Five top tips to keep your business finances working for you
Thrive members work in different sectors doing different roles, but one thing we all have in common is the need to be financially savvy. Luckily, at Thrive we have expert accountant Mark Johnstone from Argents to give us his insight into money matters. Here are Mark’s top five tips for keeping your business finances in check.
1. Be vigilant with your bookkeeping
Hands up who is guilty of shoving loads of receipts in a drawer and hoping they’ll magically sort themselves out? Us too. Mark says that this is a common mistake and a costly one. He suggests you find a product to log your receipts – whether it’s a simple Excel spreadsheet or cloud-based systems like Xero or Sage – and update it regularly. While any decent accountant can sort a box of receipts for you, why would you pay through the nose for their time when it’s a simple task you can do yourself?
2. Don’t be afraid to chase money
Small businesses can live or die on being paid on time – but sadly there are plenty of folks who drag their heels when it comes to parting with cash. There is an easy way to combat this, and Mark suggests that you start as you mean to go on from the invoice. He says that you should lay out your payment terms on your invoice and if that term expires before you’ve been paid, do something about it. You start with a letter or email, then a phone call and if they still don’t pay, seek legal help. It is your right to be paid on time. One thing he does suggest, however, is where you can, try to avoid sending an invoice dated on the 1st, 2nd or 3rd of the month as in most big companies those invoices will be rolled into the next month’s payment and you’ll be left to wait. If you can do it, an invoice dated the previous 31st or 30th is likely to be settled quicker.
3. Be clever about your car
It’s a good idea to get educated about your expenses – especially the motoring ones. HMRC allows you to claim for your vehicle expenses, but you should work out whether that’s a good idea in your case. For those who run limited companies, you should weigh up whether the benefit in kind tax you’ll be charged will negate any savings you might make on claiming for the servicing and running costs of the vehicle. Sole traders need to be careful too. While it’s a no-brainer to claim, you must be honest about the percentage of the time you use your motor for work compared to private use. You can only claim on the work percentage, and you need to be able to prove that it’s an accurate representation if you are questioned further about it.
4. Be a good payer to HMRC
Everyone loathes paying tax, but Mark says it’s a foolish idea to drag your feet on it. The tax officer automatically charges interest and penalties if you don’t pay your tax on time, and they stack up. If you are struggling to meet your payments to HMRC, Mark says there is a hierarchy of who you should pay first. He says you must prioritise VAT because that money is what you’ve collected on behalf of the VAT man and doesn’t belong to you. The penalties for failing to pay it are severe. Next, you must make sure you cough up for PAYE and NI as if you don’t, the charges start to be added straight away. Finally, you can look to your Self-Assessment and Corporation Tax. It’s good to know that if you pay corporation tax more than ten days early, you will be given a small bonus automatically so that’s worth doing if you can. However, if you are struggling to find the money for your personal tax, you should ring HMRC and offer a payment plan as they are open to negotiating payment and usually accept a schedule.
5. Boost your triangle
No, Mark hasn’t gone geometrically mad. Instead, he’s talking about a visualisation technique and a thought process he uses to assess new and existing clients, and you could use too. The idea is that the triangle is formed with leadership and money being the two base corners and your product or service being the top of the triangle. In Mark’s experience, businesses struggle if those two base level concerns are weak or not working in tandem so you have to make sure that you are operating on a very solid foundation. From then on, the focus is on building the tip of your triangle up as much as possible to reach new business heights. Mark and the team at Argents are most excited about helping to give the entrepreneurs they work the tools to do just that, which is one of the reasons they consider themselves to be aspirational and strategic partners for their clients.
If you’d like more information on Mark’s work, or want to learn more about how Argents can help boost your business call 01603 666132 or email email@example.com
If you want to know how you can grow your business through Thrive or to keep up to date with our networking hints and tips, please email firstname.lastname@example.org or ring us on 01603 59772. Thrive, developing connections for growth – growing people, growing businesses.
Kate White – Front Page Media