Growing your business and managing its finances can be hard.
Many business owners neglect to have an action plan in place for their company’s growth because they are too involved in working IN the business rather than ON the business.
If things go on like this for far too long, you end up not being able to be financially strong and healthy as your competitors
I get it! You have to play the pivotal role of managing all aspects of your business and hence do not have time to actually check the financial health of your business. Sooner or later, you end up with a high tax bill which indirectly impacts your business’s cashflow
Have you experienced any of the issues below?
Well here are some steps/tips to make your company financially sound and healthy so that your business have higher profits and also does not overpay taxes
- Planning with Cashflow Forecast
Sales increases, lost revenue, unexpected costs, new hires, or seasonal fluctuations are easily planned for when you create cash flow forecasts. You have to Set up a cash flow forecast. For this to happen you need to
- Get your books up to date (bookkeeping) with the help of the accountant/FD or a bookkeeper
- Set up a financial plan in your online accounting system
- Prepare the cash flow forecast using the data you have
- Plan when there will be cash inflow and outflow to ensure you have enough cash to manage your day to day business activities
2. Management Reports on a monthly basis
Once your bookkeeping is up to date, you need to
- Prepare management reports which will tell us where you are every month
- Review all the expenses and sales and see where you can make improvements (for example, if your marketing expenses were higher with no ROI in sales then you need to assess whether you need to change your marketing strategy etc)
- Assess how much-estimated tax you will have to pay in the future based on the profits.
3. Creating Budgets on a monthly or quarterly basis
Similar to cash flow forecasting, you also need to create budgets that bring realism and objective data into your business, create scenarios and understand how your business will look like in the next 12 months
- Planning- You should prepare a realistic monthly budget with predictable sales and expenses
- Regular Record-Keeping- Weekly or even daily reconciliation are crucial. This will help your records up to date
- Monitor the cash flow- You need to review and adjust the cashflow regularly to ensure it is up to date
- Chase your debts- Chasing your late payers promptly and regularly is the way to ensure the cash comes in when expected.
- Watch your spending- This would form part of your budgeting exercise and needs to be regularly reviewed. Ask if all the overheads are necessary.
4. Strong Finance Team
In order to carry out all the above functions above, you also need to have a strong proactive finance team whether it is an accountant, FD or bookkeeper (unless you are an accountant yourself and can do it all by yourself). You also need their help in implementing any tax-saving strategies that could help you lower your tax bills
Conclusion
If the business has incorporated all the above steps, there is a high chance of the business increasing its financial growth and also saving some money on taxes.
If you would like to know how I can help integrate all the above steps then please feel free to book a call with me below
