Improve Your Cash Flow for a Healthy Business

“Improve your cash flow for a healthy business”

Profitability is a vital component of a successful business, but without proper cash flow management your business is at risk of failing. The cycle of cash in and out of your business determines your business’ solvency.

Improve your cash flow

 

The saying ‘cashflow is king’ was great advice many of us have heard repeatedly from the older generations, and it’s just as relevant today. Here are some tips for improving your cash flow management:

 

  • Working Capital: In order to properly manage your cashflow you need to understand just how much working capital your business needs to run and keeping things moving from day to day, week to week or month to month depending on your business type.

  • Invoice as soon as you can – do you really need to be invoicing at the end of the month? Can you invoice as soon as the work is completed? What are your trading terms? Can you shorten your trading terms? If you are not invoicing as quickly as possible mainly due to lack of organisation or inconvenient to do so, then it would be worth looking at Cloud Accounting options. There are dozens of apps out there that will let you invoice on the spot with a few clicks. It’s also good practice to setup automated reminders that are delivered before the due date. Also it may be appropriate for you to ask for partial payments upfront, or milestone payments over the course of a project.

  • Stay on top of DebtorsConsistently remind those with outstanding debts of their obligations. Debtors will be more likely to pay your account if you keep on top of reminders and follow up with phone-calls. If you have certain clients that are chronically late then you need to look at ways to recover the costs to your business such as late fees or penalties. You should also review your credit policies for habitually slow paying customers.

  • Holding excess stock: Do you really need to be carrying and holding all of that excess stock? Do you have an efficient re-ordering method? Do you have any easy way for you and your staff to know what stock you already have on hand so they don’t purchase more of the same? Stock management can also be easily managed via the use of modern technology.

  • Purchasing and price comparisons – are you really getting the best deal? You could save significant amounts by routinely checking over your pricing, and asking for better pricing on items you purchase in bulk or can get more cheaply from another supplier. Also, opening up trading accounts where you were previously COD, once the relationship has been established can be a good way to improve your cashflow situation. It’s worth asking for extended trading terms where they are available – but always ensure that you budget for these large bills that will be due months after you have been paid for the work or you could run into trouble.

  • Pay bills only when they are due. Does anyone pay their bills early? – doubtful, but if you do, don’t.  Keep the money in your bank as long as you can.

  • Continue chasing and winning new business. Don’t be over-reliant on the clients and customers you already have and bear in mind your client/customer life-cycle. Know how many new clients/customers or work you need to be winning each period in order to stay afloat and your hit your targets, whether you are trying to simply maintain a client base or grow.

  • Have a backup plan – in the unfortunate case when things go wrong it’s good to have a backup plan such as an overdraft, finance or access to personal funds to get you through a cash-flow crisis.

Remember, we are always here to assist you with your cash-flow management.  Simply contact us to make an appointment – it could make the world of difference to the health of your business.

The GDPR – Is your small business ready?

Is your business ready for the new GDPR effective from 25th May 2018?

GDPR

Businesses are starting to panic as they try to comply with the General Data Protection Regulation (GDPR) before the 25th May 2018 deadline. It’s a wide-ranging regulation designed to protect the privacy of individuals in the European Union (EU) and give them control over how their personal data is processed, including how it’s collected, stored and used. It affects every company in the world that processes personal data about people in the EU. Many believe that the GDPR won’t apply to them because they have fewer than 250 employees, infact it applies to every business that has customers, employees or clients in the EU.

 

Does it apply to me?

Any organisation, regardless of size, that regularly processes EU residents’ personal data must comply with the Regulation. However, SMEs may be exempt from the more rigorous steps.

Article 30, for example, states that the Article (which relates to the documentation controllers and processors must keep regarding data processing) “will not apply to small businesses except if the processing results in a risk to the rights and freedoms or data subjects, processing is not occasional, or the processing includes special categories of data as referred to in article 9, or personal data relating to criminal convictions and offences.”

This means you might not need the extensive documentation that larger organisations are required to keep. Nevertheless, you may find that your suppliers or customers will require you to have such documentation within their new GDPR-compliant contracts, so having it may give you a competitive advantage.

 

Data protection officers

The GDPR stipulates that certain organisations must appoint a data protection officer (DPO). There isn’t an exception for small businesses, so if you fall into the following categories, you’ll need a DPO:

  • You are a public authority (except for courts acting in their judicial capacity).
  • You carry out large-scale systematic monitoring of individuals (for example, online behaviour tracking).
  • You carry out large-scale processing of special categories of data or data relating to criminal convictions and offences.

The good news is, you aren’t obliged to hire a full-time employee for this role. You can have someone who performs this alongside other duties (if they aren’t processing data and don’t have a conflict of interest), you can share a DPO with other organisations, or you can outsource the role entirely. It may seem a daunting and expensive prospect, but there are cost-effective options out there for SMEs.

 

As a bookkeeping practice we are a ‘Data Controller’ and are registered with the Information Commissioner’s Office (ICO).  Please read our Privacy Policy for full details.

 

Pick yourself up and move on!

“I’m delighted to be back to business stronger than ever”

New bookkeeping service

Sometimes a setback can be a defining moment in business.  After breaking my elbow and losing full movement in my arm, my last business had to close.  During my recuperation I spent a lot of time thinking about where I wanted to be in my career.  I knew I wanted to be my own boss, do something I’m passionate about and excel at, whilst being able to work around my two children.

 

I have 30 years experience working in business finance and I get a buzz out of analysing numbers.  This includes running my own business and managing my own accounts.  I knew I wanted to continue working in business finance but wanted to be self-employed.

 

So I did a lot of research and chose to become an ICB certified bookkeeper, so I could offer professional services to align with my existing business skills.  I studied with Ideal Schools, who are a distance learning training provider, and they were brilliant.  While the kids were at school I had my head in books (sometimes when they were in bed too).  I fell in love with studying, although struggled with manual double entry bookkeeping – thankfully we have computers now!  It took 4 months (and 8 exams) to become a qualified bookkeeper, passing with distinction.  I also qualified in the completion of Self Assessment Tax Returns and passed with 100%!  This was the hardest exam I have ever done and I am extremely proud of my achievement.  Especially as the UK tax system is one of the most complex in the world.

 

This is just a few words to say I am very excited to be back in business.  I am looking forward to helping local small businesses with their finances.  I’m also looking forward to supporting new businesses and providing my knowledge and experience in business start up.  Starting a new business is very exciting but can also be stressful (I know, I’ve done it).  I would like to help take some of the stress away and take care of the finance side.  After all, who likes dealing with the books (except me of course)?  Business owners should do what they do best and allow me to do what I do best.  I love working with numbers! 

 

Jo Finch – AICB