The Importance of Keeping the Cash Flowing

Anything that disrupts a business’ cashflow is a serious problem that needs to be solved quickly. But, although they are more likely to be affected by late payers than large companies, many small and medium sized businesses do not take positive action against debtors.

There are a number of reasons for this:

Fear of losing customers

A large company will probably be better off without its late payers. In contrast, a small business that relies on only a handful of customers for most of its income will be reluctant to risk offending them.

No credit control system in place

Credit checks on new customers, prompt invoicing, timely reminders and a clear strategy for dealing with late payers are all common practices in large companies. Many smaller businesses deal with each problem as it arises and might treat individual late payers in different ways: with varying results.

Lack of staff / time

Large companies employ qualified credit controllers whose only role is to ensure that payments are received on time. In a small business, responsibility for invoicing, collecting and monitoring payments might fall on people who have several other duties to fit into a busy day. Late payments can go unnoticed and the person who eventually spots them might not know what action to take.

Chasing late payers is time-consuming, especially if the culprit is difficult to contact and doesn’t respond to polite requests. It’s a task that can easily slip to the end of a long ‘to do’ list. An experienced bookkeeper could always provide the support you need in this department.

Whatever the reasons – or excuses – for late payments, the consequences for a small business owner are the same. Money, which is rightfully yours, is not available to pay your own bills or invest in growing your business. In the worst cases, you could end up in debt or even lose your business.

Can you afford to ignore late payers? If not, using the services of a qualified bookkeeper, experienced in credit control, could be one business expense that will pay for itself many times over.

Why you should Keep your Business Plan Up To Date

Every business, no matter how small, needs a business plan. It’s an essential tool if you need a loan or want to attract a business partner, but its usefulness doesn’t end there.

In the early days, a plan that includes a description of your business, its goals, strategies to achieve those goals, assets, competitors and detailed financial information will help to turn vague dreams into a realistic enterprise. Thoroughly researching facts and figures to include in your business plan will highlight potential problems and spark new ideas. Remember to seek help from a bookkeeper for extra support if necessary.

Once the business is up and running, many business owners put their business plan aside and forget about it. This is a big mistake. No matter how busy you are, occasionally reviewing and revising your business plan allows you to look up from the day-to-day details of your business and see the whole picture again. In particular, it should make you ask some of the following questions:

• How close are you to your original goals?
• If those goals are in sight, what next?
• How accurate were your financial forecasts?
• If you’re struggling to meet targets, what’s going wrong?
• Are you still enthusiastic about your product or service?
• Has the market changed?
• What are your competitors doing?
• Have you reacted to customers’ feedback?
• What can you do to improve anything you’re unhappy with?

Nothing stands still in business, and it’s impossible to plan for the unexpected: a new competitor suddenly appears, you win a big contract, or new government regulations mean you have to redesign your main product. Anything that affects your business, for better or worse, should be added to your plan. You can then make adjustments where necessary and use that information to steer your business on a different, but still successful, course. If you do not have the time to create a business plan yourself, you could always get an outsourced bookkeeper to do it for you.