5 ACTIONS TO BEING MORE IN CONTROL AND GETTING MORE SLEEP
As a business owner myself, I understand the challenges of running a business with all the competing demands and how things you are on top of will occupy your mind or sit at the back of your mind nagging away until you have dealt with it.
A lot of clients come to us for our services but often the underlying reason is that they have concerns about their business finances. People worry about money – whether personal or business – and they need solutions to give them a better feeling of control.
Whether you are the only person in your business doing it all yourself or if you have staff or a bookkeeper to help you, it is worth putting at least these 5 actions in place. This will give you much greater financial control and therefore peace of mind.
ACTION 1 – REGULAR BOOKKEEPING
If you don’t have this in place at the moment then this is the first place to start. Whether you are using a spreadsheet or an accounting package, keeping on top of this at least monthly enables you to know exactly how the business is doing and you can therefore deal with any issues and make adjustments straightaway if you need to generate more sales or reduce costs. So plan this into your schedule, or if you don’t have time or want to do it, delegate to an appropriate member of staff or outsource to an experienced bookkeeper.
ACTION 2- CHASE OVERDUE PAYMENTS FROM CUSTOMERS WEEKLY
If you invoice customers who have payment terms and they have not paid within those terms, chase them as soon as they become overdue. Put time aside each week, or delegate it as a weekly task to a member of your team, to follow up with customers to get your payment received. The sooner you start chasing the sooner you get paid or become aware of a problem that you can then solve.
ACTION 3 – KNOW YOUR BREAKEVEN POINT FOR THE MONTH
As well as chasing payment for invoiced work, keep a close eye on your sales coming in during the month so you know you will generate enough sales to cover your costs for the month. For example, if your costs are estimated to be £15,000 that month then where are you mid month with your sales? Are you projecting £15k or above or do you need to take action now to generate more sales and/or decrease your costs?
ACTION 4 – PUT MONEY ASIDE FOR VAT AND CORPORATION TAX
If you are VAT registered or a Limited company then you know these bills are coming and when. This is where you may want to have separate bank savings accounts where you can move money to put aside for these payments. For VAT, you can calculate this monthly and put it aside until the VAT return is due. For Corporation Tax you can put aside 20% of your net profit each month. This means you no longer have to worry about making these payments when they are due as the money will be available. If your business isn’t currently in a position to do this because of cashflow or because you are behind with these payments, then making a start on this either with one or the other or putting aside what you can, then this will also help your sense of financial control.
ACTION 5 – MANAGE EXPENDITURE YOURSELF
Irrespective of whether the business is going well or if it is going through a tough stage, it is important to always review and manage your costs in the business and ensure you don’t start to let unnecessary expenditure start to creep in.
Having regular payment dates when you pay your suppliers rather than paying them adhoc and making sure that if you have delegated financial responsibilities for making payments that this is controlled and you have the ultimate decision on expenditure.
AND FINALLY …………..
When you have got all of these 5 actions taken and these processes in place it should give you much greater financial control and therefore peace of mind. When you and the business are ready, there are then further steps you can take to develop the financial management for your business further e.g. cashflow forecasting, setting budgets etc
At The Bookkeeping Department, we help businesses with all of these areas and you are welcome to contact us if you need any help. At all. www.thebookkeepingdepartment.co.uk Tel: 01462 455455.