Poor cash flow is all too common among small businesses, and is a result of bad bookkeeping. Late invoicing, over stocking, and not chasing payments are just some of the reasons why businesses fall at the first hurdle. It doesn’t matter how good you are at dealing with the rest of your business. You can have the best product, top customer service and first class design, but ignoring your day to day finances could spell disaster.
Better bookkeeping can be the difference between failure and success when a business is starting out. Follow these simple steps to look after your books. A bit of time and effort early on will be rewarded further down the line.
Invoice on time
It may sound obvious, but forgetting to invoice for work you have done or a service you have provided is a common mistake. Late invoicing means late payment which means less cash in the bank. Less cash in the bank could mean late rent payments or VAT returns which can cause major problems. Invoicing on time can remove these problems and could mean you get paid for your work faster.
Chase up your invoices
Many people feel embarrassed asking for money, but they shouldn’t. If a service has been provided and work has been done properly, it should be paid for. Naturally some companies are better at paying on time than others, but you shouldn’t be afraid to make the phone call and ask for your money. Ignore any poor excuses and keep pushing to get paid as soon as payment is overdue.
Accuracy and attention is key
Good filing systems and accurate records should make your business life a lot easier. Keeping all receipts and invoices on record means you can quickly and easily find information or settle a dispute. Keeping accurate records will make your year-end accounts that much simpler and save you money. If your accountant has to spend less time doing your bookkeeping, they will charge you far less for their services.
Use dedicated software
Using a dedicated and comprehensive cloud based software package can be far simpler than sticking to spread sheets. Software such as Sage One and Big Red Cloud are accessible remotely and can be updated wherever you are. They can provide accurate forecasts and cash flow projections in real time, helping you manage your funds.
Understand HMRC and VAT
If you get to grips with HMRC and VAT regulations right from the start, your business will be more likely to prosper. Missing payment deadlines can incur legal problems, but knowing how much to pay and when will eliminate this.
Don’t become the thing you hate
Not receiving payment on time is frustrating and could destroy a small business, but not paying your suppliers on time could be equally damaging. Remember, they are running a business too. They want to be paid just as you would. Maintaining good relations with your suppliers means they will keep doing business with you and your business will thank you for it.
Of course, spending your Friday nights ‘doing the books’ might not be your idea of fun, but it will pay off in the long run. A good set of books will satisfy the tax man and provide you with an accurate appraisal of how your business is doing. They can show you where you need to improve and what opportunities lie ahead. When your business gets to the stage where you want to outsource your bookkeeping, there are Certified Bookkeepers out there who would be happy to take on the challenge.