With National Spring Cleaning Week upon us, here are some top tips from Emily Coltman to help you polish up your accounts and get your business books looking fresh for new growth.
Winter is finally on its way away, self-assessment is a distant memory, and it’s a great time to think about how you could spring clean your business books and make your company more efficient.
Review your customer list
Look at who you sell to. How quickly does each customer pay you? Do any of them regularly question your price, or expect you to deliver more services for no additional fee?
Remember, this is your business. You do not have to deal with anyone who makes your life difficult.
It is sometimes hard to turn customers away, particularly as a small business in the early stages of its life, but you will be glad of it in the long run and your bill for headache pills will be much smaller
Look back at your cash flow
Have a look at your business bank account and see how much you had in the bank at the end of each month. When were your peaks and troughs? Did you have particular months when you were really short of cash? What could you do next year to stop that happening again do you need to open your business to new markets, to put your prices up, or borrow extra money?
If you do not keep track of your cash, you could find yourself unable to pay bills on time, which will damage your relationship with your suppliers and make them not want to go the extra mile for you next time you need something delivered urgently. Remember, the better your relationship with your suppliers, the more you can do for your customers.
In the very worst case scenario your business could even not survive if it runs out of cash completely.
Is your categorisation consistent?
When you’re deciding which category in your business books to put your costs into, such as stationery or postage, you may well find that some of your company’scosts could easily go into more than one category. For example, a monthly subscription to a software provider could be computer software or subscriptions.
While there may not be clear-cut guidance from HMRC about which category to choose in these situations, make sure you allocate these costs consistently as they recur. That way, if your accountant needs to move the cost to a different category for tax reporting, itll be quicker for them to do that. Also, it’s much easier for you to track how much you’re spending in each category if you always put the same costs in the same places.
Go back over your historic transactions and make sure that you’ve categorised your costs consistently.
Emily Coltman is chief accountant to FreeAgent, provider of cloud accounting software for freelancers, micro businesses and accountants. She is passionate about helping the owners of small and growing businesses to escape their ?fear of the numbers? and she translates small business finance and tax into practical common sense speak.
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