Spring Clean Your Finances by Martin Huckle

 

Every small business needs to keep a watchful eye on their finances .That age old expression “Cash Flow is King” will literally make or break a company. What better time than now to look at the finances of your business, and streamlining its operations.

 

So where do we start? One common way is to go through an eight point plan as highlighted below. 

 

 1. Spring cleaning.

 

Spring cleaning your finances and improving administrative procedures will help to streamline the way ahead for your business.  Reviewing your paperwork, including invoices, bank statements, and receipts, will inevitably lead to unwanted paperwork, but attending to this problem in the early stages, will sweep clean and avoid slowing down your business at a later date.

 

2. Unwanted clutter and updating.

 

It is important to dispose of documentation that is no longer required, and catch up with outstanding invoicing. This will give you a clear picture of the current state of your business, allowing you to concentrate on your book-keeping and other finance tasks.

 

3. Business plan.

 

Reviewing your business plan regularly may help you to confirm the direction of your business, and help to keep you on track. Ask yourself if anything could be improved? Now you have organised your administration, can you improve your documenting system to make this run more efficiently? Have you followed your budget? These are all important questions to ask yourself in an effort to move your business forward productively.

 

4. Be efficient.

 

Keeping a record of all current ongoing projects will enable you to raise an accurate invoice immediately after the job has finished. This will give a good impression of the efficiency of your operation. Remember to always ask your customer for a purchase order number, and make sure this is quoted on your invoice. Your invoice should also contain clear information about your payment terms and conditions.

 

5. Don’t let your suppliers off the hook.

 

Suppliers are constantly reviewing offers and discounts to customers, but are you missing out? It is very easy during the day to day running of your business to plod along with your existing suppliers and their prices, but when was the last time you negotiated prices for bulk or loyalty discounts? A regular scan of the market place may help you discover new suppliers, and help you to compare prices. Just think what a ten percent reduction in cost could have on your profits!

 

6. Sort out your cash flow.

 

Is your business funding slowing down your firm’s growth plans? If so, consider more innovative funding solutions. A bank overdraft that is repayable on demand may destroy any momentum you have built up heading into the new financial year. Consider selling your unpaid invoices to a finance company; it frees up your cash flow by releasing up to 85 per cent of the value of your outstanding invoices as soon as you raise them. The invoice financier then chases payment for you – freeing up your time. Remember there are restrictions here e.g. the payee must be a credible company such as any of the high street retailers. Most finance companies will run a credit check on the invoiced company to ensure that there will not be a problem recovering invoice values and debt.

 

 

7. Appointing your accountant.

 

It is important that you get the right accountant for your business, and at a price you like. Prices and services vary, so make sure you get quotes before appointing your chosen firm or individual. Accountants will provide a wide range of tax services, and if you have chosen wisely, will also give you some sound business advice.

 

 

8.  Tax and the dreaded deadline!

 

Now you have completely revamped your office operating systems, completing your tax return should be easy. That is unless you have left it to the last minute! Waiting for the deadline is like playing Russian roulette and could equally turn out to be just as painful financially. Complete your return in good time by providing your accountant with your financial transactions from the previous year, and you may find the gun provided by the tax man, only contains blanks after all.

 

Running a business when you are a small SME is never easy but you can make it easier for yourself and staff if you are lucky enough to employ any by implementing the steps above! Remember from little acorns…

 

FashionCapital understands the needs of designers and CMT units of today and we will shortly be posting a more in-depth article regarding Funding and Invoice Discounting.

 

By Martin Huckle