
You’ll be able to anticipate a potential cashflow disaster before it strikes so you can take the best course of action!
Understanding which invoices you have outstanding and chasing payments as soon as they’re overdue is so so important!
Depending on the size of your orders you could be sitting on a ton of cash yet to reach your bank account.
If you have outstanding invoices beyond their due date it’s so important you’re proactive in chasing them before it’s too late.
Many businesses will focus on generating more sales to boost cashflow, which makes perfect sense of course. But what’s the point in making more sales if you’re being paid for them?
When you connect your sales ledger with Know-it the platform will automatically pick up who your aged debtors are, how much they owe and their due date. Once you do this you’ll be able to automatically chase your late payments using email, SMS and letters using your own customisable schedule!
Usually chasing payments would be a long and pretty unpleasant task. We’ve taken these pain points away by completely automating the process.
Once you sync your sales ledger and see your aged debtors you’ll be able to get a quote for recovering your invoices in seconds.
Their track record speaks for itself helping recover hundreds of millions of pounds worth of commercial debts from all over the globe.
Boost your cashflow with Know-it today!
Sign up to Know-it free and automate your credit control processes!
Easily connect your sales ledger and Know-it will help you mitigate credit risk, reduce debtor days and boost cashflow.
Not quite ready to sign up? Why not book a full demo and let us show you how Know-it can help boost your cashflow? Schedule a call here!
Declan is our content writer here at Know-it!
He is committed to educating readers on the importance of credit control and how technology can help streamline processes for SMEs whilst providing actionable help on how businesses can mitigate credit risk, reduce debtor days and boost their cashflow.
Connect with me on LinkedIn!