Financial
stability is crucial to any business. It is extremely important that you
protect and enhance it. Cashflow of your business is vital. You need to be
aware of how much money is coming in and how much money is going out of the
business. You will need to have a plan in place to cover any shortfalls.
Governments
are having their own challenges and not always there to help us in a crisis, we
have to stand on our own two feet, to see ourselves through these challenging
trading times.
To stay on
top of cashflow, it is best to speak to your accountant about cashflow
projections. We have also got examples of how to get the best of cashflow on
our website, click here to find out more.
We have
examples of cashflow and budgeting here.
So, what
can be causes of cashflow issues?
The number
one issue we see is when a supplier has increased their prices significantly.
This is when you need to decide if there is something you can scale back on or
is it time to start shopping around. Talking to your suppliers if you notice
increases, we’ve all been facing this over the past 18 months.
Track and
monitor your costs, by carrying out management accounts, comparing this year
with last year, you can see instantly what has changed for you and your
business.
Late
payments from customers can lead to cashflow issues too. This can sometimes
cause tension as you do not want to ruin relations. The following tips can help
tackle these issues;
·
Ensuring
your invoices are accurate and on time can help avoid late payments.
·
Giving
gentle reminders as it approaches credit term limits.
·
Providing
easy payment solutions such as bank transfer or a direct debit system
·
Check
your customers credit score, giving too much credit without looking into your
customer bill paying activities can lead to bad debts.
·
Discounts
for early payment to improve the timing of when the cash will be paid in can
help too.
We all
dislike to pay tax, but it is a part of life. Tax planning helps to keep your
business financially healthy. We must ensure we have the funds to cover the tax
payments. This is why it is crucial to work with your accountant so that you
know well ahead of time how much your tax bill is. Not paying the tax bill in
full and on time can add to the cost. Penalties and interest will incur and can
make this less manageable.
There are
allowances and reliefs out there to bring the tax bill down. Getting this done
correctly will ensure that you pay the lowest but accurate amount over to HMRC.
Set up a
savings account, and slowly build up the cash towards any tax bill, you don’t
get surprises when its time to pay the bill then. Any surplus in that account,
could pay for something you want.
Businesses
that plan ahead, traditionally do better than those that don’t plan and work in
the dark.
