Cash flow problems occur more frequently than you think, even for businesses with healthy profit margins. An accountant does more than prepare your accounts to help predict cash flow problems and can help prevent them occurring.
Build a Cash Flow Forecast
Identify any expected shortages prior to them arising. This will normally involve collating your sales forecasts, fixed costs and known payment dates. Then, using this information and current trading updates, the accountants will update and refine your cash flow to help you manage your finances effectively.
Spot Late-Payment Patterns Early
An accountants’ review of your debtor data can quickly highlight up any late payment by customers and identify trends and patterns in late payment. This can allow you to take early action to chase payment of outstanding invoices or even change your credit terms in order to minimise the late payment deficit.
Time Your Tax Payments Carefully
The date of a tax bill can have a devastating effect on cash in the short term. By understanding the trading cycles of businesses, Swindon Accountants can help with forecasting and advising on cash flow and the spread of tax bills over the months in order to set aside sufficient amounts.
Check Whether HMRC Time to Pay Applies
Your accountant can establish if HMRC’s Time to Pay will enable you to spread the payment of your tax debt over a number of installments. They will also negotiate on your behalf with HMRC regarding the repayment schedule.
Review Your Invoicing Terms
Shrinking payment terms and ensuring your invoices are sent out promptly can have a significant impact on cash flow. Accountants will advise on your current terms and recommend changes, for example, sending out invoices on the day of delivery as opposed to the end of month. For further information regarding cash flow reporting see the ICAEW website.
Swindon Accountants is covered in more detail at https://www.randall-payne.co.uk/services/accountancy/swindon-accountants.
Making even small changes to managing your finances can have a significant impact on your business’ day to day management.