Avoiding financial issues when running your own business

As an accounting firm, we were horrified to learn that more than half of businesses don’t survive past their fifth year.

Without proper budgeting, a decent ‘’cash in, cash out’’ log and well-kept books, it’s easy to trap yourself- and your business- in the black holes of disorganisation and loss, with nothing but empty accounts and upset clients to show for your hard work and investments.

Accounts forecast

First of all, get your cash flow in check! Hundreds of businesses flounder due to a cash deficit and we would always advise to plan ahead. When is the money coming in and why?

Sales forecasts and business expenditure- stock, materials, operating expenses and yes, dividend and loan (re) payments all need to be kept on top of and updated.

And don’t forget tax, whether it’s corporation, income or VAT!

Debts

A well-organised debit/credit control system marks out looming debts- and can even help avoid them. Write down and organise anything you/anyone else owes.

Partial invoices for customers facilitate business/client relations- even the best of us can benefit from paying in instalments. Service Purchase Orders (www.sap.com) makes both external and internal invoicing quick and easy.

And watch ALL your business accounts have the correct money coming out and in- keep track of every deposit/outgoing amount, no matter how small! HMRC has a special advice page for companies, whether small or limited.

Misunderstood credit terms

Negotiation is key. Before you start refinancing or changing interest rates on your accounts, check they’re doing the best for your business.

Whether it’s you who hasn’t engaged with stray interest or taxes or your client who is asking about a rate change or extra charge, it’s important to keep informed.

Get client-ready, get the facts and get involved.

Disorganisation

All we have to say is calendars, bookkeeping and Excel! Our qualified accountants want you and your business to thrive, but we can only do so much for you both.

Trust us, we know it’s a huge workload getting clients and setting up accounts and invoices, but, to retain a loyal following, regularly updated accounts are very necessary and the longer you leave this, the higher the paper pile will get.

Build an accountancy system and log, log, log your incomings, outgoings, who has and hasn’t paid you and what came in and when.

Spreadsheets are your friend at the end of both the trading month and fiscal year- keep track of your statements and accounting periods using budgeting software.

For more information on any of the above, or any other accountancy issue, do get in touch.

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