How do you determine what to pay someone?

1. What can the business afford to pay?
2. What are the market rates for this type of position? (see recruitment websites for guidance)
3. What can your business offer an employee in growing their skill sets so that they make take a different salary to get these skill sets? e.g. Apprenticeship, internship
4. What are people's expectations? Someone with a university degree qualification may expect more money than someone with only a leaving certificate.

How do you deal with yearly demands for expected wage increases and how do you control increases.

Here are some methods on how to reduce them down and make them manageable.

What is a month end?

A month end is the closedown of a trading month. A month is closed when all transactions, invoices, credit notes and payments have been entered for that month and all the reports have been printed out. Different accounts software have their own methods for performing a month end but they perform the same general processes.

When all the transactions have been entered, then all the month end reports can be printed. Many of these reports are printed out and then filed for future reference such as for a vat audit or your accounts year end audit.

The month end routine is the term used to describe the process you do to ensure that all transactions have been entered into your accounts system and that all the necessary reports have been printed out and the system is then ready to process the next months transactions.

What reports do you print out at month end?

All money leaving your bank is a payment of one sort or another. Some you pay to suppliers, some to staff and some more to banks. But what do you do with all these payments? read on.

Examples of types of payments

• Cheques
• Direct Debits - example: Lease repayments
• Standing orders
• Bank Drafts - example: euro and foreign currency drafts
• E.F.T. (Electronic Fund Transfers) - example: using online banking to make payments

While most cheques and other payments are made to suppliers, who in turn give you an invoice, some other payments go elsewhere. You must record all payments whether they are cheques or another type of payment.

To make thing simple we need to divide payments into two categories, Supplier and Non Supplier Payments. Supplier payments can be made up from any of the different payments listed above and so can non supplier payments.

We can sub divide payments to suppliers into suppliers paid by cheques and suppliers paid by any other method e.g. direct debits. We can also subdivide Non Supplier payments the same way.

If we were writing them down in a book, here is how we might record cheques:

Wages are recorded in the non supplier column, as this money is paid to your employees who do not supply you with invoices.

Other payments (Non cheques) would be recorded as follows:

V.A.T. and PAYE/PRSI are paid to the revenue commissioners and so are analysed as non supplier.

If you record all payments similar to that above in a red hard backed analysis book, you will have all your payments recorded and be able to ensure that all your payments are recorded in your accounts system.

By listing all the cheques on one page and in sequence, you can see if any are missing, as there will be a gap in the number sequence. And by listing all non cheques on a separate page, it makes it easier to see when money is being taken from your bank account automatically by someone else (the direct debits) and this will help plan your cashflow, as you can look at the previous months payments to estimate this months payments.

Treat any money leaving your account as a payment. Do not consider cheques as the only form of payment and do not think of payments to suppliers as the only payments you need to record. You must record all payments no matter how small they are and no matter how many times they appear on your bank statement. So do not omit bank charges and interest.

You enter all the supplier payments in your creditors ledger and you enter all the non supplier payments through your nominal ledger. If you do not know what a nominal ledger is talk to your accountant and if you still don't understand drop me an email or call me and I can help you out.

By entering every payment you made into your accounst system, you will then be ready to produce a proper profit and loss account and be able to use the bank reconciliation facility in your accounts system.

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(c) Nilsson Denver Ltd 2007