Congratulations – your small business is running along nicely and things seem to be falling into place. But before you go popping the champagne, are you sure you have absolutely everything organised with your business finances?
Get professional help
How do you currently manage your books? A bookkeeper, accountant or do-it-yourself spreadsheet based on your shoebox full of receipts? If you’d rather spend your weekend with the family than sorting out paperwork, seeking professional help can pay off in more ways than one, particularly when it comes to tax time.
If you want help from an accountant, a good place to start is to seek recommendations from friends and associates. Make sure you check qualifications and professional memberships (such as a CPA or IPA) and if possible, try and find an accountant who is familiar with your industry, whether it’s crash repairs or restaurants.
Accountant or bookkeeper? Bookkeepers can help lighten the load by properly recording all the day-to-day transactions, as well as advising on accounting software and other issues; whereas accountants can provide higher-level advisory services, including business planning, regulations and tax advice. Without a bookkeeper you will be recording all the transactional details yourself.
Storing it in the cloud
Cloud-based software such as Xero or Quickbooks can provide real-time financial information and reporting, accessible any time and from any device, such as your smart phone or tablet.
Storing it in the cloud also means that if an accident happens or fire breaks out, your key files won’t be harmed and your business can continue unaffected. You can also share access with your accountant or bookkeeper, making their job much more efficient, which ultimately means less cost for you.
Follow regular procedures
Stay on top of your finances by following regular procedures:
- Check cash flow on a weekly basis and monitor any potential issues such as upcoming tax or super payments.
- Review business performance against forecasts on a monthly basis and make adjustments where necessary, such as providing discounts for early payment or negotiating longer terms with suppliers if cash flow is tight.
- Ensure invoices are issued as soon as jobs are done or at least on a regular basis. Online services such as Harvest can also help chase money by sending automated payment reminders.
- Follow up outstanding invoices, regardless of the client, with the same procedure. For example, send an email reminder after 30 days saying “Reminder that your invoice issued on XXX is now late by XXX days. Please can you settle the outstanding amount by XXX”
- If your email is ignored follow up with a phone call, then send a letter two weeks after. Still no joy? Consider contacting debt collectors thereafter.
- Ensure personal and business finances are kept separate, with a separate bank account set up with automatic payments to cover GST, PAYG and staff superannuation.
- Set up a proper record keeping system, including contracts and insurance documents, tax records, employee data, licences, safety and other information legally required for your business, such as a food safety plan for a cafe.
If things don’t run as smoothly as you would like, there are sources of advice available if you urgently need some help:
- Your accountant, business adviser, banker or lawyer
- Your advisory board, business associates and friends
- Your industry association or chamber of commerce
- State government bodies, such as SmallBizConnect for small businesses based in New South Wales, the Brisbane City Council’s business hotline for Brisbane businesses or Business Victoria
- Federal government support, such as business.gov.au or the Fair Work Ombudsman Small Business Helpline.
Need more financial help?
Talk to Prospa about obtaining business finance to support your growth plans, in 2016 and beyond.