Month: January 2022

Managing your business finance for success

Every business exists to make money and grow, and one of the essential ways is through good financial management.

Getting your business finance in order through good budgeting, accurate cash flow analysis and effective use of management accounting all share a single objective, which is to improve your business efficiency.

When your business is efficient, it can convert all the available resources to maximise output with ease, thereby delivering better products and/or quality services, increasing sales, improving staff morale, enhancing customer experience, to name but a few. As a result, your business will be in a good financial position to meet its financial obligations and have strong cash surplus to put back into your business for growth.

In this article, our small business management consultants at TaxAgility discuss how we can assist small business owners in London, Richmond and Putney to better manage their business finances for success.

Understanding your business and objectives

A client once commented that he quit his 40-hour a week job to launch a business that required him to work 80-hour a week. Highly driven, he was managing most tasks by himself apart from business finances which he turned to our small business consultants. His reason was simple – the best way to unlock any business potential is to get assistance from experts who can provide honest advice based on financial statements.

Essentially, he was looking for a management consultant who can help him to create accurate budgets and forecasts, giving him data that he needed to make informed decisions. Today, his financial performance is strong, allowing him to have an office with a team of staff. Growth is stable and consistent, adding value to his company and achieving success.

The path to success often starts with a realisation that you may be too overwhelmed with day-to-day tasks and diversions to look at your business objectively. This is why engaging a small business consultant makes sense, though the key is to find one who can take time to understand your business and aspirations.

At TaxAgility, we often kick-start a no-obligation meeting by listening to you first. It is only through listening, understanding, and looking at your business through a clear lens that will allow us to create strategic plans that can meet your financial goals accordingly.

Improving business finance

Every business is unique and consequently, there isn’t a standard recipe which every small business owner should apply when it comes to improving one’s business finance. Areas that we may discuss with you include:

• Ways to eliminate redundancies
• Ways to reach your cost and revenue targets
• Improving return on investment
• Using historical financial data to do forecasts and budgets
• How to analyse budgeted versus actual results
• Reviewing of management accounting
• Reviewing of credit control and cash flow
• Analysis of key trends in your business
• Analysis of risk management

Key benefits of improved business finance

Regardless your areas of focus, our small business consultants always strive to deliver three key benefits to your business and they are:

1. Financial control

Knowing how to make money doesn’t necessarily mean knowing how to best manage the money you earn. Managing money requires disciplines and conscious choices. Take cash flow for example, not many small business owners have time to monitor the amount of cash the business has in the bank or check which customers have paid you on time. Yet when you need to make a purchase, you may not think twice. In this instance, our small business consultants help to reign in control by providing cash flow forecasts that can guide your decisions.

2. Informed decisions will spur growth

A series of good decisions equate to success. If your decisions are data-centric, they will create a positive impact on your business finances quickly, which will further strengthen your financial position. Here is an example – many entrepreneurs believe that borrowing is good, but borrowing without knowing your ability to pay it back is far from good and will quickly ruin your business reputation. Borrowing to spur growth, for example, is only good if you have a repairmen plan in advance, as well as knowing where else you can cut expenses and save.

3. Set, measure, optimise

At TaxAgility, we believe in setting KPIs and measuring performances that help your business to achieve its goals. Financial numbers from every week, every month, every quarter, every year should be tracked and measured. It is worth bearing in mind that even the best plan may lead to occasional bumps along the way, which is why optimisation is essential. Having our small business management consultants on hand to guide you can make all the difference.

Optimising business processes

While not the specific domain of TaxAgility, it is an essential part of improving your business's financial standing and something we strive to help our clients understand. Business owners and operators should routinely review their operations to ensure they are working at peak efficiency. A key consideration is whether some processes may be better served if they were outsourced or handled in a different manner. Consider the following scenarios:

1. Company bookkeeping and accounts.

Many small firms start out doing their own bookkeeping and accounts as a way to save money, not surprisingly. However, many continue to do so even after they have grown substantially, employing several staff to handle the multiple aspects of a company's financial operations. While this may make sense to a large firm, it can be come an expensive proposition for an SME. With the advent of cloud based accounting and outsourced accounting, it can make more sense to off load these functions to an external accounting firm. These firms have optimised around offering dedicated accounting support to small businesses. Cloud accounting tools such as Xero, enable company management to keep a firm grasp on financial matters, as the tools give immediate access to the companies financial data 24 x 7.

2. Financial management

There's been a trend in recent times to not only outsource the accounting function, but also, to outsource the financial management and oversight of a company too. There comes a point in a company's growth when the firm should really consider the appointment of a financial director or a CFO. This can be a big step to take and, of course, such positions are not cheap to fill. This is a function that can make sense to outsource for some companies. Alternatively, they can appoint an interim CFO, one that doesn't work full-time and is not an actual employee. There are obvious cost efficiencies to doing this, also some risks to consider too.

3. Specialist staff.

It can obviously make sense to keep certain specialists you depend upon on your payroll full-time. After all, they may hold the keys to your success within the skills they bring and you'll ant to protect that. However, businesses in search of efficiency, will want to look closely at this. Many of the more advanced skills, particularly in the creative and manufacturing sectors could effectively be outsourced, so long as the right levels of security and IP protection are put in place. Also, diversification of your base source of the key skills you need will allow you to develop resilience to change, both in skills required and protecting the business against the whims of specific individuals. Being able to draw upon a greater source of skills could also increase your competitiveness.

4.Employee base.

Recent global turmoil has been forced businesses to reconsider the basis upon which the employ staff. In times before the pandemic of 2020, employers kept pretty much to a straight forward 37 hour 9 to 5 type of working arrangement, particularly where more office based staff are concerned. Post pandemic though, things are markedly different. Power has shifted and employees now demand greater freedom to work from home (or wherever they consider home to be). Such demands prior to the pandemic were often inconceivable to some employers. However, thought through wisely and putting long standing work practice prejudices aside, such flexibility could also work in favour of the employer. In a lot of instances, employers could see this as an opportunity to restructure how they employ people and they type of employment they need. for instance, not having people in the office regularly not only saves costs but also allows the potential to employe people on a freelance basis, offering greater cost saving opportunities through more optimised processes - i.e. only employing somebody when they are actually needed.

TaxAgility can help to improve your business finance

At TaxAgility, we understand that small business owners have limited resources. Our aim is to help you transform the limited resources available to you into success by focusing on your business finances.

We believe in growing together with our clients – when you grow, we grow too. This is why our dedicated small business management consultants work cohesively with you to help build your business and take it to the next level. We use financial numbers and data to recommend changes, mitigate risk and improve profitability.

Most important, we provide fast, quality management support to small business owners without any hidden charges. Give us a call on 020 8108 0090 today because your business deserves the best opportunity to succeed.

Payroll consideration

A growing business requires staff with skills that can help your business expand further and faster. Your staff can consist of short-term contractors or permanent employees. Contractors are often cheaper, more flexible, and they tend to be specialists in niche areas like database development and network security which you only require from time to time. On the other hand, permanent employees are focused and loyal to your business; they are the people you can rely on to grow your business.

Employing permanent staff requires PAYE, National Insurance, a pension scheme, as well as other benefits your company provides. These are time-consuming administrative work. Instead of hiring a full-time payroll employee, a cost-effective option for many small business owners is to outsource the payroll function. At TaxAgility, our payroll services for small business are here to assist payroll preparation and compliance for you.

VAT

VAT is a complex subject and when a business experiences strong growth, it tends to involve international suppliers and customers. Trading internationally, meaning importing goods from and exporting goods to other countries, often leads to more questions about VAT.

If expanding internationally is on the card, the general guidelines for VAT are:

• If you are VAT-registered, the suppliers from an EU country do not charge you VAT for goods that they sell to you. However, you must account for the VAT yourself.
• Suppliers from a non-EU country do not charge you VAT for goods that they sell to you, but you will pay import VAT before customs release the goods to you.
• If you are selling goods to customers in EU countries and they are not VAT-registered, you will be charging them the UK VAT. But if your customers are VAT-registered, you can then zero-rate (ie not charging VAT) on the goods you sell to them.
• If you are selling goods to customers outside of the EU, you do not normally charge VAT.

For solid VAT advice, sector-specific VAT issues, completion of VAT returns, and other VAT concerns, talk to one of our VAT service team for small business today by calling 020 8108 0090.

If you liked this post, you might also like:

• Planning the future of your business
• The complete guide to buying a small business
• Small business: use technology to your advantage

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

by Donovan