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Know your Cash Flow

Every business owner needs cash and most are acutely aware of it, especially in the early years.

You may have to juggle wages, VAT bills, personal or company tax bills and chase late payers to get the cash you’re owed. You may be paying from personal savings to start up the business of your dreams and all cash does is flow outwards. Whatever your situation, Cash is still King.

Not only have you become a bank account watcher, someone who builds and stares at an excel spreadsheet, that soon takes on a life of its own but you may annoy your precious customers by actually daring to ask them to pay on time, and that leads to anxiety about repeat business or a damaged business relationship. You know you’re experiencing cash flow stress and it is not a good feeling.

Could you pay less VAT?

As a small business owner cash flow anxiety certainly makes you aware that you are human. All the emotions are yours and yours alone, and the person who has to take the action, is you as well. As an Accountant to small business humans it’s the emotional side of the cash flow anxiety that I see doing more damage than just taking the shine off your lovely business.

The thing about cash that you sometimes miss, is that it’s as essential to know the Flow as it is the amounts to go in or out. It’s the timing that matters – that is the Flow. Software and Apps that help manage the cash and its flow can be life savers to you and your business and as much as you love Excel, and I do too, you can reduce more stress by using the right tools for the right job. Here are 6 Tips to help you go with the Flow of your business.

Tip 1 – Use cloud accounting software Xero or Quick Books Online are best. They are the market leaders and match up to each other in functionality – if one launches something the other develops it too – this is all in your best interest as the owner of a small business that needs cash to develop itself.

Move from Sage to Xero

Tip 2 – Get good Cash Flow software┬áthat adds on seamlessly to you accounting software. That means everything in the accounts is automatically put into the cash flow. No more worries about spreadsheet formulas, or forgetting something. It also means you can review reliable data and add in forecasts going forward. So if your bad payer says they will pay you in 90 days instead of 30 you can accurately plan for that, and follow up to make sure it comes in.

Tip 3 – Share your accounts and cash flow software with your adviser or Accountant. The best thing you can add to Xero or QuickBooks is an Accountant. They can check over what you’ve got – you always have to input the sales forecast – and they know when you should, or may have to, pay HMRC tax, salaries, loans, get a VAT repayment etc. Remember the key payment dates for PAYE, corporation tax and VAT. Your adviser can forecast your VAT payments based on your sales forecast and you get to see your business in cash terms instead of profit or loss terms.

Tip 4 – Cash Flow software like Float will give youscenario planning as well. You can look at “what if” scenarios, like what if I took on a new staff member, what if I bought new technology or what if I paid myself more money.


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Tip 5 – Reliable software will let you see the Flow. This means you can see the cash crunches coming. You can ask the bank for an overdraft facility, you can show any financers that you have tight internal controls over cash management, and your stress levels will reduce because the sense of reliable control will also increase.

Tip 6 – Open a separate bank account to transfer cash reserves. This helps you save the cash for tax bills, save to repay investors or for new items you want to buy.

Taking control of the Cash Flow will help you take control of your wellbeing.


Blog written by Carolinecaroline connor FCMA




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