Getting your company’s finances in order is always crucial, as it helps your business to not only survive but grow as well. However, because there are so many elements involved in improving financial management and finances in general, it is completely natural to feel overwhelmed in the face of such a daunting task.
It is not as challenging as you may believe, however. If you know exactly what to do in terms of planning, organising and monitoring your business’ finances, you will be able to get your finances in top condition.
Create a Clear Business Plan
When your business plan is clear, you will find it easier to establish your current financial situation and where you want to be in a given time period. This plan should include details about how you finance your business and all of its activities, how much money you need and how much it will cost you to invest in new opportunities.
This way, you are always aware of your financial situation and can take measures to fix any potential issues before they become serious.
Track Your Financial Position
This should be done on a regular basis, even daily. You will want to know how much money you have in the bank, how many sales you’re making, what your stock levels are, etc. This includes day-to-day costs – if you do not have enough cashflow to cover daily operations and costs, like wages, you will not be profitable. This means you need to know how much money your business requires to survive every day.
By keeping an eye on every single aspect of your business where money might be coming in or out of, you can keep track of your expenses and review your current position against the targets you’ve created in your business plan.
Keep Updated Records of Everything
When your records are up-to-date, you will always be aware of how much money you’re spending and making. This means that you do not have to worry about falling behind on payments or failing to realise that certain expenses will be coming out of your business account on a certain day. Keeping track of debts, creditors, suppliers, and more, will help you know your current financial situation without fail – and take preventative measures or fix problems as soon as they come up.
For example, you might find that you will require additional cashflow to handle an especially busy month and apply for a loan to cover it. Without keeping accurate and updated records, it would be difficult – and even downright impossible – to be aware of this.
Make Sure Your Customers Pay on Time
A crucial part of your business is making sure you receive payments on time. Many companies develop problems because of late customer payments, which can put them in the red quicker than you may think. In order to prevent late or, worse, non-payments, you will want to create precise terms and conditions in the contract you make with a certain customer.
Additionally, it is important that you have a management system in place that can help you to track every single client account and know their current situation. This way, you will be able to easily chase any late payments and ensure your clients pay you on time.
You will also want to invoice your customers as soon as work has been completed. The longer you wait to invoice them, the longer you will have to wait for your money, which can be needed somewhere else in your business. This is especially important for SMEs that are still expanding and need the cashflow to do it.
Cut Down Costs
Sometimes, the best thing to do is to make difficult decisions that will have a positive impact on your business in the short or long run. This can be anything from product markdowns to selling assets to pay for a debt, for example. Unwanted assets should be the first consideration you make to either sell or lease, as they will not be missed for your business’ growth.
You might also need to increase your prices if you’re facing rising costs – this might not prove to be a popular decision with your clients, but it might be the best business decision you make. Another way to try and cut down costs is to reduce or rearrange expenses; this includes switching suppliers, reducing the quantity of stock purchases, and change to cheaper alternatives.
Meet Tax Deadlines
One way to spend more money than you originally planned is to submit taxes late. Failing to observe the deadlines in place might mean you will need to pay extra fees and interest, as well as fines, depending on how late you are. Eliminate this risk by making use of your accurate records and making sure you always pay what you owe on time.
Get Professional Help
You are an expert at what you do, no matter what it is, and running your business will not only require a lot of your time and effort, but it will also require you to keep developing your skills in order to keep succeeding.
This means that you should not have to learn accounting on top of everything else you have on your plate. Our SME accounting services will allow you to keep your business finances in order at all times and you will not have to worry about having to keep track of it all yourself, which can be incredibly time-consuming.
And, just as you are the best at what you do, so are we. Our professionals have years of experience in business accountancy and will be there for you every step of the way through a personal service that will perfectly fit your business needs.
We have a large array of accounting services at your disposal, so use our tax calculator to choose the right option for you and your business. Alternatively, contact us to learn more about how we can help or ring us on 0800 276 1574 to chat to us about your requirements.