How to avoid cashflow

Here are two startling statistics of start-up businesses:

·         One in four businesses don’t make it through the first year

·         More than half don’t survive past the fifth year of trading

There can many reasons for this, but one of the main reasons for this is down to cashflow – without it, a business simply cannot stay afloat. Below are some of the most common cashflow problems and some advice on preventing them from occurring in the first place.

Keeping accurate company records

Lots of new business owners put off bookkeeping duties as they are so busy with the huge workload that can be involved with setting up a new company.

The longer the books are neglected, the worse the problems will get; records and forecasts are pivotal to you knowing what is happening in your business.

It’s also important to ensure that you keep a proper record of what customers have and haven’t paid you to avoid significant sums of money that may owed to you getting overlooked. An effective accounting system is vital to manage your cashflow.

If you don’t have the time to do this yourself, an accountancy practice or bookkeeper will be able to do this for you.

How to manage company debts

Slow payers or bad debt is money that is owed but not paid.

This can be crippling for any new company but is usually preventable if a proper credit control system is put into place early on. If you discover that a customer has a poor credit record but you still want to take them on as a client, ask them for an upfront deposit or issue partial invoices so they can pay as portions of the work are completed. In other words, understand your customers and manage the risk.

A customer at any cost?

Calculate very carefully if want to offer credit terms - does your business model support it? If it doesn’t work early on don’t do it; you can always introduce credit terms as and when the business can afford it.

If you are currently in this situation then re-negotiate terms with your customers and/or suppliers or consider factoring the debt.

No cashflow forecast

A cashflow forecast is vital for any new business and is something that a qualified accountant can put together for you. This will allow you to forecast the months you can expect to see a cash deficit and the months when you may experience a surplus.

It will allow you to plan ahead as well, as give you a pretty good idea of how much cash your business is going to need over the next 12 months in order to survive. It is a good idea to keep the forecast on a rolling 12 month basis.

Free of charge accounting advice from Chartered Accountants

Omni Chartered Accountants offer totally free of charge advice for any business – new or otherwise – that may be experiencing difficulties. We are also here if you or would like to find out more about our cost-effective solutions that are designed to help your company run smoothly.

Call us now on 01902 837 408 or request a free of charge call back from our website today!

Are keeping books and records a benefit or hindrance to your business?

Are you confident and happy with your bookkeeping and records?

Do you see them as a hindrance or a benefit?

At Omni Chartered Accountants, we see many different levels and quality of the way businesses record and hold vital and pivotal information.

When records are poor, inaccurate or incorrect, it is imperative that they are reviewed and put right to ensure the correct numbers are available for all aspects of the business, not just the accounts.

Bespoke accounting solution for poor company records

Omni applies a very cost effective and totally bespoke approach to such situations. We will correct the information, show or train you how to ensure that the correct records are kept, or alternatively, we can take over the bookkeeping altogether if preferred, meaning that the level of involvement and assistance is very much tailored to your abilities, budget and circumstance.

It is so important, boring and dull, maybe!

But, it is important that you understand you have to keep proper and accurate records, not only for the tax and vat man, but also for yourself.

How else do you know who you owe, who owes you, what areas of your business are performing, underperforming, and what areas need your attention or are a priority? Crucially, how else do you know if you are actually making or losing money?

You need to look on your books as your very own window to viewing the health and wellbeing of your business.

So, now you know why you need to keep accurate books and records, just how confident are you with yours, do you want them health checked? If so get in touch by requesting a free of charge call back from our website or by clicking here to contact us.

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