Congratulations! Your small business is running nicely and things are falling into place. But before you pop 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 DIY spreadsheet based on a shoebox full of receipts? If you’d rather spend your weekends with the family, seeking professional help can alleviate the stresses of paperwork, particularly at tax time.
A good place to start is by seeking accountant recommendations from friends and associates. Check their qualifications and professional memberships (CPA or IPA), and choose 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. Accountants can provide higher-level advisory services, including business planning, regulations and tax advice. Remember that without a bookkeeper, you’ll 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 anytime and from any device.
Storing your key files in the cloud also means that if an accident happens or fire breaks out, 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. Make adjustments where necessary, such as providing discounts for early payment or negotiating longer terms if cash flow is tight.
- Ensure invoices are issued as soon as jobs are done. Online services such as Harvest can chase money by sending automated payment reminders.
- Follow up outstanding invoices 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 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.
- Ensure personal and business finances are kept separate, with a different bank account set up for 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.
If things aren’t running smoothly, there are sources of advice for when 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 Small Biz Connect for small businesses based in New South Wales, the Brisbane City Council’s business hotline, or Business Victoria.
- Federal government support, such as business.gov.au or the Fair Work Ombudsman Small Business Helpline.
Talk to Prospa on 1300 882 867 about obtaining a small business loan to support your growth plans for the future.