Just as January 1st is a time when we might take stock of our personal lives and make our resolutions to do some things differently, so April 6th – start of a new financial year – can be a time when we’ve taken a fresh look at our business practices and decided what needs to change. What could you do differently in future to get better results?
Is all your paperwork in order, and all your bookkeeping up to scratch? If you use outsourced bookkeepers, the answer is probably yes. But they may still be able to give you suggestions for improvements that could boost your results. Some of the most important areas that have an impact on the bottom line are covered below.
Do invoices always go out without any delays? Do they always relate to a purchase order number? Do they clearly state the amount that is due, with a breakdown showing VAT? Are they always checked against the rules for VAT accuracy by someone in the know? Do they clearly state your terms, the date the payment is due and whether you retain the option to levy a legally allowed penalty for late payments.
It’s so important to have adequate procedures in place for this. Making credit checks on new business to business customers is easily done before you extend new credit, and it can save much heartache. Until this is completed, you could ask for payment up front, or a large deposit, or you could simply delay your service. Most reputable organisations will respect you for this and collaborate.
Keeping tabs on payments that are overdue could be in the remit of your bookkeepers. They could follow up for you or just inform you when that is needed. A telephoned reminder often gets the desired result, or you could find out if there is a problem and discuss how it could be dealt with. Staged payments are always better than no payment, or perhaps you need to relax your terms and give more time. If a client is going to be difficult, it’s important to be strict about charging late payment interest and even taking legal action to claim the compensation you are entitled to.
Where could you cut costs? Is it time for some market testing or renegotiating with suppliers? Can you save money by joining or starting a local purchasing consortium? Can you cut staff costs and gain more expertise by outsourcing any non-core business activities?
The Business Plan
This will be a good time to review and update your plans. Did your financial forecasts for last year work out? If not, why not, and what changes should you be making? Does the plan include any development projects? If not, is it time to add some? Will you need more funding? Where will it come from? What do you need to be doing in order to get it?
Preparing for a new financial year by addressing these areas could give your business a lift. Involving staff and outsourced bookkeepers can lift morale and motivation and propel you into the next tax year with momentum.