These days spring cleaning doesn’t just apply to your house but also to your business. Why not take advantage of this wonderful time of year, and the easing of lockdown, to get organised and make improvements by spring cleaning your books.
Consider going paperless
A paperless approach has many benefits. Not only does it offer a much higher level of security for you and your customers’ sensitive data but can also save you time and money. Even going partially paperless can make a big difference. Documents stored in the cloud are readily accessible and can avoid frustration and wasted time.
Going paperless will save you from the accumulated file boxes taking over the office – with a paperless system, you will no longer need closets and offices filled with old documents. Digital files take up no physical space at all. They are stored remotely and can be accessed from anywhere.
We would recommend using a data capture tool like Hubdoc which is free to use as part of a standard Xero subscription. If you use Xero and aren’t making the most out of your free Hubdoc account then we suggest you take a look.
Have separate bank accounts
Not having separate bank accounts for business and personal, or using the wrong account to pay for things, can mean your finances can get a bit messy. By using a separate business bank account, you avoid having to trawl through all your personal bank statements each month and sifting through hundreds of receipts trying to identify (and remember) the items that related to your business. If you are not doing your bookkeeping on a regular basis this process can be incredibly time consuming and you also run the risk of potentially not picking up genuine business expenditure.
Check your transactions for VAT
If you’re registered for VAT, it’s not always easy to know how much you should charge to your customers and how much you can reclaim on your costs.
What you charge to your customers depends on which goods and services you sell. If you’re not sure whether a particular item should be standard-rated, reduced-rated or zero-rated, or exempt or outside the scope of VAT then you can check HMRC’s guidance here https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services or one of our team would be happy to help.
Set a budget
It’s clear that the world is changing, every day. The targets that you had at the beginning of 2021, are not going to be the same as they are now or next week or the week after.
Use your up-to-date financial information to set a realistic new budget. Allow yourself enough spend to grow – cutting costs too far will stifle growth – but be strict, keep track of your spend every month and stick to your budget. Xero even has its own built in Budget Manager.
A clear view of cash flow helps to inform better business decisions. Without a strong cashflow even the most profitable businesses will fail.
To make sure you’ve got enough cashflow to keep your business running, follow these steps:
- Stay on top of bookkeeping. It’s the single best way to understand all the financial transactions in your business, and you can’t do the rest of the steps without it.
- Generate cashflow statements.
- Analyse your cashflow. Take the information from your cashflow statements and use it to understand how money is moving through your business.
- Cut overspending to increase cashflow.
- Speed up your accounts receivable. The faster you get money in your pocket, the more cash you’ll have.
Why not freshen up outdated processes, blow the dust off those excel spreadsheets and give your bookkeeping a new lease of life by getting in touch with us.