For any business, particularly start-ups, looking after small cash flow is a vital task to help keep the business profitable and on track to the aims of the business plan.
There are essentially two goals that will be needed to control small business cash flow and that is to control expenditure and income. There are a number of techniques to ensure that this is easily carried out.
I should also point out that the help and advice from an accountant could be invaluable, and here at Yorkshire Accountancy we are more than happy to offer help to our clients and potential clients alike on a range of issues covering accounts, payroll and bookkeeping services.
However, when it comes to small business cash flow it is essential that you have accurate and up-to-the-minute information, regardless of business size and there are some excellent software packages that will give you the information you need at the touch of a button.
You will need to know things like cash flow forecasts, budgets and what your debts are to keep your business profitable.
Alongside this, is the fact that just about every business goes through peaks and troughs which, if not managed effectively, can create chaos with a small business cash flow.
This is especially true if your business is a seasonal one such as you work towards major events such as Christmas every year which means that immediately after the festive season you will be faced with your greatest costs since your bills will be the same but your income will fall.
You need to be aware of these troughs and budget accordingly to ensure that your business remains profitable.
One of the issues that all start-ups and small businesses face is that they will inevitably have bad debtors. To counter this you will have to establish a procedure on how you tackle your debtors and get them to pay your invoices.
Depending on your business, you’ll soon find out that whoever is in charge of credit control and debt recovery are playing a vital role in the effectiveness of small business cash flow management.
Not managing bad debts will not only undermine your business but also, in all likelihood, put you out of business.
Most accountants will recommend that you get into the habit of paying your bills promptly and become aware of when clients pay their invoices and ensure that your bill gets to them before they pay up or you could face waiting another month for payment.
It’s also important, that the invoice that you send out is not only accurate but is timely and reduces the opportunity of a client to question the invoice and therefore delay its payment.
Inevitably, you will have a client who will not pay and you will have to resort to using a third party to collect the debt. This will cost you time and money and be a distraction you do not need. There are obviously specialist debt collection agencies who can do this work for you and it’s best to do some research before taking one on.
Finally, you can also help your cash flow by not making large purchases. If what you are buying is not critical to your business then don’t buy it – and if it is needed then you should look at spreading the cost rather than paying in a lump sum for things like machinery, vehicles and office equipment.
As I said before on this Yorkshire Accountancy blog, your accountant should be helping you and your business grow by offering help and advice particularly for small business cash flow. If not, you’re welcome to contact us and we will see if we can help you.
Contact Yorkshire accountancy for bookkeeping and payroll services, as well as cheap accountancy services, on 01482 845750 or visit us at Yorkshire Accountancy.