A report by business innovation charity Nesta revealed that 42% of business owners say dealing with finances is the most stressful aspect of running a company. And a staggering 17% added that the stress has made them unwell.
This is in line with what many of our customers say to us. Making sure they get paid on time and keeping on top of the paperwork (by which they mean finances) often keeps them up late at night.
We’ve been there ourselves and it’s not fun. Which is why. over the years, we’ve developed a few habits which we’ve found make for stress free business finances.
Here’s what works for us.
1. We Update Our Cash Flow Forecast Weekly
First thing Monday morning, Denyse updates our cash flow forecast with the results from the previous week. She then looks at our sales projections to check if they’re still in line with our forecast or whether she needs to make any adjustments.
For example, if a customer wants to order a van racking system and has had to delay the purchase for a week while s/he waits for a late payment from customer, Denyse adjusts the cash flow forecast to take account of this.
2. We Check Our Bank Account Daily
We check our bank account once a day to make sure everything is as it should be i.e. no unexpected payments and monies have been received as promised. Because we update our cash flow forecast weekly, there are rarely any surprises.
3. We Make Sure Cash Never Dips Below A Certain Level
You know that old saying cash is king? Our aim is to have six months’ worth of running costs in the bank. We’re not there yet. (Few businesses are). But as we work towards achieving this goal, we make sure the amount of cash in the bank never dips below a certain level. As our turnover increases, so does the amount of cash we maintain in the bank.
4. We Pay Suppliers On A Set Day, Weekly
When Denyse does our weekly cash flow forecast, she also thinks about which bills we’re going to pay that week, and whether we need to defer any to the following week because, for example, we’re waiting on late payments.
5. We Know Exactly How Much We Owe Our Suppliers
Mark’s wife, Sophie, keeps our books up to date so we know exactly how much we owe our suppliers at any one time. It wasn’t like this until we brought in Sophie. We make sure we’ve made provision in our cash flow forecast to pay our suppliers when the payment date falls due.
6. We Set Aside Money For VAT Every Week
Every week, we make sure we’ve made provision for paying the VAT when it falls due. Some of our customers find it helpful to transfer the VAT element of their income into a separate bank account, set up specifically for this purpose. Then when the VAT bill falls due, they use the funds they’ve accrued in their “VAT account. to pay the bill.
7. We Use Receipt Bank To Record Receipts
Receipt Bank is a handy app which we use to photograph receipts. These are then, as if by magic, stored digitally and uploaded to our accounting software. Many of our customers use this app too. This has put an end to scrabbling around for lost receipts when it’s time to prepare the annual accounts.
This is how we’ve made business finances stress free. We’d love to hear your tips and suggestions. Let us know in the comments box below.
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