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!

Can KPMG really disrupt SME market and take on Google?

Well, you decide.

Recently, Big Four firm KPMG has declared its objective to dominate the SME market by putting the message out to small businesses that they can pay them the same as their current accountant but they will “give them more”.

KPMG want to take on high-street and mid-tier accountancy firms that focus on the UK SME market – but can they really?

KPMG's UK head of regions, Iain Moffatt, said;

"This is the biggest investment KPMG has made in the SME market in the past 30 years.

The small business accounting platform allows us to enter a market that we haven't previously had access to.

"It's a transformational change in our business. For the first time, a Big Four firm can offer services to start‐ups and small businesses for a similar price as high-street accountants."

Moffatt did continue to state that their involvement with larger organisations would continue – their investment of the “lower end” of the SME market was a decision to expand their ambitions with a new arm for their company.

He denied that the "Big Four are more interested in the HSBCs and BPs of this world", stating that;

"We operate in that space already and we do it well. Our upper middle market share is around 25%; our lower middle market share is around 10-15%. We want to push that latter figure up to 25%.

"We'll do that by saying to small businesses: ‘You can pay us the same as your current accountant but we'll give you more'. We want to work with companies all the way through their lifecycle. We're building a fully integrated business proposition."

Moffatt also imagines that within the next five years, Google or Amazon will be their biggest threat, rather than other big accountancy firms.

Could one of the “Big Four” represent your SME?

At Omni Chartered Accountants, we offer a personal yet convenient service. Our clients receive one-to-one consultation and advice that is tailored to suit their circumstances.

In addition to this, our prices are low – we would actually throw down a gauntlet to KPMG and ask if they could really offer the same level of service at the prices we currently offer.

Why not telephone us for an initial chat on 01902 837408? We are always on hand to offer advice on whatever accounting query you may have and will be happy to work out the perfect package for your accounting needs.