The Importance of Cash Flow Management

Hopefully you experienced a brisk trade in December. With the increase in sales, you could find that your cash flow differs during this month compared to any other time of the year. Stay on top of your December cash flow by making sure that you follow these tips:

Stick to a Budget

With the till ringing at an increased rate and takings looking higher than expected, it is easy to get carried away and spend more than you usually would. But this could be dangerous and should be avoided. Ideally you would have already planned for this prior to the Christmas rush by drawing up - with the help of your local bookkeeper - a Christmas budget. By forecasting an increase in sales, you could have funds set aside that you know you can spend on more stock or expanding products or services if needed.

Consider Extra Expenses

At Christmas, profits should increase. But many businesses find that expenses and outgoings can also shoot up almost without warning. Paying staff for overtime, throwing Christmas parties, lost days through adverse weather conditions, increased heating and electrical usage; it all adds up. Avoid facing an eye watering bill by employing an outsourced bookkeeper, ideally all year round, to regularly check up on expenditure so they can warn of or even forecast in advance any potential problems.

Effective Invoicing

One reason cash flow becomes a problem during December is as everyone is so busy, invoices are often sent out late and, as people take time off work for the holidays, payments can become delayed for several weeks after Christmas. Make sure that you or your bookkeeper sends out invoices effectively and on time.

Outsourced bookkeepers are skilled at managing all aspects of cash flow management. By leaving it to them, the burden is removed from your shoulders, leaving you free to drive up sales as best you can before, during and after Christmas.

Business Expenses Advice for Small Businesses

There are certain times of the year when business expense claims become more common. Christmas is one such time. But what can be claimed as an expense? Are there different types of expenses? Follow this guide and you should not go far wrong:

What are Non-Taxable Expenses?

A non taxable expense is something that you or an employee buys that is for business use only. Often known as allowable expenses, these can be deducted from your end of year tax bill. But working out what can be claimed as a non taxable expense can be difficult. As a rough rule, things such as travel costs for business purposes, general running costs such as electric and phone bills, as well as premises costs such as renting an office can be claimed back. This is however by no means an exhaustive list, and from time to time it may become difficult to know whether one thing or another could be claimed back as an expense.

The best idea is to invest in a professional bookkeeper so they can keep a detailed record of all expenses you accumulate throughout the year. This way you will have a tidy and comprehensive list to present to your accountant at the end of the tax year, and then they can work out what can be reclaimed or discarded.

What can’t I claim as Expenses?

The basic rule is that you cannot claim anything that is for personal use. This means that you cannot claim your phone bill as expenses if you have used it for personal reasons. You cannot claim travel expenses on your journey to or from work, but you can claim back expenses spent visiting clients for example. Again, it is best to check with a professional to make sure you have the right to claim back what you think you are due.

Do I need to Keep a Record?

It is very important that a detailed record of all of your expenses is kept throughout the year and that it is kept up to date at all times. Everything must be recorded along with receipts and the relevant documents that prove the expense was business related.

HMRC can be very strict so it is best to use an outsourced bookkeeper to keep all of these records for you. They will know how to collate and present your expenses in a professional way and will offer you advice on what you can or cannot claim.

Make Sure your Business Can Cope at Christmas

It doesn’t take a rocket scientist to tell you that Christmas is for most businesses, both large and small, the busiest time of the year. Taking advantage of all of this increased trade is vital and the perfect way to start the New Year on a strong financial footing. In fact many businesses rely heavily on doing a roaring trade in the build up to Christmas.

Coping with the increased demand is very important otherwise there could be some serious consequences and a lot of money could be lost. But how can you ensure the Christmas rush goes as smoothly as possible?

Increase the Number of Staff

Extra demand means more hands will be needed. Employing more staff is the most obvious way to make sure there are more hands on the pump as it were. But what if you cannot afford to employ another member of staff? If this is the case, then look at ways of delegating time consuming jobs to others. A popular option is to employ an outsourced bookkeeper and pass onto them all the accounts and payroll responsibilities for a month or two. This could free you up and allow you to spend more time generating cash.

Stay on Top of Cash Flow

There is no better feeling than receiving order after order as the countdown to Christmas begins. You send out items or sell them on the shop floor at such a rate that you are forced to order more and more stock. But be careful. Just because orders are up does not mean that you can necessarily afford to buy more stock than you usually would. Staff might be working longer hours and your payroll might therefore be more than it is during the rest of the year. Before you know it you have ordered too much stock that you cannot sell, as well as facing a large payroll bill.

Avoid this scenario at all costs. Use the help of a local bookkeeper to keep on top of your cash flow management system during the Christmas rush. With this taken care of, you can get on with other important tasks with the knowledge that no nasty surprises will be waiting for you in January.

Do not make any rushed decisions. Sometimes an outsourced bookkeeper who is separate from your company is the best person to entrust with your cash flow and pay roll duties when things get busy.