“turnover is vanity, profit is sanity, but cash is reality”
This has never been more true than it is today and lack of cash is the number one killer of small businesses. Recent times have seen a tough economy, meaning customers will pay you more slowly and suppliers will want you to pay them more quickly.
So what measures can you put in place to keep on top of your cash flow and maintain a healthy business?
Whatever your business structure you will need to keep financial records. Not only to keep the friendly folk at HM Revenue &Customs happy, but also to form the basis of your annual accounts. The announcement in January by HMRC that they intended to crack down on poor record keeping by SMEs, with potential fines of £3,000 was a wake up call to all businesses.
Aside from avoiding potentially hefty fines, good financial records will also help you to monitor the performance of your company and make informed business decisions. Good systems, accurate records and timely reports also result in greater business efficiency and provide you with the information you need to manage your cashflow and run your business successfully. An added bonus is that you can stay on top of those customers who seem to be allergic to paying their bills, by acting quickly.
Are your invoices just pieces of paper requesting payment?
If so, you may be missing a key advantage they have over anything else you send to your customers – they’re actually obliged to look at and take notice of them!
Also, as potentially the last contact your customer will have with you, an invoice may be the last chance for establishing a lasting link with them. A customer who pays and then wanders off into the wilderness is a waste of the resources required to attract them.
“Mommy, a calculator will help you to work faster, just don’t tell anyone!”
Lily, aged 6 and 3/4
These wise words were uttered by my daughter during one of her many ‘pep talks’. I receive such nuggets of fabulous advice on a regular basis and it’s the innocence and excitement in such fantastic revelations that melt my heart and make the hard work worthwhile. I am a proud Mum to two beautiful girls, happily juggling my parental responsibilities, my dream bookkeeping business and a fulfilling home life.