Cashflow, as any accountant will tell you, is the heart of your business. it’s quite literally what keeps your business alive.
What ‘any accountant’ won’t tell you is the best way to check its pulse. Because when you look at some accountancy programs in common use, you’ll make a startling discovery.
They don’t give you a quick, easy, and efficient way to look at precisely what’s happening with your
So why is that important?
Getting the money in…
When you send an invoice, you’ll expect to be paid. Preferably on time. Which, of course, doesn’t always happen. So it’s essential to know what invoices are out there. Which have been paid – on
Without all of that
You may have had a ‘good month’. You may have a sizeable amount of income outstanding. But it’s not yours until it’s in the bank – so you also need to know exactly when that has happened. And not just for your own sake.
…keeping an eye on payments…
It’s embarrassing, for example, to find you’ve sent a payment reminder to a client who’s already paid. (So it helps to phrase those reminders carefully – and always include a line such as ‘If payment has already been sent, please ignore this reminder – and our apologies for troubling you.’) Automated reminders are a godsend (and an excellent time-saver). But if you’re using them it’s doubly important to keep your bookkeeping completely and thoroughly up to date. You don’t want a moment’s carelessness to cost you a valued customer. And it could.
You may also need to think about your payment terms. Large companies usually delay payment as long as possible. If you become a large company you may want to do the same (it certainly helps with
Small companies, on the other hand, may need a few days to pay – simply because that’s how long it takes them when, for instance, they spend a lot of time out of the office. So if it’s a client you value, you may want to discuss the most sensible arrangement with them, too.
…and watching what goes out
When the bank balance looks healthy it’s tempting to think of it as a licence to spend. There’s
But before you do, you need a clear idea of your future
Do you have a big bill coming up? Are you due to pay VAT (and if so, do you have the money safely in reserve?) And what about tax? Again, is there enough in reserve – and do you know how much you may need to pay?
These are things you just can’t afford to get wrong. So everything comes down to having the right accounts package, keeping the bookkeeping accurate and up to date, and getting the right advice at the right time.
Most of these issues are easy to solve. First, by using Xero for your accounts. And second, by ensuring that your accounts are up to date, accurate and well-managed.
Xero’s reporting tools will show you, on one screen:
your current bank balances
the current state of your invoices (which are settled, which are due – and when – and which are overdue), giving you the most accurate possible income forecast
which bills are due, and when – giving you the most accurate possible forecast of outgoings
Regular, scheduled income and outgoings can be programmed into the system – as can tailored reminders, with payment periods individually tailored for different clients.
But – as always – the results depend on accurate data. And that’s where you are likely to need some help. Because that’s the very first thing we will do for you at Haywood Accountancy. And – when you need it – we can do much, much more.
Like to know more? Then give us a call or drop us an email. No charge, and no obligation.