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I Love My Business Finances
Date: Mar 07, 2023
This is probably the statement that no Business Owner says EVER!!
But why? They are at the heart of your business and without the knowledge about where your business finances really are at (the reality, not best guess) you risk your business failing.
You run the risk of making the wrong decision for your business. You may be able to recover from it but it could also be detrimental to your business and delay success, business growth or worse case scenario, mean that you need to cease trading.
Completing your business finance tasks is not the thing that most business owners enjoy doing but in most cases, think of it as an “easy task” so are reluctant to pay a qualified person to complete this work.
Why do people see this as a cost rather than an investment when at every level your business finances are critical to the success of your business?
Shockingly, we’ve experienced people (not our clients) suggesting that moving items around the Profit and Loss account will make things look healthier. Wrong, the figures are still the figures. If you’ve spent the money, it’s gone and you can’t miraculously create sales that don’t exist because you “may make that sale” or remove expenses when you’ve spent the money.
Working with someone who is qualified to complete your business finances enables you to know exactly what your income and expenses are, what profit (or loss) your business has made, what the potential tax is going to be, and most importantly can the business afford you and the life you are living!
It is also not all about the turnover or sales, although this is where most focus of business success seems to be related to. Unless you have a profit (Income less expenses) then it doesn’t matter what your turnover is, £millions or £’s, you have spent too much money.
Now that could be the business plan, to reinvest all income the business receives and to take a hit for a couple of years and show a loss and not a profit but unless you have a plan this could just happen without you knowing it.
Another surprising conversation we hear often is on the topic of wanting to take money out of the business and how it is expected that the business will be able to afford what you need as you have made the sales. Not if you’re a limited company, as you may pay yourself a salary but you will generally take most of your money out as a dividend.
You can only take a dividend if you have the business profits available and so we come back around to knowing your business finances and what profit your business is actually making.
So why is it so difficult to complete your business finance tasks every month?
Does any of this sound familiar:
• Lack of organisation and no prioritisation to complete them
• Time constraints as you have so many other things to do
• Lack of motivation as it is not the exciting part of running a business
• Not using a cloud-based accounting system
• Not using apps that can streamline tasks.
It's important to identify your specific challenges that you face when it comes to completing your business finance tasks and address them proactively to make the process easier and more manageable. Or work with a qualified accountant or bookkeeper who can take all of this stress away.
If your business is registered for VAT or has employees and you complete your own business finances, it is your responsibility to be up to date with all the regulations and rules.
Most business owners, especially if you use cloud accounting software for your business finances, are unfortunately of the belief that the system is more intelligent than it actually is. Cloud accounting is great, and all of our clients use QuickBooks or Xero, but unless you know how to use it you CANNOT assume that just because you have posted a transaction it is correct, and the VAT is recognised accurately.
The system only knows what you tell it so if you don’t know then that will be replicated in the cloud accounting.
We provide 1-2-1 training to all our clients when they join us on QuickBooks or Xero so that they can complete their finance tasks accurately.
In most cases our clients outsource their business finances to us and we become their finance team. Why would they do this? Here are a few reasons from a practical viewpoint:
• Time back to run your business whilst a team of experienced Chartered Accountants manage your day-to-day business finance tasks
• No more paper. Use cloud accounting and relevant apps for your business to streamline your finance processes
• Keeping you and your business on track with your finance and regulatory responsibilities
• Completion of VAT Returns and Payroll submissions by the HMRC deadlines
• Delivery of monthly or quarterly management accounts giving you insights into your business performance throughout the year
• Accurate and insightful financial information to help you make the best business decisions
And what about:
• No more stress
• No more procrastination
• More sleep
• More clarity on your business finances
• Better business decisions
• Better business success tracking
The practical side of outsourcing your business finances is just one element but the true value comes in having a happy and healthier mindset which is able to focus on running, growing and evolving your business.
Identify the specific challenges you are facing when it comes to completing your business finance tasks and address them proactively. Do you need to outsource them? Do you need training to complete them correctly or to understand them?
You can love your business finances (with a little help).