Historic bank payments

Discussion in 'Accounts & Finance' started by EllieP, Jan 21, 2020.

  1. EllieP

    EllieP UKBF Newcomer Free Member

    3 0
    Hello, I hope someone can help. About seven years ago I started a business with my co-Director. We both put in some money to get things off the ground. She put in a little more than me (15k against my 12k) so it was agreed she’d have more shares than me.
    The business is doing well with 10-20k turnover each month. We both take a salary and then any left over at the end of the year is paid as dividends.
    I know that we had a good year last year but when it came to receiving dividends, my co-Director told me there was nothing in the account. She organises the finances along with an accountant. I have access to the bank statements so looked back to see where the money had gone. There was one payment of 30k to herself with the note “repayment of loan”. I asked her about this and she said it was money she’d put into the business on top of the initial start up costs. I wasn’t aware of her or anyone putting 30k (or anything) into the business after the initial startup when we both put money in.
    I’d therefore like to see the bank statements going back to when we first started the business as this is the second time she’s paid herself an amount that she says was repayment for money she had put in (last time it was only 4K). If she did indeed put the money in then fine, if not then I’m not willing to let her keep taking large sums out.
    The statements online only go back 12 months and we have no local branch.
    The account is in both our names as directors. How would I go about obtaining historic statements or better still just a list of payments made by her and myself into the business account? Phone the bank?

    I don’t know if this is relevant but I also recently discovered via my accountant that my shares in the business are Class B and my co-Director’s shares are Class A. When we started the business we agreed on the division of shares because she invested more. But there was no mention of different share classes. My accountant tells me that my shares “should” convert to Class A soon but I don’t know how that works and whether I should wait for that to happen before addressing this payment of 30k.

    This is frustrating because the business is doing well, our staff are great, my salary is good, and I love doing what I do, but I need to be sure my co-Director isn’t taking money that she shouldn’t otherwise it could go on forever. I also don’t want to accuse her of this outright, which is why I’d like to check the bank statements for myself.

    Any advice gratefully appreciated!
     
    Posted: Jan 21, 2020 By: EllieP Member since: Jan 21, 2020
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    18,969 2,202
    The business keeps records going back 7 years.

    Shares converting but you were unaware of it? Sounds dodgy.
     
    Posted: Jan 21, 2020 By: Mr D Member since: Feb 12, 2017
    #2
  3. EllieP

    EllieP UKBF Newcomer Free Member

    3 0
    She has the accounts at her house and I was hoping to check her claim without making a big deal out of it for the sake of our working relationship. What sounds dodgy? I wasn’t even aware there were different share classes when I started the business I assumed our shares merely represented the amount we invested.
     
    Posted: Jan 21, 2020 By: EllieP Member since: Jan 21, 2020
    #3
  4. Mark T Jones

    Mark T Jones UKBF Big Shot Full Member

    4,059 1,333
    Therein lies the problem.

    Discuss it.
     
    Posted: Jan 21, 2020 By: Mark T Jones Member since: Nov 4, 2015
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    18,969 2,202
    The whole thing sounds dodgy.
    Money you weren't aware she put into the business. Shares of different classes that will convert soon.

    Accounts may be at her house - what about company records?

    Banks often go back up to 7 years online - do you have bank access?
    Bank statements can be requested, they do cost money so would be noticeable to any director handling bank statements. If duplicates are received how can you be sure they won't be taken to her house?

    What you have here is poor communication at best.
     
    Posted: Jan 21, 2020 By: Mr D Member since: Feb 12, 2017
    #5
  6. billmccallum1957

    billmccallum1957 UKBF Ace Full Member

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    If your co-director put £30K into the business, wouldn't you have noticed? Wouldn't she have told you? Wouldn't you have held a board meeting to approve the repayment?

    Sounds like you are being conned out of your dividends.
     
    Posted: Jan 21, 2020 By: billmccallum1957 Member since: Feb 11, 2016
    #6
  7. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,944 2,407
    You need to discuss it with her now. It doesn't have to be confrontational.

    If she has A shares and you have B shares it may well be that she's paid herself a dividend without you being paid.

    You need to start taking much more of an involvement in the business - do you have regular meetings to discuss monthly/quarterly accounts? If not I'd start doing that.
     
    Posted: Jan 21, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #7
  8. Paul Norman

    Paul Norman UKBF Ace Free Member

    2,615 790
    There are a few questions to take into account here.

    1. Do you have contract of employment?
    2. Do you have a written directors agreement?
    3. Do you have regular, minuted, board meetings?

    This is a fairly classic example of what happens. Two people go into business. They trust each other. Stuff happens that makes that trust wobble. The mechanisms are not in place to deal with it.

    In this instance, if the other person has loaned £30k to the business, there will be a record of it in the books somewhere at the time it happened. The accountant should know about this. You should know about this.

    Unfortunately, because it probably will create tension, you are going to have to sit down and have a serious, bit trouser, conversation. With an agenda. Which will include these items:

    1. Tell me about this £30k, and show me where it was introduced into the business
    2. We need a minuted agreement that no big transactions will happen without the knowledge and authority of both of you.
    3. Management accounts need to be fully visible. (If you don't understand them I recommend some training on the subject)
    4. Proper written contracts will be drawn up, if they do not already exist.

    You need to do that. If that is not possible, then you have two other choices

    1. Walk. Who wants to work with someone dodgy>
    2. Poke up with it and receive a salary.
     
    Posted: Jan 21, 2020 By: Paul Norman Member since: Apr 8, 2010
    #8
  9. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,129 3,411
    Check Companies House and see if you have always had B class shares and check how many shares each of you have.

    You have to have a serious conversation, however, I would suggest that you need a better understanding of what should be happening before that starts. You may want to talk to @The Resolver who hangs around here sometimes.
     
    Posted: Jan 21, 2020 By: Newchodge Member since: Nov 8, 2012
    #9
  10. EllieP

    EllieP UKBF Newcomer Free Member

    3 0
    Thanks all. We did have a discussion, which is when she told me the money was repayment for money she had put in. She explained she’d put money in to pay for stock. So the next stage of that discussion would be me saying “sorry, I don’t believe you, prove it”, which is why I’d like to look at the statements myself to see for sure as if she had taken money out that she shouldn’t, she’d be able to fabricate a piece of paper showing me it was put in. That’s why I was hoping to see documentation from the bank. I have full bank access and copies of the accounts from the accountant but individual payments in or out are not shown on these and the bank statements don’t go back far enough.
    We do have an agreement that any amount in or out of the account greater than 3k is discussed and agreed upon. That was happening until last year when she has made several large stock purchases. I spoke to her last week about this and underlined that we need to have the 3k limit in place again and that I’ll be checking the bank statements monthly due to our turnover being the highest yet but profit being next to nothing.
    We also used to have regular monthly meetings but neither of us found this particularly useful. From my point of view this was because I have little knowledge in this area (the financial side of running a business) and she has a lot, so she would simply say things like “don’t worry about it” and “I’ll sort it out”.
    From the outset it was agreed that she’d do the lion’s share of the financial management because of our different skills and experience. So for me to step in now is awkward and not something I’d need to do if it wasn’t for this 30k and our profits being so low in a good sales year.

    As far as the shares go, they have always been Class B, I just wasn’t aware of it. She didn’t tell me that there were different share classes and I only looked at the number of shares on the certificate to check it was in line with what we had agreed.
    I understand these convert to Class A after eight years so I don’t know whether to bring this up or just wait another year and see if they automatically convert.

    My primary goal right now is to find out if she did originally put in this 30k that she has taken out. If she did then I’ll ask how much else she has put in (if any) and ask to see evidence so I know what she’s likely to take out in future. If she didn’t ever put this 30k in then my course of action will be very different and not amicable so I’d like to have the facts at my disposal.
     
    Posted: Jan 21, 2020 By: EllieP Member since: Jan 21, 2020
    #10
  11. Mark T Jones

    Mark T Jones UKBF Big Shot Full Member

    4,059 1,333
    I think you are confusing being friendly/hostile with being business like.

    You don't believe or disbelieve; you want to understand wnen it happened, why it was necessary to put in £30K; what circumstances went around it, how you can avoid that situation again amongst many other things.

    Fooling yourself that someone will handle the finances 'because you don't understand it ' is a recipe for disaster. You don't need detailed knowledge of accountancy, you do need to understand the basics of cashlow, P & L and balance sheets - it isn't that difficult to learn.

    As with most of the responses on here, the fundamental problem is one of communication
     
    Posted: Jan 21, 2020 By: Mark T Jones Member since: Nov 4, 2015
    #11
  12. Mr D

    Mr D UKBF Legend Free Member

    18,969 2,202
    You are a director. Learn the financial aspects of your position.
    Not everyone understands accountancy, that's why we hire accountants. We do need to know what is happening with our own business and what the financial position is like.

    As you say, highest turnover but apparently no profit. So something needs looking at.
    Processes, spending, pricing, what costs are needed and what costs can be done away with.

    What you don't know, learn. What looks odd, ask about.

    Among other things what happens tomorrow if one of you has a stoke / car accident / heart attack etc.
    You may not need to be as expert as each other in your individual roles, you do need to be able to step into the role if necessary.
     
    Posted: Jan 21, 2020 By: Mr D Member since: Feb 12, 2017
    #12
  13. Paul Norman

    Paul Norman UKBF Ace Free Member

    2,615 790
    QUOTE="Mark T Jones, post: 2981204, member: 255658"]I think you are confusing being friendly/hostile with being business like.

    You don't believe or disbelieve; you want to understand wnen it happened, why it was necessary to put in £30K; what circumstances went around it, how you can avoid that situation again amongst many other things.

    F/QUOTE
    This is so fundamental to business.

    In business, you are business colleagues. I don't care what you are outside. Friends, relatives, or worse.

    That is the danger of business with friends. It blinds us to sound business process. I was a finance director of a big company. The Operations Director new much less about finances. That did not stop him holding me robustly to account all the time. And likewise, I did the same to him. It made for a professional relationship.[/QUOTE]
     
    Last edited: Jan 22, 2020
    Posted: Jan 22, 2020 By: Paul Norman Member since: Apr 8, 2010
    #13
  14. Alison Moore

    Alison Moore UKBF Regular Full Member

    120 13
    You should be able to contact your bank and request past copies of bank statements. Businesses have to keep their records for 7 years anyway, so banks will still have records from at least 7 years ago. However depending on how the account is set up a) you might need both directors approval to request these and b) the bank will probably have to send them to the address registered with them - so you business partner might see them anyway. But either way, you do need to address it with her, as a director you have a legal responsibility to know what it going in with your business. Also bear in mind that if she put the £30k into cover stock, she might have just purchased the stock using her own funds and then put the stock into the company. The company accounts will show this, but the bank account won't.
     
    Posted: Jan 22, 2020 By: Alison Moore Member since: Aug 4, 2016
    #14