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Spring clean your finances

By rotide
Created 14/04/2008 - 01:00
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With the impact of the credit crunch gradually filtering through to the wider economy, small businesses are under more pressure than ever to stay on top of their finances.

And with the beginning of another tax year now upon us, it's the perfect time to ensure that processes are put in place to ensure that your business is able to keep track of money coming in and going out.

"The arrival of the new tax year offers the perfect excuse for small businesses to take a good look at their finances and plan for the year ahead," says Anthony Pilkington, managing director of BookCheck Ltd. "The other reason for organising your finances is to know how well or not you are performing so you can improve."

He offers the following tips and advice on how small businesses can make sure they get their finances under control to weather the economic storm and start the new tax year as they mean to go on:

Get organised
Random piles of paper make for an inefficient business, so finding out where everything is the first step. Sort out your paperwork; collate invoices, bank statements and receipts. Throw out what you don't need, catch up with invoicing, work through your filing system and get straight. Having gone through this painful process, remind yourself not to get in a mess again. Introduce some workable systems and stick to them

This is a time to be brutal as a small reduction in costs could have a massive impact on your profits. Long-term suppliers will usually be open to negotiation on bulk ordering

Plan ahead
Once you've de-cluttered, you'll have the space to plan. This is the best time to assess the previous year's objectives and set some realistic goals. Look at how things have gone over the last 12 months; have you followed your budget or are things a mess? Don't panic, just plan your next steps carefully trying not to repeat the same mistakes

Negotiate well
Most companies invest time and effort setting up good supplier networks, but few take measures to properly review these relationships and assess how they are working for the business. This is a time to be brutal as a small reduction in costs could have a massive impact on your profits. Long-term suppliers will usually be open to negotiation on bulk ordering, so reassess, renegotiate and get your costs down

Improve cashflow
Shortage of cash can seriously impact on a business' growth potential. So review funding streams and consider more innovative solutions. Perhaps invoice financing or factoring could be a way to inject some energy into your cashflow. This will usually release around 80% of the value of invoices as they are raised. This may free up time, as the financier can be responsible for chasing up payments

Get professional help
Many people cut corners here, but it's a false economy. Professional book-keepers, with the support of an accountant, can make the difference between success and failure. Not only can they help you introduce systems and procedures, they can take the hassle out of the day-to-day financial running of the business and ultimately prevent headaches at the end of the tax year

For more information see www.bookcheck.ltd.uk [1]


Source URL:
https://www.newbusiness.co.uk/articles/accounting-advice/spring-clean-your-finances