The need to track expenses, manage your books, issue invoices and create accounts may not be at the top of your list of reasons for starting your own business but it is important to remember that the bills and the taxman always have to be paid.
To help you focus your efforts on your bookkeeping and accounts set aside time each week, an hour may be sufficient, and use the tips below to streamline your tasks
1 Keep up-to-date with your invoices
If you delay invoicing your clients then you will have delays in being paid. Clients are more likely to pay promptly if they receive your invoice promptly. This is key to keeping your cash flow healthy.
There are many invoicing software packages available, (some are free), that can make sending invoices easier, enable you to set up invoice templates and often include the ability to send email reminders to customers when invoices become overdue.
2 Manage your bills
Keep track of your business costs and pay your bills promptly thus ensuring you maintain good working relationships with your suppliers and do not incur unnecessary interest and finance charges.
Knowing the costs your business is incurring is as important as invoicing your customers when it comes to staying on top of your cash flow.
3 Check your bank statement (and business credit card if you have one)
Checking your bank statements each week will ensure you know which customers have paid you, what you have spent within your business and will ensure you are aware of your bank account balance in relation to any overdraft facility you may have in place.
Reviewing your bank statements in this way will also ensure that when your accountant is preparing you year-end accounts and tax return you know exactly what each item on the statement relates to.
4 Check your projects are earning you enough
Always take time to relate costs to individual projects or sales if appropriate thus ensuring you know how profitable each project is. This will also help you decide whether to take on similar projects, adjust your pricing or where you may be able to save money.
5 Review your business results
Review the business profit and loss account for the last few months to see if you can make any changes to smooth out any peaks and troughs in profitability and cash flow. As your business grows you should look at comparable periods’ year on year to help you set ongoing budgets and review the effect of changes you may have made within the business.