If you have been inspired to start your own business, it’s because you have found your superpower and you want to focus all your energy on doing what you do best. The reality is that running a business demands a whole lot more of your time to run the business, which can draw your attention away from developing the dream products or services you have in mind. Which is why we have developed this simple guide to managing accountancy.
Day-to-Day Guide to Managing Accountancy
Business management comes with a whole range of different roles and responsibilities. This is the invisible cost of branching out on your own. Managing accountancy is one such area. Whether or not you are good with numbers, keeping on top of good record keeping and compliance can be tricky alongside all your other responsibilities. Prestige Business Management can take the pressure out of managing accountancy. But we understand that not every service suits every business. So we have compiled this guide to managing the key financial processes to get you started and if you are ever uncertain we are here to help.
What to do Daily
Check your business bank balance every day. You need to know what your cash position is every day. This is because your cash flow is crucial to the daily running of your business. An unexpected pay out today, could trip you up tomorrow. So check your account balance everyday and make sure this matches your cash flow forecast. If not, find out why right away to avoid any small mistakes causing bigger problems in managing accountancy later on. We recommend that you open a dedicated sole trader account to separate your business and personal financial transactions. This will help you maintain your record keeping.
What to do Once a Week
Set aside some time once a week to review your regular financial obligations. Typically these will be:
You need to accurately record all your financial transactions. This is your bookkeeping and forms the foundation of your business’s financial reporting. We recommend our partners QuickBooks for ease of recording and reporting, however we can also provide you with an excel spreadsheet template and we use Xero.
Make sure all of your receipts, invoices and other financial documents are filed correctly. This will save you time and improve your accuracy when reporting. We can help you choose and set up cloud accounting software to help you with this, such as partner Dext.
Check your records for any overdue payments. It’s good practice to send a reminder on a weekly basis for any unpaid invoices. It could easily be an oversight on your clients behalf and a friendly reminder will help speed things up, but remember to state your payment due date and that you expect payment in full by this time. Vice versa make sure you are up to date with your own outgoing payments. Furthermore you should make sure you are sending out your business’s invoices on a weekly basis. This will help build a smooth process by which invoices are regularly generated and paid. This will help you evaluate your cash flow projections.
Cash Flow Analysis
Staying on top of your cash flow with a cash flow forecast will show you when and why you might be short of funds throughout the year. A good cash flow forecast allows you to plan ahead for any shortfalls when managing accountancy. This is one of the most important insights into the success of your business and how to strategise your next steps. Update your cash flow forecast one a week. This will help you plan ahead. This will also show you if your business is growing or not and new data will help you make even more accurate cash flow predictions.
What to do Monthly
There are some essential processes that need to happen every month on time, your payroll for example. Plus analysis of how your business is developing month by month and possibly inventory or VAT returns, depending on your particular trade. Prestige Business Management can highlight any specifics that are relevant to you. But typically at the end of the month you will want to have completed these jobs:
Conducting accurate and timely payroll is one of the most essential business processes. Firstly you’ll be wanting to pay yourself your hard earned wages. But equally your employees will be relying on their income arriving on time. Make sure your payroll processes are ready to handle this monthly workload and that you give yourself enough time to ensure accuracy.
This typically applies if you sell goods or materials. An average pharmacy will have regular suppliers for certain products. However you don’t want to end up amassing a stockpile of sunblock in the winter for example. Check your stock flow once a month and make adjustments to your shipments of certain products or materials. Use your cash flow to inform managing accountancy and good business decisions.
Past Due Payments
Hopefully this won’t occur too often, but make sure you not only follow-up on any past due payments, because you need to account for the delay in your cash flow, in case a major hold could seriously impact your business. If so, make a contingency plan to cover the shortfall as well as demanding the payment be made as soon as possible.
Review Profit and Loss Statement
Your profit and loss statement is a core document that reveals the health of your business finances. It gives a clear view of your income and expenditure over a set period, and it highlights where you are succeeding and where there needs to be improvement. This may inform key decisions about where your business needs further investment or what dividends to pay out.
Quarterly and Annual Responsibilities
Most businesses run smoothly week-to-week and month-to-month. However there are other processes that you must complete quarterly or annually, which are crucial to running a successful business and some that are a legal requirement. These can seem daunting, mainly because they are conducted more infrequently, but it is also important to remain compliant. Fortunately Prestige Business Management will keep you informed about upcoming filing dates and you can pass as much or as little responsibility as you want, over to our specialist team.
- Profit and loss statement
- Balance sheet
- Cash flow statement
Following the end of the financial year on 5th April, you usually have nine months to file your statutory accounts. This includes your balance sheet, profit and loss statement, cash flow statement and a director’s report, as part of your financial year end reporting. Prestige Business Management can prepare these documents for you. We aim to streamline your financial administration, allowing you to focus on the elements of your business development that only you can do. We will ensure that you remain fully compliant with HMRC and fulfil your shareholder requirements.
How Prestige Business Management Can Help You
These regular processes will keep your business running smoothly and help you to understand how your business activities influence your margins. These are all interconnected. Using recommended software and formatting documents in a way that best suits you can cultivate success. Find out what we can do for you. Call us today on 0203 773 2927.