Author: info@team4bookkeeping

Ways To Improve Your Cash Flow

Are you thinking of ways to improve your cash flow? Having a positive cash flow is key to your business success. All in all, it amounts to controlling your expenditure and regulating your income. In this article, team4 looks at some of the most common cash flow problems you might experience. We also give you our tips for preventing them from happening in the first place or fixing them if they do. First of all we consider what cash flow is, what constitutes a healthy and positive situation, followed by eight of the top causes and things you can implement to improve your cash flow.

The definition of cash flow and the importance of creating a cash flow forecast

Cash flow is a measurement of the amount of cash that comes into and out of your business during a particular period of time. You are aiming to have a positive cash flow whereby more money is coming into your company than is going out. Conversely, a negative cash flow is the opposite and if this goes on for any length of time, it will become increasingly difficult to pay invoices, cover expenses and pay wages. Even if you have a profitable business, you can run into trouble and incur short-term cash flow issues. This may happen for example if you are incurring expenses and customers are late paying their invoices. It’s therefore soon becomes clear that you need to create a cash flow forecast.

Eight causes of poor cash flow and eight ways to improve your cash flow

  • Poor financial planning – set up balance sheets, profit and loss statements, cash flow statements and forecasts
  • Late paying or non-paying clients – negotiate early payment terms and check the client’s credit history
  • Too much stock – keep this to what you will need with good inventory management
  • Excessive overheads – keep these to a minimum and find cost savings wherever possible
  • Profits are too low – make sure you are charging realistically and freshen up your marketing activities
  • Over investing – evaluate if your business really needs new equipment etc. before purchasing
  • High overheads – review and write down overhead costs such as rent, rates, utilities, Internet etc. and identify anything you can cut down on
  • Product pricing – keep these competitive ensuring they are not too high or low

 Accounting software will ensure cash flow data is available at your fingertips

One of the ways to improve your cash flow is to have a Chart of Accounts. You will need to know and understand the monies that are going through your business. Irrespective of the size of your company, regular updates of the numbers including monies coming in and out, budgets and cash flow forecasts are essential. And this data should all be at your fingertips. Accounting software is the answer, as this provides the information in real time. Just in case the thought of accounting software appears daunting, team4 will be able to help and advise you on the most suitable system for your type of business.

Getting paid on time is essential so send invoices promptly

Being paid on time is key to your survival. Ensure invoices are sent out promptly with clear payment terms which could be immediate or a specific number of days. Add payment options to the invoice and offer a recurring payment option. Again, use accounting software that is the most suitable for your business.

Establish debt-chasing procedures

The longer a debt remains unpaid, the more difficult it is to collect. Whatever terms you give, for example 30 days, start chasing on day 31. Establish a structure, which may include follow-up phone calls, invoice reissuing or a stronger course of action if the debt remains unpaid.

How can team4 help you to have a positive cash flow?

Through understanding common cash flow problems, it may be possible to avoid them in the first place. A cash flow forecast gives you information about the future state of your business and this knowledge will help you to make important decisions before they become critical. Here at team4, we hope our top tips on ways to improve your cash flow are helpful. We understand that every business is unique and we are here to help manage your accounts to give your business every possible chance of having a positive cash flow. To find out more, call team4 on 01825 763378 or email info@team4bookkeeping.co.uk

Seven Tips To Get Clients To Pay On Time

A healthy cash flow is vital to your business so getting clients to pay on time is key. Your business, irrespective of size will struggle if your customers don’t pay their invoices promptly. To see the money rolling in on time, you will have to set systems in place, which make it simple for your clients to pay you. In Business-to-Consumer (B2C), it is usual that customers pay for their goods and services immediately. However in Business-to-Business (B2B), you will have to invoice them. In this article, team4 gives you seven of our top tips to speed up those incoming payments to give you the best chance of getting your clients to pay on time. These are some of the most effective ways that we use and they won’t compromise your relationship with your .

How to get your clients to pay on time

  1. Set out clear payment terms – immediate or specify the number of days
  2. Invoice as soon as possible – clients can’t pay until they receive an invoice
  3. Organise payment administration – there is a process to being paid
  4. Reward early and on time payments – think of a discount to encourage speedy payment
  5. Offer a recurring payment option
  6. Add payment options directly into the invoice
  7. Embrace payment technology – use accounting software that is the most suitable for your business

  1. Establish clear and exact payment terms

 

Sometimes clients don’t pay you when you think they should because they don’t know your terms – you haven’t told them. Add a contract section explaining exact payment terms, ways of paying, date payment is due and any other details that may be relevant. Discuss this with your client so that there are no misunderstandings. Ask customers if a specific invoice format is required or if they use an in-house system.

 

  1. Send invoices as soon as possible

 

In order to get clients to pay on time, send invoices as soon as possible. Once the client receives the invoice, your payments terms will kick in. It’s also acceptable to send gentle reminders. This could be to let your client know that the payment date is looming. If you take advantage of technology, this can be done automatically and this way you won’t appear pushy.

 

  1. Payment administration must be organised

 

Depending on the size of the business you are invoicing, there will be a chain of command. This will start with the person who deals with payments, the person who approves the work and finally the person who pays it. Make sure all the necessary people receive the invoice.

 

  1. Reward early and on time payments

 

Incentives can work really well and a discount for a prompt payment such as 5% might encourage people to pay. You can try to be quite creative with this. Conversely to discourage late payments, you could add an interest or late payment fee.

 

  1. Offer a recurring payment option

 

With some clients, you may offer the same services each month with the same payment due. An automatic payment could be set and here you won’t have to worry about invoicing dates. If the invoice varies slightly each month, you can still set this system up. Let the client know the base amount that will be going out each month and notify them of any additional costs before you add them on.

 

  1. Add payment links directly into the invoice

 

Lots of clients do want to pay on time and so you must make it as simple as possible. Opening up another browser, logging into an account before money can be sent may become tedious to the customer. If your invoicing system supports it, integrate payment links/buttons directly into the invoice. Clients can then pay via digital payment gateways such as PayPal or GoCardless.

 

  1. Use payment technology

 

In this digital age, e-invoices are normally sent. These are easily done with the technology that is available today. Using accounting software, invoices are sent out immediately via email. This has the added advantages that records can be kept more easily and payments can be tracked seamlessly.

 

How can bookkeepers get clients to pay on time?

 

One of the many roles of a bookkeeper is to prepare invoices and send them to your clients so payment is received on time. They will also manage the accounts receivable ledger and chase up any late payers. The easier and more convenient you can make the process of paying invoices, the better.

 

How can team4 help you with invoicing your clients?

 

As bookkeepers, we specialise in getting clients to pay on time. We are here to streamline your payment processes. Our bookkeepers use a variety of accounting software so that customers are billed quickly with payment terms clearly stated. And we chase up any outstanding invoices so you don’t have to. We are pretty rigorous when it comes to chasing outstanding invoices and use accounting technology such as Sage, QuickBooks and Xero to automate the process. Our aim is to keep your financial stress to a minimum, so you maintain good relationships with your clients and have a strong cash flow. For help with your invoicing, please get in touch with team4, call us on 01825 763378 or email info@team4bookkeeping.co.uk.

Seven Questions To Ask Your Bookkeeper

Here are our suggestions for questions to ask your bookkeeper. Making sure your new bookkeeper is a good fit for your business is so important. But do you know what questions to ask your bookkeeper prior to using their services? The first place you will probably start is doing an Internet search and checking out a bookkeeper’s website is a great way to discover more about them. Here you can check out the services they offer. The site will also be a good indication of how professional and experienced they are and it may answer some of your questions straightaway.

Questions to ask your bookkeeper before you hire them

 

  1. How professional and experienced are they?
  2. What is the scope of their bookkeeping work?
  3. Who will be responsible for your account?
  4. What is their availability and how will they keep in touch with you?
  5. What accounting software packages do they use?
  6. Can they help your business grow?
  7. How much do they charge?

 

  1. How professional and experienced is the bookkeeping practice?

 

This is one of the first questions to ask your bookkeeper and to determine this, we have broken it down into a few more enquiries you can make.

 

  • How long have you been in business?
  • Are you registered and qualified?
  • Do you have experience in my type of business?
  • Can you provide me with examples of satisfied clients?
  • How will you protect my confidential data?

 

  1. What is the scope of their bookkeeping work?

 

First things first, make a list of services you are expecting your bookkeeper to offer. For example, do you want them to run your payroll and prepare your VAT returns? Now you are ready to ask what services they offer, as these differ between bookkeeping practices. Some bookkeeper’s skills are limited to data entry whereas others provide a more comprehensive package and can mange your accounts and analyse your financial statements.

  1. Who will be responsible for my account?

 

One of the key questions to ask your bookkeeper is whether you will have somebody personally responsible for your accounts? It’s always good to have a dedicated person who knows your business. However, you will also want to know what happens when that person is on holiday or sick. Backup is usually easier within a bigger bookkeeping firm.

 

  1. What is your availability and how will you communicate/keep in touch with us?

 

Ask about their availability and discover if they only work during normal office hours, Monday to Friday from nine to five. You will also want to know their policy for replying to emails and returning phone calls. And with communication, how will they expect to receive your information, such as bank statements and invoices.

 

  1. What accounting software packages do you use?

 

Check which ones they use as if they use several, they will be able to advise you on the software package that is best for your business. Some of the most popular are Xero, QuickBooks and Sage. If you feel that you would be able to do this aspect in house, check if they offer training and support packages.

 

  1. Can you help to grow my business?

 

A bookkeeper will help you to see the big picture of your business finances and give you that extra pair of eyes to check your cash flow and offer advice. Also, by having a bookkeeper on board, you won’t be doing your own accounts and will have more time to spend on doing what you do well and that’s running your business. They can maximise your income and perhaps help with the costs you can cut.

 

  1. How much do you charge?

 

This is one of the most important questions to ask your bookkeeper, as you must make sure you know what you will be paying. Will you be invoiced by the hour, monthly, or is there a package price? If it’s the latter, be aware of what is included and what isn’t. And don’t forget to ask if there are any extra charges. Also, when will they expect payment? Knowing this will help you to budget and of course it will impact your cash flow.

 

How can team4 help you with bookkeeping for your company?

We hope you have found questions to ask your bookkeeper helpful. team4 have been in business for over 30 years with a team that has been steadily growing over the years to offer you everything you need as an outsourced bookkeeping department. A free consultation is available, so you can meet us either via a video link or in our East Sussex office in Uckfield. This is a great opportunity to ask those questions and to discover if we would be a good fit for your business for an efficient and smooth relationship with your new bookkeeper. To find out more, call team4 on 01825 763378 or email info@team4bookkeeping.co.uk. Now is a great opportunity to read through our brand new site and see what team4 has to offer.