How much!!!! I can get it cheaper – does that mean its expensive?

I’m going to try and keep this brief to encourage everyone to read this but this is a topic of many of my conversations.

So I’ll start by telling you Windrush Business Services are not the cheapest! there are loads of sole traders and other companies that offer the services we do. But when you are shopping around do you ask them for their qualifications? As a Chartered Management Accountant I have spent a lot of time studying to gain a professional qualification. Further as a member of a professional body I am obliged to be properly registered, indemnified and work to a code of conduct AND ensure I undertake continued professional development to ensure I am up to date and technically competent. I take pride in this and to ensure I am not flying totally by the seat of my pants I ensure the advice I give is not off the cuff maybes or heard about it somewhere. I also take care to discuss clients with my book keepers so they know what to look for and when to refer to me so the quality of our service matches what should be expected.

Not surprisingly, when I discuss this with my clients its apparent this is not a phenomenon experienced by just me. In fact its across the board! And I’ve noticed our clients generally are not the ‘cheapest’ because they consider quality, expertise and doing the job right in the first place is more important.

Also I have taken on a few clients over the years who have approached me as they are in a pickle, and the reason is that they wanted to keep accounting costs low as they saw it as an overhead they begrudged paying rather than a service. But in fact all they have done is ‘defer’ the cost as they have to pay to get it put right. 

So when buying goods or indeed services, when you have looked at the market for pricing consider why the cheapest is cheaper than the rest and whether it might cost you more in the long run. 

 

Will you be in a position to make you’re VAT payment due this month?

A reminder for everyone with a May VAT quarter as your VAT return is due in a few days and payment due later in the month.  
Easy to have lost track given VAT payments due between 20th March and 30th June due to COVID-19. Also easy not not link the May return is payable but it is the payments that are deferred. (Payments which would have been payable in the deferred period become due 31st March 2021).
If you will struggle to make your VAT payment, Time to Pay arrangements are available to all businesses and individuals who are in temporary financial distress. These arrangements are not new, Time to Pay arrangements have always been available, however at present they are far easier to get put into place, in ‘normal’ times they can be used as a last resort. Interest is payable on the late amounts throughout and you may incur penalties for missed payments without an arrangement in place.
To put a time to pay arrangement in place contact HMRCs Time to Pay service on 0800 024 1222 between 8am and 4pm Monday-Friday

What is Working Capital?

I hear you saying its obvious, but to some (and I’m talking about the micro business owner) it isn’t. The are many times then I reassure a business owner things are going well and in the right direction to be asked ‘then where’s the money, cos it isn’t in the bank’.

I think of it simply as the money that’s tied up in the business, and sometimes the business has more tied up in it than other times. And growth increases the amount of money that’s tied up so be aware that a decition to grow your business will not in most cases result in an instant jump in the bank balance. 

As soon as you stock up the money that was sat in your bank account is now sat on a shelf and will stay there untill it’s sold. You then have to wait the 30/60/90 days until it arrives back in the bank. Driving sales increases the debt book which is closer to the bank than stock but it’s still tied up in the business. So you stock up then sell it and then replenish stock that’s double whammy to the bank timing wise because you can be sure the supplier will want to be paid before the customer has and you have bought two lots. That’s why there’s no money in the bank.

This is why I tell clients that it’s all well and good looking at the P&L and cheering then crying into a bank statement, within your management information you need a balance sheet. This tells you what your bank account could look like and how close the money might be to arriving back, and of course how much of it is about to fly back out the door!

Growth is great, but needs controlling so as not to over stretch the business. Make sure the working capital ratio under review. The working capital ratio (Current Assets (stock and what you’re owed)/Current Liabilities (what you owe) indicates whether a company has enough in the short term to cover short term debt. Anything below 1 indicates negative working capital. While anything over 2 means that the company is cash rich (and could have capacity to use funds to grow). Most believe that a ratio between 1.2 and 2.0 is sufficient.

When you should hire an accountant

Management Accountants can help out at various stages during the growth of your business. So when should you consider hiring a Management Accountant for your small business?

Challenges for growing small businesses

There are good reasons for hiring a management accountant at different stages of your company’s growth. From a business plan to company formation, loan application to cash flow management, a management accountant can make life easier for you at each step.

That doesn’t mean you always need to employ one full-time or hire one on a retainer basis. Sometimes just a couple of hours of our time will be enough.

Like all small business owners who are looking to save money, you may think you can’t afford it. But look at how long it would take you to do certain tasks and ask yourself, is that a good use of your time? and we have found working with our clients that they soon see it as an investment.

For example, let’s say it takes you 10 hours to do your books, and your time is worth £100 an hour. That’s a cost of £1000 to do it yourself. And there’s always the risk you’ve made errors – especially if you’re multi-tasking like most business owners.

However, if you get a management accountant you’ll not only have extra time to free you up to generate revenue, but you’ll have peace of mind that an expert is taking care of the details.

So what other moments during the life of a typical small business, might you want to hire a management accountant to help you?

You’ll need advice when you write a business plan

If you involve us while you’re writing your business plan, we will be able to add financial projections and our years of experience in financial modelling. This will help you create a business plan that’s realistic, professional and more likely to succeed.

Hiring a professional at this early stage will mean you get the benefit of their financial knowledge and advice right from the start. That could save you time and money compared with hiring one later.

You’ll need advice about your company’s legal structure. You should carefully consider each type before deciding which one best suits you. For example, you may do business as a sole trader or sole proprietor, working on a self-employed basis and invoicing under your own name. If this is the case, you might be able to offset some of your living expenses against tax.

However, this also means you could be held personally liable for any business-related obligations. If your business fails to pay a supplier, defaults on a debt or loses a lawsuit, the creditor could legally come after your house or other possessions.

With a limited liability company structure, it’s different. As the name suggests, the liability of the business is limited to the assets owned by the business, not you personally (though there may be exceptions in some circumstances).

We can explain the legal business structures available and help you choose the one that best suits you.

You’ll need an accountant to help with the finances

Small business accounting can quickly become complex if you do it on your own. If you feel you’re losing control of who owes you money and how much, we can help you get back on track.

You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. We can help here by managing your payroll and producing graphs so you can see how the ratio changes over time.

As we use Xero, a cloud-based accounting software, we can to share your business accounts with you quickly and easily. This will help you monitor the pulse of your business and keep track of important things like cashflow.

Hire a Management Accountant when you’re ready to delegate

As a small business owner, no doubt one of the things you like best is that you have control. You can set your own working hours, craft your business strategy, regulate your workload (at least to some extent) and determine your own finances. And being the master of all of these things is a wonderful and liberating feeling.

But sometimes it can stop you from delegating. Business owners can feel overworked, partly due to a reluctance to allow other people to help out. You might feel that no one can possibly know your business as well as you do, therefore nobody can handle any part of your business as well as you can.

Inability to delegate can mean you’re left feeling overworked and stressed. At some point you will have to let go, and learn to trust other people to handle some parts of your business so that you can look after the rest.

Delegating your company’s financial affairs is a good start. You need to choose the right accountant and make sure you trust them with your company’s financial information. Once you’ve handed over your company’s finances to someone more experienced in accountancy than you are, you will have more time to concentrate on other aspects of your business.

Some of the most successful business owners in the world are experts at delegating work to the right people – so try to learn from them.

At some point you will have to let go, and learn to trust other people to handle some parts of your business.

Hire an accountant when you have to deal with the government

It can be daunting dealing with government paperwork when you run your own business. This is why so many small business owners hire an accountant when the first tax filing is due.

But we can also help you cope with more than just tax returns. We can help your company interact with the government in other ways.

A good accountant will be able to:

  • Complete and file the required legal and compliance documents for your business
  • Keep your company up to date with the latest tax laws
  • Prepare statutory accounts
  • Keep your company’s status updated in the government’s company register
  • Maintain records of directors and other administrative personnel
  • Organise and record share/stock allocation, such as when the business is formed, when a business partner leaves or a new partner joins
  • Handle your payroll and ensuring that all employees’ tax codes and payments are recorded correctly.

Preparing your tax documents correctly could save you money – perhaps more money than your accountant charges you. And a good accountant will use their knowledge of tax laws and legislation to suggest ways you can free up cashflow, save money and raise capital for expansion.

You’ll need an accountant when you apply for a business loan or overdraft

Banks like to know they’ll get back the money they lend out. Since the credit crunch, lending to small businesses has dropped in most countries. This makes it all the more important that you have a sound business case when you apply for a loan or overdraft.

An accountant can help improve your chances. Even the fact that you have an accountant might sway the bank in your favour, as it implies you’re serious about your business. With good accounting software, your accountant can present facts and figures that back up your application for funding. They’ll also be able to answer any questions your bank might have about revenue projections and expenses.

Your accountant can also help you choose which loan to go for, and tell you whether your bank’s terms and conditions and interest rate are favourable to you.

When your company is growing, hire an accountant

Companies don’t always grow at a steady rate. A new client or a big project can mean you need to grow your business more quickly than expected.

An accountant can help you handle growth transitions, such as hiring employees or taking on more office space. They’ll look after the detail (payroll, employee tax management, property tax, utility payments and so on), leaving you free to look at the bigger picture of the way your business is growing.

An accountant can also use accounting software to analyse your cashflow, stock management and pricing. They can also provide insight into how to properly grow the business through financial analysis. They could even help determine when is the best time to introduce a new product or service offering to your range.

Get an accountant’s advice before you take on a franchise

Taking on a franchise is a popular method of starting up in business, especially in areas such as car valeting, cosmetics supply, lawn-mowing, courier delivery operations and fast-food restaurants. With a franchise, you can still be your own boss, yet in return for a share of the revenue or business equity, the franchise company will support you with brand marketing, sales, product supply and other important matters.

This can take some of the risk out of starting a new business. But on the downside you will have less commercial freedom and increased overheads, because some of your income will go to the franchise parent company. Franchise contracts vary, so the amount you pay and keep will also vary.

It can be hard for someone new to running a business to tell whether it’s worth taking on a particular franchise. That’s where an accountant can help. They can look through the franchise contract to find out the fees and percentages charged, then help you estimate your likely income after those costs have been deducted.

Only you can decide whether you then want to take on the franchise or not. But armed with detailed knowledge of the finances, you can make that decision with greater confidence.

Get an accountant’s advice before you buy a business

Some people start their new business from scratch, others prefer to buy one that’s already up and running. You should always consult an accountant before buying an existing business. They will be able to look into the company’s accounts in detail and find out if anything looks wrong.

For example, they can check whether the company’s assets (like equipment), are fully owned or leased or part-paid for, and whether the company has any outstanding debt.

It’s a good idea to consult a lawyer too. Working together, your accountant and lawyer should discover all there is to know about the company you intend to buy and run. This will give you peace of mind that you’re getting everything you’re paying for.

Get advice from an accountant before you sell your business

It’s unlikely that you’ll have run your business for years without employing the services of an accountant. But if you have, you should seriously consider hiring one before you sell up.

An accountant will put your company’s financial records in order and produce statements of accounts that you can show to prospective buyers. Using high quality accounting software they can create useful charts and tables to show your company in a good light. They can also talk to any potential buyers’ accountants during the due diligence process, which is often a legal requirement when a business is being taken over.

And, perhaps most importantly, an accountant can help you structure your financial affairs so that you get the most money from selling your business. Depending on how the sale is structured, the amount of money you receive after tax can vary considerably. For example, a lump sum might be less tax-efficient than monthly payments over a period of years.

Every company sale is different, and a good accountant will help you get the best result when you sell up.

Accountants can help you every step of the way

As you can see, accountants can help you out during every stage of your company’s development. That doesn’t mean you have to hire one, but the right accountant should make life easier for you, so you can concentrate on what you love doing.

Your speciality is running your business. Leave the financial detail to an accountant. If you and your accountant use cloud-based accounting software, you’ll be able to keep track of what your accountant does, and always be able to see your company’s financial situation at a glance.

Are you ready for the Making Tax Digital deadline?

on 1st April this year, VAT-registered businesses earning above £85K will have to be Making Tax Digital Compliant. This means that they will have to keep digital records of their tax and submit VAT returns via compatible software.

Its believed that two thirds of UK businesses are underprepared for this looming deadline. It’s crucial for SMEs to become MTD ready by 1 April 2019 as the Government has advised that from this point, businesses will no longer be able to submit VAT returns through HMRC’s Government Gateway.

If you are one of the two thirds get in touch and we can get you compliant with the minimum amount of hassle necessary.

One month to go before introduction of Making Tax Digital for VAT

HMRC press release below -if you are not yet MTD ready get in touch -we can help (and we can help you grow your business also).

Businesses are being urged to get ready as over 2,000 businesses are signing up for Making Tax Digital for VAT each day.

Almost 1.2 million businesses have one month to go before the introduction of Making Tax Digital (MTD) – a new way of keeping business records and submitting digital VAT returns.

HMRC is urging businesses to sign up now. Easy-to-use guides for businesses, agents and others are available on GOV.UK.

Nearly 30,000 businesses have already signed up to the new service which will give them a more integrated approach to business and tax. This will reduce the time they spend on administration in the longer term and make it easier for them to get their tax right.

For VAT periods from 1 April 2019, most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software. HMRC has written to every business that will be mandated with information on what they should do and how.

Mel Stride, Financial Secretary to the Treasury, said:

It has never been more important for businesses to be able to seize the opportunities that digital technology offers. Making Tax Digital helps them to do just that – making it easier for businesses to get their tax right first time by transforming how they keep their records and send information to HMRC.

It will give businesses more control over their finances, allowing them to spend time focusing on innovation, growth and the creation of jobs.

Theresa Middleton, Director of the Making Tax Digital for Business Programme, said:

There are over 160 software products for businesses to choose from with a range of prices, including some that are free, offering different levels of functionality to suit every business. It’s time to get on board and join the thousands of businesses already experiencing the benefits of MTD.

Marco Forgione, CEO of the British Antique Dealers Association, said:

I urge all business to take action immediately. There are many very simple solutions available to make the process of filing really simple.

Making Tax Digital will help our members to streamline record keeping, ease the submission of returns and reduce the chances of an error or oversight. The process is straightforward and efficient.

What do businesses need to do?

Accountants or other tax representative will already be aware of MTD and will advise businesses how and when they need to make changes to be ready for the new service.

Those already using software will simply need to ensure it’s MTD-compatible then sign up to the new service and authorise their software for MTD.

For those who are not using an accountant or don’t currently use software, it is quick and easy to sign up and there is lots of information available to help them prepare, including about what software is available.

Take steps to find out if your business is affected by the Making Tax Digital changes and what you need to do if it is. Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.

Talk to your accountant or other agent – if you use one to manage your VAT affairs – about how they are making returns MTD-compliant.

Speak to your software provider if you already use software to ensure it will be compatible.

Those businesses that are either not represented by an accountant and/or do not already use software will need to select software to use and sign up to MTD, then authorise their new software for MTD. Our GOV.UK webpages provide information on a wide variety of products, from free software for businesses with more straightforward tax affairs, to increasingly sophisticated paid solutions. There are also products that can be used in conjunction with a spreadsheet for those businesses that don’t want to change their underlying record keeping system.

There are webinars and videos for Making Tax Digital available online.

MTD is part of the government’s #Smartergov campaign which was launched to drive innovation through the public sector.

Further Information

HMRC recognises that businesses will require time to become familiar with the new requirements of MTD. HMRC has been clear that during the first year of mandation, it will take a light touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law. But this does not mean a blanket ‘no penalties promise’.

No business will be forced to go digital for their VAT returns if they are unable to. Anyone who is already exempt from online filing of VAT will remain so under MTD, and there is further provision for those who cannot adapt to the new service due to age, disability, location or religion to apply for an exemption.

Those businesses that are registered for VAT but are below the VAT threshold are also not required to use the MTD service, but can choose to do so.

How to choose the right accountant

Choosing an accountant is like choosing a new business partner. The right accountant will become a trusted colleague you can depend on, who offers advice and guidance as your small business grows. So what are the top things you need to look out for?

Top tips for choosing an accountant

Once you’ve decided it’s time to hire an accountant, the next step is to choose which accountant to hire.

It’s important to take the time to do this carefully, and there are a few things you’ll want to consider first. You’ll need to think about issues such as the accountant’s location, the division of workload and the type of accounting software you’ll use. Consider how much you’ll have to pay the accountant, and whether they can help to grow your business.

It’s in your company’s best interests to have an experienced, capable person handling one of the most important areas of your business – your finances. The right person will save you time and money year after year. So here are some things you should consider when you’re choosing an accountant.

Ask yourself if location matters

It used to be important to have your company’s accountant located nearby. But today, more companies are collaborating online, using cloud-based technology to manage their business. This means that location is less of an issue. With cloud accounting, you and your accountant can view identical real-time data at the same time – no matter where you are.

The decision about where to find your accountant really comes down to what suits your company best. Depending on how you want to handle the finances, your accountant could really be based anywhere in the world. For example, if you’re happy to collaborate via email, phone calls, video-conferences, or secure accounting software, then you could be in New York and they could be in London. If your accountant can be anywhere in the world, you don’t need to make compromises based on their location. You can find someone who really understands the specifics of your business or industry.

On the other hand, you may prefer face-to-face contact and find it useful to have someone who’s able to go to business meetings with you. If this is the case, then you’ll need to limit your search to accountants who work nearby or are willing to travel to your premises from time to time.

Wherever they happen to be based, make sure they’re an expert in the tax laws that apply to your business.

Choose a certified or chartered accountant

For peace of mind, choose an accountant that’s regulated by a professional body or recognised by the government. Depending on the country you’re in, that could be a:

  • Certified Accountant
  • Chartered Accountant
  • Chartered Management Accountant

Chartered Accountants (CAs) are highly qualified professionals who have completed above degree-level study along with workplace experience and a professional competence programme.

An experienced and knowledgeable accountant can add value to your business right from the start. If you expect your company to grow, it’s a good idea to hire a professional accountant at the beginning rather than later on.

Of course, it’s possible to use accountants who aren’t chartered – or don’t have an equivalent professional qualification – for bookkeeping, tax preparation or general financial management. However, you’ll almost certainly need those higher qualifications on your side if you go for a loan, or if you’re audited.

Look for an accountant with relevant expertise

You’ll need someone with experience preparing tax returns and financial documents for companies of a similar size and revenue to yours. If your company uses cloud-based software for much of its business, you’ll probably want someone who’s savvy with cloud computing.

It’s even better if they’ve worked with companies in similar market sectors to yours, as that will help them understand the unique needs of your business. You might want to check to see if they have larger clients. If they do, it’s a good sign as you’ll know they should be able to handle your growing needs over time.

You could also ask them for a client list that details each company’s gross revenue and number of employees. Find out how their clients have grown and developed over the years, to get a sense of whether they’ll be able to handle the evolving needs of your company.

Tap into your social networks

When searching for an accountant, the ideal candidate might be right under your nose. Start by asking any friends or family members who own small businesses if they would recommend their accountant. If so, why? And if not, why not? The answers to both questions could prove useful at a later stage, when you come to interview candidates.

Bear in mind that choosing an accountant can be a personal decision, so what’s right for your best friend’s PR business might not suit your manufacturing company. Also take into account differences in business structure. The best accountant for a sole trader might not be the best fit for a company with ten employees.

Make use of your connections online

Although Facebook might not be the best place to post a request for accountant recommendations (though it’s not the worst, either), more business-oriented networks could be useful. LinkedIn is one of the largest globally, and if you already have a profile there, you could use it to search for accountants who’ve been recommended by others.

Five ways to use your social network for more information

Use LinkedIn or other online networks to delve a little deeper into each candidate’s background and find out things like:

  1. Who are they connected to? 
    Do they have a strong network of professional people?
  2. How do they talk about their services? 
    Are they enthusiastic and interested in their work?
  3. Have they received any recommendations from their clients?
    What do those recommendations actually say?
  4. What is their experience? 
    How long have they been in business, and what were they doing before?
  5. What are their qualifications?
    Are they a chartered or certified accountant, a bookkeeper, a financial adviser or something else?

Decide how the accounting work will be divided

Accountants can handle every aspect of bookkeeping and small business accounting. In most cases, you can bundle up your bills and invoices, hand them all over, and they can do the rest. But this might not always be the best approach.

Accountants often charge by the hour, so making them do simple data-entry tasks is not the best use of their time – time that you’re paying for. So take charge and get more involved in the accounting process (if you can). This will give you a better grasp of expenses and revenues in real time and a heads-up on potential problems.

For example, you might choose to enter the basic accounts data in-house, then hand the work over to your accountant. Then they can handle the more involved tasks such as bank account reconciliation, filling out tax return forms, payroll and capital depreciation calculations.

Good quality accounting software will make it easy for you to take part in your accounting process. It will simplify tasks like invoicing, automatically sending the invoice and recording its contents at the same time. And if the accounting software is cloud-based, you can then give your accountant secure access to your accounts with the click of a button.

Get someone who’s proactive about saving you money

Some accountants will do little more than manage your accounts and complete your tax return forms, but the best accountants are more proactive. So before choosing an accountant, ask what they could suggest to save your business money.

For example, what proportion of your operating costs do they think you can offset against tax? If you’re a sole trader or consultant, can you offset a percentage of your phone bill, car costs, maybe even rent or mortgage payments? What are the implications of doing so? The accountant should warn you of any pitfalls. For example, using your home as business premises could result in a tax charge levied on the house when you sell it!

Always bear in mind that in most countries there is a big difference between tax avoidance (usually legal) and tax evasion (usually illegal). You need an accountant who knows the details of tax law so well that they’ll save you money in legal ways, but not one who takes things too far and risks causing your business to operate illegally.

Be very careful about this, because ultimately it’s you, the business owner, who’ll pay the penalty if the law is broken.

Find out what software the accountant uses

Accountants often have their own preferred accounting software. The chances are they’ll have been in business for many years and may have become used to one particular brand of software.

This can be a problem. If your company uses a different type of software there are potentially going to be issues sharing data. Although it might be possible to export and import data in a suitable format, it can be time-consuming and easily lead to errors. There’s also the risk of your highly sensitive financial information being read as you send the data back and forth, because email is about as secure as a postcard.

So try to find an accountant who’s using the same software as you. Or, failing that, one who’s willing to do so. There’s no reason why they can’t use more than one type of accounting software for different clients. That’s especially true if the software is easy to learn.

It’s best if you can agree to use market-leading accounting software that’s easy to use, and only exchange files that have been suitably encrypted. An even better option is to choose collaborative, cloud-based accounting software with encryption built in. This will mean you don’t have to worry about the risks involved in exchanging data back

Do background checks

It’s important to talk to some of your prospective accountant’s clients before you sign on the dotted line. There are professional services you can use to help you with this, but if the accountant is genuine, it’s likely they’ll be willing to give you a selection of contacts for references.

This will help confirm some of the information the accountant has provided to you. It will also enable you to hear first-hand about the relationship the accountant has with their other clients.

Be sensible when you contact referees. Don’t weigh them down with dozens of written questions to answer. A ten-minute telephone call is likely to tell you far more about your prospective accountant than a three-page form full of bland written answers.

Learn to use and trust your intuition

You’re running your own company, you have experience, and you’ve got a pretty good idea of what you’re doing. It’s also likely that you get along well with people, since that’s an important part of being successusiness.

So make use of those skills. Intuition is just another word for the unconscious processing that goes on in our minds. It’s not magic – it’s thought that takes place below our conscious level of awareness. Used in the right way it’s a powerful business tool in itself.

When you meet an accountant for the first time, consider your intuition. Alongside logical evaluations such as location, pricing, experience and references, ask yourself if you could trust this person with the intimate details of your business. If you think you could work with them for the foreseeable future then that’s great.

But if your gut feeling is saying no, you should probably walk away. Your unconscious mind may have picked up all sorts of cues (such as verbal stresses and body language) that it doesn’t like. Intuition isn’t always correct, but when it comes to choosing something as important as a business accountant, don’t ignore it.

Good accountants will help your company grow

If all of this sounds more like a marriage than a business relationship, there’s a good reason for that! Your accountant will become intimately involved with the operation of your company so it’s not a decision to be taken lightly. You will need one you can trust, who has the necessary experience and who will be there when you need them.

Good accountants help companies grow, by managing complex financial work and offering advice on practical business issues. This will be guaranteed to save you money in the short and long term. The best ones will be your partner in all but name – and as long as you choose wisely, you can’t go wrong.

Make small business accounting fun

Owning a small business is exciting. You get to do what you love, day in, day out. But traditionally, small business accounting isn’t exciting. So how can we change this stereotype and make accounting fun and easy?

Small business accounting challenges

When we talk to the small business community and accountants and bookkeepers, several things become obvious. It’s clear that all small businesses need good cashflow to survive. But many don’t really understand or manage their cashflow. They also don’t have good visibility of their accounts.

If you’re a small business owner, there might be a few reasons you started your own company. You may have wanted to do something you’re passionate about, have control of your future, or be your own boss. But it’s likely that balancing the books wasn’t high on the list of potential advantages.

Having passion for your business is great, but accounting often sits at the opposite end of the scale. The software many businesses have is often difficult to use. It’s had a history of being time consuming and confusing for anyone who isn’t an accountant.

If you’re a business owner, you might relate to the sentiment I would rather face root canal surgery with no anaesthetic than do bank reconciliations.

Too many people are frustrated with the software they use. Why is that? Small business accounting software has been unintuitive and difficult to use for years. Business owners often find themselves chained to an old desktop in the back room labouring over the finances. With a system like that, it becomes obvious why people don’t have good visibility of their accounts.

Five ways cloud software makes accounting fun

  1. When statement lines from your bank account are fed into your accounting software automatically, you can see your cashflow in real-time.
  2. Being able to see bank balances, invoices, bills and expenses at a glance gives you a clear picture of your finances.
  3. View your accounts in the cloud so you can access them when you want, where you want, on any device.
  4. You’re free to be mobile – not chained to your desktop. When you can work on the same data as your advisors at the same time, there’s no need to share a computer or exchange files.
  5. Small business accounting software with free updates means there’s no need for installations or maintenance.

Accounting can be fun and addictive

Software that makes doing business a pleasure, can only be a good thing. Making money and seeing how your business is doing should be fun. If your software is intuitive, it can be addictive to use.

What this means for small business

When business owners use software that’s intuitive and easy, they are much more in tune with their financial situation. This means they can avoid problems and take action when it matters, not after the fact, when it’s too late. Adding to that, accountants and financial advisors are able to give them much better insight and advice, spotting future opportunities for growth.

When you get excited about using your accounting software, you’ll notice the positive effect it has on your business.

How to build a watertight accounts receivable process Small Business Guide

There are many ways to get into business, but only one way to stay in – you have to get paid. That’s why a good accounts receivable process is critical.

What is an accounts receivable (or trade debtors) process?

The job of accounts receivable is to get money in the door. There are a lot of steps to that. You need to find customers that pay, bill them correctly, communicate clearly, and lay out enforceable consequences for slow payment.

Here’s your small business guide to accounts receivable management.

1. Don’t do business with just anybody

If you work for businesses, you already know that some are good at paying and some aren’t. It doesn’t have to be a lottery. Do some research before taking them on:

  • Run a credit check to find out if they’re regarded as good payers.
  • Or call someone else who supplies them, and ask if they get paid on time.

2. Put payment terms in writing (before you start)

Spell out when you’ll be billing your customer, and how much time they’ll have to pay. Point out the consequences of late payment – such as interest, fees or legal action. Get the payment terms signed off before starting work. Don’t leave any room for misunderstandings.

3. Get a personal guarantee

If you’re dealing with a fellow small business, ask the owner to sign a personal guarantee. That gives you the option of suing them or the business for unpaid debts. Just be aware that some business owners may take exception to this move.

4. Send your invoice quickly

Send your bill straight after the work’s done. It’ll take time for your customer to approve it and pay it, so why not start those wheels turning as soon as you can.

5. Make it easy for customers to pay you

Invoices get paid up to 50% faster when customers are offered convenient payment options like debit card, credit card, services like PayPal, or direct debit.

6. Watch obsessively for payment

Keep a list of all your invoices and check your bank account regularly for payment. Invoices should stay on your watchlist until they’re paid in full. Knowing what has and hasn’t been paid is absolutely critical to managing your accounts receivable.

7. Have a plan for stragglers in your accounts receivable process

Decide what actions you’ll take when invoices go past due:

  • When will you email a reminder? When will you call?
  • Will you send a past due invoice or a statement of accounts?
  • When will you involve a debt collector?

Learn how to deal with unpaid invoices and write up your own plan of action for overdue accounts. Stick to your policy unless you have a really good reason to be lenient.

8. Make the big calls

Don’t try to handle all your accounts receivable by email. There will be times when you simply have to call. Check they’re happy with the products supplied or work done, let them know they’re overdue, and ask when you can expect payment. Make these types of calls part of your plan for overdue accounts.

9. Make the even bigger calls

Check the payment history of your customers (which should be simple to do on your accounting software). Are some of them always late paying you? Maybe it’s time for a chat. Ask if they’d prefer another payment method. Or change their payment terms so you’re extending them less credit. You could start asking them for upfront payments, for example. If that doesn’t work, consider letting them go. Picking and choosing good customers is a big part of accounts receivable management.

The number one rule of accounts receivable management

Make sure you have a plan for your debtors. Don’t treat invoices on a case by case basis. Do the same things on the same days for everyone that owes you money. A consistent accounts receivable process will help keep you in business so make sure you have one that:

  • makes new customers aware of their obligations to you
  • gets invoices out the door as soon as a job is complete, or billing cycle comes around
  • sets out the specific actions you’ll take if an invoice is overdue

Today is Small Business Saturday – HRMC – What support is available for my small business?

Today is Small Business Saturday and HMRC have looked at some of the help available to small businesses, from funding to guidance and advice, through our modern Industrial Strategy. Here are their findings;

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Access finance available to support small businesses

Are you and your business looking to start up, scale up or stay ahead? Start Up Loans of up to £25,000 can give you a much-needed boost if you’re just starting out. Or take a look at the Finance Hub and the British Business Bankfor more finance options for smaller businesses.

Call the Business Support Helpline

The free Business Support Helpline can help businesses of all sizes find the right advice and support at all stages of the business journey – whether you’re starting out, growing or looking to stay ahead.

You can email enquiries@businesssupporthelpline.org, live chat or call 0300 456 3565 Monday to Friday, 9:00am to 6:00pm.

Contact the Small Business Commissioner to resolve late payment disputes

If you’re having issues with not being paid on time, the Small Business Commissioner can provide advice on late and unfair payment, help you take action and work to resolve disputes.

Put your business up for a Queen’s Award

Winning a prestigious award can give your small business a boost. The Queen’s Awards for Enterprise are recognised globally as a mark of quality for UK business and entrepreneurs. Almost any UK business can apply for free. The next round of applications opens in May 2019.

Apply for government contracts

Our Contracts Finder lets you search for information about government and agency contracts worth over £10,000 and explore information on previous tenders to see whether one might work for you.

Get in touch with your local Growth Hub

Your local Growth Hub can connect you to the right business advice and support at local and national level, no matter what size or sector you’re operating in.

See which large businesses pay their invoices on time

Large businesses have a duty to report on their payment practices. You can access this information to find out whether a business you’re intending to trade with is likely to pay on time.

Take advantage of support for innovation

If you’re a UK-based small business developing an innovative product, process or service, Innovate UK could help you get your idea off the ground.

Become more competitive by making a few simple changes

Be the Business can help small and medium sized companies across the UK supercharge productivity and earning power by making a few small but effective changes.

Get advice on selling overseas

If you are a small business interested in or currently selling overseas visit great.gov.uk for guidance on exporting, access live export opportunities, find an online marketplace to sell your products overseas and access the right finance and insurance to help you win vital international contracts.

Get involved in Small Business Saturday

Visit the Small Business Saturday website to register and advertise your business for free on their Small Business Finder, and find out how else you can get involved. Don’t forget to use local small businesses near you and encourage others to do the same this 1 December.