Outsourced Financial Controller: Quarterly Review of Your In-House Bookkeeping
Plenty of businesses turning over £1m or more have a capable bookkeeper in-house. What they do not have is someone senior checking the work, closing each quarter properly and telling the directors what the numbers mean.
That is what this service does. Each quarter, one of our accountants reviews your bookkeeper’s work, corrects anything that needs it and explains why. We then produce a full set of management reports and meet you to go through them: how the business performed, which areas are falling behind, which costs are rising faster than sales, and where the opportunities are. Your bookkeeper keeps doing the day-to-day. You get the oversight of a financial controller without the cost of employing one.
Keep your bookkeeper, add senior review
Quarterly or monthly, as suits the business
Management reports with every review
Two partner reviews: tax efficiency and business performance
Why have your bookkeeping reviewed?
A good bookkeeper is worth keeping. But even the best bookkeeper works alone, and nobody checks their own work as well as someone else does. Small errors repeat every month until they become large ones, and many of them have tax consequences the bookkeeper is not trained to see.
A regular review gives you:
- Confidence in the numbers before they go to the bank, investors or HMRC
- Errors caught within weeks, not at the year end when they are harder and more expensive to fix
- A cleaner, quicker year end, with fewer adjustments and fewer questions
- Tax problems spotted early: VAT treatment, director’s loan accounts, benefits in kind, capital items
- A bookkeeper who gets better, because every correction comes with an explanation
- Proper management information, without hiring a financial controller
What our quarterly bookkeeping review covers
We review the books as a financial controller would. Our checks include:
- Bank, credit card and payment platform reconciliations
- Sales and purchase ledgers, including supplier statement reconciliations and aged balances
- VAT coding, including the domestic reverse charge, partial exemption and imports
- Payroll journals, PAYE and pension liabilities
- Accruals, prepayments and deferred income
- Capital purchases and the fixed asset register
- The director’s loan account and any personal expenditure
- Suspense and miscellaneous accounts, which is where problems tend to hide
- The balance sheet as a whole: does every balance make sense and can it be supported?
We correct what needs correcting and give you and your bookkeeper a short written note of what we changed and why.
The management reports you receive
Once the books are reviewed and closed, we prepare a full management accounts pack. It opens with a plain-English summary, analyses each revenue stream, compares every line with budget and the previous period, and presents the trends in charts so anomalies stand out. It includes a balance sheet, a cash flow forecast, the KPIs that matter for your sector and your running corporation tax position.
You can see exactly what goes into a pack on our management accounts page.
Your quarterly review meeting
Each quarter, two partners review your figures, and both attend the meeting that follows, in person or by video, whichever suits you:
- Hussein Bhaiji FCCA CTA, Chartered Tax Adviser, with over 20 years of UK tax expertise including time at HMRC. His review is focused on tax efficiency.
- Mukkarram Ali FCCA, who refined his expertise at Deloitte and is a former Group Financial Controller at one of the UK’s largest industrial property developers. His review is focused on business performance.
We go through how the business performed, which areas are underperforming, which costs are getting out of hand, what the cash forecast shows and what your tax position looks like for the year. Tax and business advice, from one meeting.
Support for your bookkeeper, not a threat to them
Owners sometimes worry that a review will unsettle a loyal bookkeeper. In our experience it does the opposite. Most bookkeepers value having a qualified accountant to ask, someone who explains the tricky entries and backs them up when the numbers are questioned. We work with your bookkeeper, not around them, and the review gets quicker each quarter as fewer corrections are needed.
Examples from our reviews
Case study: the subcontractor invoices nobody questioned
The business. A groundworks contractor turning over £2.8m, with an experienced bookkeeper who had been with the business for years. We had just started reviewing the books each quarter.
What the numbers showed. At the first review we sorted the quarter’s purchase invoices by supplier and VAT rate. Several subcontractors were charging 20% VAT on work that falls within the construction domestic reverse charge (section 55A VATA 1994 and SI 2019/892). The bookkeeper had paid them and reclaimed the VAT as normal. But VAT that should not have been charged is not recoverable as input tax, so about £31,000 of the reclaim was exposed if HMRC looked.
What we did. The VAT return had not yet been filed. We took the incorrect VAT out of the claim, wrote to each subcontractor asking for corrected invoices, and sat down with the bookkeeper to set up a check at the point a new subcontractor is added to the system.
The result. The return went in correctly, so there was no input tax for HMRC to deny on that return and no exposure to an inaccuracy penalty under Schedule 24 FA 2007. The bookkeeper now catches these before they are paid.
Case study: a company card, a busy year and a section 455 bill in waiting
The business. A technology consultancy turning over £1.6m, owned by two directors, with a part-time bookkeeper.
What the numbers showed. The bookkeeper had been posting personal spending on the company card to one director’s loan account, correctly, but nobody was watching the balance. By our second quarterly review it was £60,000 overdrawn. If that was still outstanding nine months and one day after the year end, the company would owe tax under section 455 CTA 2010 at 33.75%, the rate that applied to those loans: £20,250.
What we did. Hussein set out the options at the review meeting: repay from personal funds, declare a dividend on that director’s own class of shares (each director holds a separate class) from the reserves shown in the management accounts, or split the clearance across two tax years so the director’s own tax bill stayed lower. The director chose the split. We added the loan account balance to the front page of every quarterly report.
The result. The account was cleared before the deadline, so the £20,250 charge never arose, and the director’s personal tax on the extraction was about £6,000 lower than clearing it in one go.
Case study: the rota nobody had changed
The business. A care services provider turning over £4m, with its own payroll clerk and bookkeeper.
What the numbers showed. The quarterly report put staff costs alongside revenue for each contract. Wages were up 11% on the quarter while revenue was up 3%. The payroll detail showed the overtime and agency cover sat almost entirely on two contracts, where the commissioning client had increased care hours but the rota had never been rebuilt to match.
What we did. We took the directors through the contract-by-contract figures at the review meeting. They rebuilt the rotas for both contracts and took the cost figures to the commissioning client to support a higher hourly rate.
The result. Overtime and agency spend fell by about £9,000 a month, the new rate added £64,000 a year, and staff costs went back to about 70% of revenue from 74%.
Signs your bookkeeping needs a review
- Your management figures change after the year end, sometimes by a lot
- The suspense or “miscellaneous” account keeps growing
- Bank reconciliations are done, but nobody checks the balance sheet behind them
- VAT returns are filed by one person with no second check
- The director’s loan account balance is a surprise every year
- Your accountant sends a long list of queries and adjustments at the year end
- The bank or an investor has asked for figures and you were not sure they were right
If two or more of these sound familiar, a review is likely to pay for itself.
When you need more
As a business grows, the review can grow with it. Some clients move to monthly reviews. Others ask us to take over the bookkeeping entirely, or add forecasting, budgeting and board reporting through our fractional CFO and FD service.
Who this service is for
- Businesses turning over £1m and above with a bookkeeper or small finance team in-house
- Directors who want an independent check that the numbers are right
- Businesses reporting to a bank, investors or a board
- Companies preparing for growth, investment or a sale, where clean books add value
Why Merit
- Reviewed by qualified accountants, with a second tax specialist checking every VAT return we prepare
- A registered audit firm, so we know what auditors and lenders look for when we review your books
- Chartered Tax Advisers and professionals who have worked inside HMRC, who see the tax consequences of bookkeeping errors
- Commercial experience: our partners have built their own businesses from nothing to over £1m in turnover
- Errors stopped at the source: where we find a recurring problem, we set up a check in your software or process, as in the subcontractor case above, so it does not come back
Book a free appointment
Tell us how your finance function works today and we will suggest the right level of review, with a fixed fee quote.
Outsourced financial controller FAQs
What does a financial controller do?
A financial controller is responsible for the accuracy of a business’s financial records and the controls around them. They review the bookkeeping, close each period, prepare management reports, oversee VAT and payroll, and make sure the directors can rely on the numbers. An outsourced financial controller does this on a part-time basis for a fixed fee.
Will you replace our bookkeeper?
No. The service is designed for businesses that want to keep their bookkeeper. We review the work, correct what needs correcting and explain why, so the bookkeeper improves over time. If you later want us to take on the bookkeeping as well, we can.
Can you review monthly instead of quarterly?
Yes. Quarterly suits most businesses with a capable bookkeeper. Monthly suits businesses with high transaction volumes, stock, tight cash or lender reporting. You can switch between the two as the business changes.
Does our bookkeeper need to change software?
Usually not. We work in Xero, QuickBooks, Sage and FreeAgent. We need access to your software and bank feeds, and read access to supporting documents.
Who attends the quarterly review meeting?
Both partners, Hussein Bhaiji and Mukkarram Ali, and your bookkeeper for the part that covers the review findings. Hussein brings the tax view and Mukkarram the business performance view, and the bookkeeper hears every correction explained first-hand.
How is the service priced?
A fixed quarterly or monthly fee, agreed before we start, based on the volume of transactions and the number of entities and revenue streams.
What if you find a serious error?
We tell you straight away, not at the next meeting. If it affects a VAT return, payroll submission or anything already filed with HMRC, we advise on how to correct it and handle the correction for you.