When reviewing a set of accounts, it’s sensible to thumb through the purchase invoices in particular – even if someone has already done that in preparing the accounts – because it really does matter that your adviser understands your business.
You don’t spend money unless there’s a good reason, and the goods or services you buy give a good indication of what’s going on as you work to make your business a success.
As we move towards automatic processing of bank transactions, scanning and recognition of invoices, there is a risk of losing an understanding of the connection between the numbers and the practicalities of the business itself.
For example, in one client’s paperwork an expenditure invoice for catfood looked like a domestic item, but on enquiry it turned out that mice kept getting in the warehouse and damaging stock, resulting in customer complaints. After unsuccessful attempts to trap the mice, the client adopted a stray cat, even going on to installing a catflap. The mice disappeared.
It was a legitimate business expense of course, but of more consequence was the discussion it generated which in turn resulted in the client eventually relocating to more suitable premises with better facilities and access. The cat moved with them, and whether the cat is still needed to suppress mice in the new premises is questionable, but it remains the business cat.