An accountant on £20k whose client offered to pay in sheep

Welcome to The Money Diaries with Sage, where we dive into the finances of business owners and discover how they deal with money matters on a daily basis.

We’re asking entrepreneurs how they’re managing their finances over a seven-day period, to give you a picture of what incomes and outgoings really look like from their perspective. 

Today is the turn of an accountant who’s been running his practice for five years.

And make sure you check out Reader’s Response at the end of this article, where accountant and best-selling author Carl Reader reveals his thoughts and shares some top tips for our entrepreneur.

Here’s what we cover in this article:

Meet our entrepreneur and check out their Money Diary

Final thoughts on the week

Reader’s Response

Meet our entrepreneur and check out their Money Diary

• Industry: Accounting (across a number of different businesses and sectors).
• How long have you been an entrepreneur? I have always had an entrepreneurial mindset, but I have been developing my own accounting practice for the past five years.
• Day job: In addition to the accounting work I manage a holiday let and a long-term rental that my wife and I own. I’m also involved in several community and local business organisations, which take up a proportion of my working day, but the rewards are not financial.
• Location: Scotland.
• Salary: £20,000.
• Household: Married with three children (one still at home and two being supported through higher education). The household is completed by three hens and one (very naughty) dog.

Day 1 – Monday

A bit of a late start this morning, so leaving the house in a rush at 9.20am for the 25-mile trip to town for a 10am meeting.

No time for breakfast but took a coffee with me and left wondering how we coped before travel mugs.

My meeting (unpaid) is with the Local Education Authority, and is my first in-person attendance for two years. The main item on the agenda was budgets for the education service, so I was in my element.

I always try to get the best value out of the time and cost of a trip to town, so I tried to meet up with a couple of clients.

Unfortunately, it didn’t work out, but I was able to speak with them and sort a few things.

And at least they know that I was interested in catching up.

Just before leaving town I noticed that I was down to 1/3 tank of fuel, and not sure when I will next be in town (and never want to run out in the middle of nowhere) to fill up on my way out of town.

Diesel is at £1.55 a litre (6p higher than the UK average), and I also decide to get a sandwich before heading back down the road (well it was 12pm, and I hadn’t had breakfast).

Fuel: £54.84

Sandwich: £2.85

On my way home, I receive an email chasing an overdue bill for some boiler work on our let property.

I make it a point to pay all my bills on time because it is the right thing to do, especially in a small community and in a profession where reputation is everything.

It seems that the bill was emailed to an old address, but in any event I was not happy with the work billed.

Decided to think about it overnight before replying.

I get home from the trip and have various emails to deal with, following up on outstanding client issues.

In the afternoon, I have a video meeting with an engagement officer from my professional accounting body.

We cover various topics about the profession, including about the positive impact that Covid has had on access to CPD (continuing professional development) and networking events.

The past few weeks have been exhausting, and so my wife suggests that we go out to the cinema later in the week.

Cinema tickets: £11.00

After tea, I bring in some wood and coal with the intention of settling in for a warm evening in the lounge in front of the fire.

As the fire warms the room, I am back in the office starting to deal with some of the backlog routine paperwork that has built up during tax season.

After an hour tidying, I head to the now-warm lounge for a sit-down.

It was suggested to me that to make good use of my time I should iron while watching television in the lounge.

I wisely follow that suggestion.

Client receipts: £308.25

Furnished holiday let: £289.20

Paid some general office bills: £211.68

• BT
• Information Commissioner
• Companies House

Bounce Bank Loan repayment: £70.99

Money spent: £280.37

Money earned: £211.68

Day 2 – Tuesday

Wild night with disturbed sleep, and so up late.

Winds averaging around 60mph; we could feel the house shake and see the windows flex.

A retired friend has kindly been helping us out by putting in our new kitchen.

They have so much attention to detail and this is a major cost saving. The downside is that they are usually very punctual and so manage to arrive while I am in the shower.

They take it in their stride and just crack on.

As a general rule I try to keep Mondays and Tuesdays in the office and settle down on client work.

Just before lunch, I head up to the local shop to post a couple of items. It is a lovely break in the weather so I decide to walk.

One of the items is a registered letter to HMRC, asking when I could expect a reply to my previous letter from July, which was about an outstanding £408 VAT repayment.

This goes second class, on principle.

Total postage: £6.79

I was also tasked by my wife to get something for afternoon tea for our friends working on the kitchen, which is uncommon because my wife loves to bake and hates serving up store-bought treats.

At least she asked me before I left for the shop, as it is not unusual for her to think of something after I leave, ring the shop, and when I get there I am just handed something by the shop staff. 

Two packets of biscuits £3.98

One drawback with being in a remote place is the lack of support services most people take for granted.

A local charity was needing to upgrade some IT but wasn’t sure what spec they needed or where to source it from.

I was able to help with that and so they asked me if I could actually order it for them and I will be reimbursed.

HP computer £882.00

Responded to the overdue invoice that I received yesterday. I am not going to let it fall into a major dispute but at the same time I am not going to be a doormat.

Now I will await their response.

I have been concerned for a while about my pricing.

I know I am undercharging, but not by how much or what the going rate is for different services.

Although software can help you build up a total client cost, it can’t tell you what are reasonable costs to charge, and I don’t want to fall back on to the hourly charge method.

Today I decided to be brave and I put together a list of what I charge for different types of clients, and sent it out to four colleagues who run their own practices which are of similar size but more importantly have a similar attitude and outlook on the profession.

This was a little nerve-racking in case they were offended by me asking or even worse ridiculed my existing business.

Instead I got three replies, all of which were very helpful and encouraging, and I think have strengthened my informal network.

Paid some general office bills: £408.60

• Payroll outsourcing
• Professional indemnity insurance

Money spent: £1,301.37

Money earned: £0

Day 3 – Wednesday

Slept well despite another storm during the night, and started the day up and early.

It is still very windy in the morning with on-and-off-again sleet showers.

Video call with client at 10am.

I booked the call in with her earlier in the week following a prompt from a mutual acquaintance who said that she was frustrated accounting-wise—one of the benefits of a small community if you take the time to listen to what people are saying.

We had a fruitful conversation, and it transpires that she is not able to keep up with her accounts as she originally intended, and also has a tight deadline for her 2021/22 accounts due to funding applications.

Working through lunch so leftovers and another coffee at my desk, with Prime Minister’s Questions on in the background, as you never know what surprise announcements they will come out with.

Finished work early and picked up my daughter and her friend after school before taking them into town for drama club.

Setting off earlier as tonight is the film we got tickets for on Monday, so will need to stop off at the supermarket on the way in for them to buy some tea.

As we are at the supermarket, I buy a salad for my own dinner and also buy the sweeties for the cinema trip.

No visit to the supermarket would be complete without a trip to the fridge where the discounted things on their use by date are—I don’t need any of the items straight away, but that is why God invented the freezer.

Supermarket dinner, cinema treats, and bargain buys: £21.77

Picked up two coffees to take in to the cinema with us, and have another two in the cinema café after.

Four coffees: £9.00

Money spent: £30.77

Money earned: £0

Day 4 – Thursday

I drop my daughter off at school, and on a whim on the way back I go up a local hill to get the panoramic view over the countryside covered in snow.

Very cold, so glad I had my trusty travel mug with hot coffee.

An office day today, so no cost for coffees or food, but need something hot for lunch—so beans on toast it is.

Speaking with one client today—a successful knitwear and retail owner, who also works on the family croft (a small area of land).

She was reeling at her recent VAT bill and asked if HMRC would take payment in sheep.

She has made the same offer to me before, although she made herself clear that she was meaning sheep all ready for the freezer, and not still running around the garden.

On balance I think she is joking, but sometimes I am not completely sure.

Spoke to a client who called with a general enquiry.

I took the opportunity to mention that he hadn’t paid his recent bill.

It has genuinely slipped their mind but generally, credit control can be a sensitive topic in a small community, and in this particular case they were one of my wife’s relatives.

Still living with the impact of Covid and had a potential new client cancel as their whole family have tested positive.

Have every sympathy with them, but I make mental note to follow up when they are well.

Organisation is not my strong suit but definitely something I need to work on to grow the business.

Money spent: £0

Money earned: £0

Day 5 – Friday

Have a 10am meeting in town, and my daughter managed to miss the bus again, so I head off early so I can drop her off on the way.

No time for breakfast but was handed a warm, homemade buttered cheese scone on my way out the door.

The people turn up on time and we order coffee, and I show extreme will power by not ordering one of the café’s egg and bacon rolls.

Nothing to do with the cost but mostly, because of my waistline, and partly because I have a habit of the egg running down my shirt which is not a professional look.

Covid has been particularly hard on some people including one of the people I am meeting with, and they had to deal with redundancy, financial hardship, and serious mental health issues, with a family to care for.

This is the third time we have met and spend the time looking through their work options, jobs they might apply for, tax concerns from a brief self-employment, and how it all impacts their benefits.

Very unlikely I will ever get any paid work or fees from this, but that is okay.

As expected, I pay for the coffee.

Three coffees and one tea: £12.50

On my way to my next appointment, I call in at a client whose mobile catering business has just reopened after the worst of the winter.

My main purpose is to pick up a year’s worth of bank statements.

While I am there, as she makes some of the best cakes and bakes around, I also pick up a slice of her soured cream and cheese slice for my lunch.

I pay the full price and I am not disappointed.

On principal I always pay the going rate for anything I buy from clients and would never take advantage of our business relationships.

It is part of your reputation in a small community, and also helps to separate business and personal where the two rub along next to each other.

One exquisite slice: £3.30

I headed out of town to a remote area for another client visit.

The family member of the client has had major surgery, and so the only way to meet up is for me to go to them. Usually we meet halfway.

In true local style, I go in via the back door and we sit at the kitchen table.

Very productive meeting over a cup of tea and homemade cake.

A chance comment by the client led to the discovery of an insurance policy and a potential claim, and I spend the next 20 minutes on the phone to the insurance company on their behalf.

After that is all tied up, it is time to head off.

I get home and a few minutes after me the family arrive from town with a Chinese takeaway, which counts as a treat after they did the weekly shop.

Chinese takeaway: £27.10

Supermarket: £172.47

Feeling quite tired and the evening is spent in an armchair listening to BBC Radio 4 followed by an early night.

Client receipts: £1,746.94

Sundry office costs: £12.99

Money spent: £228.36

Money earned: £1,746.94

Day 6 – Saturday

Daughter is off for the day with a friend—requiring a £15 subsidy—and so with my wife on a 12-hour day shift it is just me and the dog at home.

I fight the urge to do any office work, and so manage to have the first Saturday off since Christmas.

I take the opportunity to paint the new kitchen walls—and I’m quite pleased with the result.

While out and about, I call into the paint and decorator shop and pick up some more paint and a few other things for decorating the kitchen.

The cost of the kitchen units is just the start; all the extras for other things add up.

Paint and stuff: £62.70

While the teenagers went to buy ‘essentials’ for their lunches for Sunday, which managed to cost me another £10, I had a mission of mercy to the hospital.

My wife had made a cake to have with her colleagues on the ward at teatime, but she left it at home, so I’m off to deliver the cake.

My next two deliveries were to drop my daughter’s friend’ home, and then home for us to spend a warm night in in front of the fire, with torrential rain outside.

Money spent: £87.70

Money earned: £0

Day 7 – Sunday

Having gone through a period of being an unpaid taxi driver to two older children, I am increasingly finding that I am doing the same for our youngest, and am cajoled into taking her to town for a drama workshop.

I manage to miss church service being late on my taxi run, and so settle in to do some work, as still trying to catch up after a horrendous tax season.

Quite cosy in my office with the electric heater on (which is cheaper than running the oil-fired central heating for the whole house), and the dog sleeps peacefully on ‘her’ chair and snores.

I stop for a sandwich for lunch and a local calls in with his croft accounts.

We stand in the kitchen talking about how the croft is going and his accounts.

I have deliberately not hassled him about hurrying with his accounts as they have had a recent family bereavement, and so had other priorities.

I settle down with my laptop in the lounge and carry on with some work, until tea is ready, and we watch Call The Midwife.

It is not necessarily top of my viewing list, but it is an opportunity to share some time together.

I make a mental note that we are almost out of firewood.

I have plenty of wood outside, all scrap I have collected which would otherwise be dumped, but I need a spell of decent weather before I can cut it up.

Money spent: £0

Money earned: £0

Closing balance at the end of the week:

Total money spent: £1,928.57

Total money earned: £1,958.60

Final thoughts on the week

Looking over the week has made me see how much work and personal lives intersect.

From a money point of view, I am left wondering if I claim enough of my office costs as business, and possibly plan ahead more to make best use of travel time, etc.

I am fortunate that I don’t have much of the small ‘leakages’ of money which add up, like a fancy coffee every day, but possibly my weaknesses are less frequent with a higher price tag.

I am encouraged by the response to my fees query with the other accountants, and need to find the time to act on this.

It was useful feedback, but more importantly was the connection with other accountants, which I hope to develop.

I am reminded that I need to be intentional about things to make the best use of my time, which is the great leveller and that may be a trade off with money, such as actually paying someone to fit my kitchen.

Finally, I am seriously considering getting my daughter a laminated bus timetable.

Reader’s Response

And to wrap up… what are Carl Reader’s thoughts on the financial habits of our accountant?

Check out the video below to find out…