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    Top Tips for Managing Cash Flow for Small Businesses

    Running a business is anything but a piece of cake. It involves taking risks, extensive planning, and careful management of resources, and not many are equipped with the entrepreneurship skills required to handle these tasks.

    Thus, around 20% of small businesses fold in the first year, according to an article by the Telegraph, and nearly 60% close down within the first three years. According to a report on Investopedia, the lack of adequate funding or capital resources falls among the top reasons businesses fail.

    While financial hurdles are an unavoidable part of setting up and running a business, they do not have to be the reason why your business fails. All it takes is a little bit of planning and efficient resource management to succeed.

    Here, we bring you top cash flow management tips for small businesses to help you set up a functional and efficient resource management system. But before we dive into our tips and suggestions, let us first understand what cash flow actually is and why it is important.

    What is Cash Flow Management?

    Cash flow management refers to the practices and strategies businesses undertake to monitor and track the amount of money coming in and going out of a business. It involves tracking earnings and expenses and calculating the net cash flow to determine whether the company is making a profit or a loss.

    The ultimate goal of all cash flow management strategies is to earn a positive cash flow so that the business starts earning a profit. Here are a few tips that can help you achieve that goal.

    1.     Calculate When You Will Breakeven

    Efficient cash flow management is all about planning, and the first step to efficient planning is to calculate when you will break even. It will help you get an idea of when you will start earning a positive cash flow, which, in turn, will help you plan your finances smartly until the business becomes profitable.

    2.     Keep Your Eye on the Cash Flow and Not on Profits Alone

    Sure, earning a profit or breaking even can be the major benchmarks or management goals, but they shouldn’t be your primary focus. Another common mistake that many entrepreneurs end up making is trying to cut back on costs too heavily to attain profitability a little quicker.

    Understand that as a new entrepreneur, you will have to spend a substantial amount of money on setting up your business. Your focus should be on ensuring you avoid any unnecessary expenses such as paying really high electricity bills or purchasing more inventory than you can handle.

    Spend only on essentials in the short run, and you can, of course, focus on expanding operations once you start earning positive cash flow.

    3.     Set Up Emergency Cash Reserves

    The initial days are going to be a struggle, and you may find yourself out of cash on some days; on others, you will barely manage to cover your day-to-day expenses. But on some, you may even be able to earn a little extra. On good days, you will have to act smart and save what you earn to use it on the bad days. You will also need to set up emergency cash reserves in case you have a few consecutive bad days.

    4.     Collect Receivables As Soon As Possible

    We understand that giving customers to purchase products and avail services on credits may be a good marketing move. But refrain from offering such incentives during your starting days. Instead, try to encourage early payments by offering discounts on upfront cash payments.

    As a start-up, you need to keep a close eye on your earnings and your expenses so you can set financial benchmarks and set goals. Try to encourage your customers to pay ahead of or on time, so you don’t find yourself waiting for payments to calculate net profitability.

    5.     Set Invoice Timelines

    In continuation with our previous tip, you should also set up invoice timelines or clear payment terms when taking up new clients. You need to be able to put a date on when you will receive your next payment, so you can plan your expenses accordingly. Thus, all your clients should be very clear on payment terms and conditions.

    6.     Hire a Professional Accountant

    Managing a business, overseeing business operations and managing the company accounts by yourself is not an easy task. In fact, you may end up tiring yourself out to the point where you start mismanaging important tasks. Thus, you need to delegate important responsibilities such as accounts handling to professionals well-equipped to handle the job.

    Accounto is a cloud-based accountancy firm based in Dublin, Ireland, offering professional accounting services at affordable set rates to new businesses. Reach out to us if you would like to establish a functional financial and cash flow management system for your business.

    Preparing for a Meeting with Your Bank

    Preparing for a meeting with a bank manager to put forward your business proposition can be quite unnerving and anxiety-inducing. Rightfully so, too, as banks reject around 80% of funding proposals. But that is not because the bank manager does not want to offer small business owners finance. It is because they found the proposal was lacking, and the meeting did not proceed satisfactorily. 

    The meeting with the bank manager can decide whether you will be able to set up your dream business or not. Thus, instead of worrying about the meeting itself, you should put in the extra effort, time, and attention to detail when drafting your small business funding proposal. You should also be prepared to answer different questions related to the business model’s finances, profitability, scope, and sustainability. Here is how to prepare for a meeting with the bank manager

    Step into the Manager’s Shoes

    Business owners and bank managers think quite differently. Where a business owner is simply seeking finance for their business, the bank manager is looking for what is in it for the bank. Where entrepreneurs are willing to take calculated risks, bank managers are not at all willing to take a risk. They will require a certain level of guarantee that even if the business fails, which around 90% of them do, the bank will be able to recover the money lent. 

    Instead of just putting forth your business plan, you will have to provide the bank with some security and a sound financial plan that will prove your ability to pay back the loan. Your business and personal account need to have a solid credit record that proves you repay your loan on time and will be able to make payments in order to qualify for a loan or funding by the bank. 

    Set Clear Objectives

    Banks want to see something solid. They don’t want to know what you tentatively plan to achieve in five years. They want to know your objectives and plan of action to achieve them in a set time frame. Make sure you have your objectives clearly written down and have a detailed plan of action in writing for the bank manager to review. 

    Practice Your ‘Elevator Pitch’

    Knowing how to speak is just as and maybe even more important than knowing what to say. Thus, write down your pitch, put on a suit, stand in front of the mirror and practice away until you feel like you have the delivery just right. You may be tempted to wing it thinking you know your proposal best. 

    But we advise against it as your lack of preparedness can very well be the reason why you lose your chance at securing funding. Write down a carefully thought out script and do not deviate from it as that is the best way to say all you need to say systematically. 

    Dress to Impress

    First Impression counts a lot. Thus, do not walk into your first meeting with the bank in casual clothes. Your clothes, shoes, the way you dress, and how you carry yourself all tell a lot about your personality. 

    Bank managers assess more than just your proposal; they also assess your professionalism, work ethic, passion and dedication. So, make sure you dress to impress. Wear formal attire, formal shoes, and make sure your hair is neatly styled. 

    Be Prepared with Answers

    Your business funding proposal meeting will have a question-and-answer portion where the manager or bank representative will point out flaws, if any, in the proposal, seek clarification for points they cannot understand and more. Walk in the meeting with a clear mind so you can tackle these questions. 

    Ensure you have all the statistics, facts, figures and financial reports or plans at hand, so you don’t have to reschedule the meeting. Your preparedness or the lack of it otherwise can make or break the situation, so ensure that you are aware of all the minor and major details.  

    Focus on Building Relationships

    Don’t make it sound like you are only in there to secure funding. Focus on establishing a functional and mutually beneficial relationship with your bank so that you can turn to them for financing later and even get discounts and special packages. Try to become a valued customer for the bank so that they go out of their way to help you set up and run your business.

    Let the Professionals Handle the Job

    Instead of trying to do everything yourself, you might want to consider letting your accountant deal with the financing aspect. Even if you want to conduct the meeting yourself, consider taking them along or consulting them when drafting your pitch. 

    Accounto is a Dublin based accountancy firm that can help you draft a sound business financing proposal, reducing the chances of rejection.

    The Value That an Accountant Can Bring to Your Business

    If you’ve recently set up your business or are thinking of starting a new venture, you might be thinking of all the ways you can cut costs to keep expenses to a minimum. Here, you may even be considering taking on multiple roles, including that of an accountant. However, that may prove counterproductive in the short and long run, especially if you do not understand the accounting system and practices. 

    An accountant does so much more than just make entries in a book. If you are still on the fence on whether you should hire an accountant or not, below are just a few benefits of hiring an accountant for your small business.

    Can Help Set Up Your Business

    During the initial setup phase, you will have to make many significant decisions, including determining your business structure. Your business structure plays an essential role as it directly determines the legalities of your business, tax requirements and more. 

    An accountant is equipped with the knowledge and expertise required to guide you on which business structure may be ideal for your business, given the business type and your current and predicted financial situation. 

    Conduct a Financial Analysis for Your Business

    Figuring out how to efficiently manage finances is perhaps one of the most challenging parts of setting up a business. Small business owners usually start by investing their life savings or through borrowed funding, so they have little to no margin for error or failure. 

    An accountant can help eliminate or reduce the financial risks by assessing your financial situation and creating a well-thought-out and efficient budget for your business. Where you may forget to take into account the need for emergency cash reserves, an accountant will not as they understand the importance of careful financial planning. 

    Set a Budget for Your Business

    As a new business owner, you may find yourself unable to manage your expenses for every expense that seems important, but not all of them actually are. Your accountant can help keep expenditure in check by devising a budget for you. With a limit to how much you can spend in a week or per day, you will learn how to prioritize your expenses and be able to manage your finances better.

    Manage Business Cash Flow

    Another important aspect of efficient business management is cash flow management. Usually, business owners are unable to keep track of payments and receivables and may end up overestimating the amount of money coming in and end up overspending, which can cause a business to run out of funds very quickly.  

    An accountant will not only be able to track cash flow but also update your budget, set financial goals and benchmarks.

    Handle the Tax Filing Process

    Accountants will ensure they maintain proper financial records, detailed accounting books and receipts properly logged in to efficient accounting software as per the requirements of your business. They can also advise you on how much taxes you need to pay during the year to make the tax filing process easier. 

    Another major benefit of hiring an accountant is that you will have all your financial records in order, so the tax filing process will be a piece of cake. Not that you will have to handle it anyway, as that too falls under the accountant’s job description.  

    Make Data Backed Financial Decisions

    If you want results, you will have to make data-driven business decisions, especially when making major financial decisions. If you want to purchase inventory in bulk, your accountant will be able to guide you on whether that is financially feasible or not. 

    If you want to scale operations, you will have to consult your accountant to get insight into the current financial situation and company savings to help determine the best way forward. In case you find that you may need to acquire funding from external sources, your accountant will help devise a financial proposal plan and reach out to potential funding sources as well. 

    Reduce Your Workload 

    Lastly, but most importantly, hiring an accountant means less work for you. It allows you to focus on business operations and management and leaves the tedious tasks of maintaining daily financial records to the professionals. 

    Accounto – Providing Client-Based Accountancy Solutions

    Accounto is a Dublin-based accountancy firm. Here, you will find accounting experts with a passion for numbers and the goal to add value to their clients. If you are still unsure about the benefits of hiring an accountant for your small business, reach out to us to learn more about why hiring an accountant is an essential step for your business. 

    Benefits of Working With an Online Accountancy Firm

    Wondering whether a digital or cloud-based accountant is as reliable and convenient as your local accountancy firm? Are they as trustworthy and qualified as a traditional accountant? Here’s what you need to know about working with an online accountant!

    Effortless Communication

    An online accountant is well-versed in multiple methods of online communication. They are responsive and easily-accessible via your preferred conversation channel, whether that’s email, phone, video chat, or online chat.

    Many traditional accountants rely primarily on older communication methods like phone calls and face-to-face meetings. This may not be sufficient in situations where digital communication is more convenient. You can expect stellar response times from an online accountancy firm!

    Up to Date with Technology

    By its very nature, a digital accountancy firm is up to date with the technologies that make it easier to conduct business. They will know what online services are the most trustworthy and easy to work with. Their technological know-how can translate to more efficiency and more control over your business’s accounts.

    If your company isn’t particularly tech-savvy, there’s no need to worry! An online accountant can be a great help when transitioning from paper to digital bookkeeping processes. They’d be glad to suggest the best cloud software for your needs and can help you make a smooth, seamless transition to a more efficient way of managing accounts.

    Efficient Processes

    Online accountants are here to support you in the best way possible, and that means creating efficient bookkeeping processes. Most online accountants have developed their processes specifically to make it as effortless as possible for you to do business online.

    Whether this means signing documents via digital signing software or using ID software, it can save you significant time and effort. Meeting via video chat or communicating online can also save you the time of traveling to your accountant’s office and having an in-person meeting.

    Professional and Qualified

    You can rest assured that there are plenty of online accountancy firms that offer professional, reliable, prompt services that are completely compliant with Irish Revenue and CRO regulations. A knowledgeable accountant can perform the same services online as they could do in person, and often can provide even better service digitally!

    That being said, you should always check with your accountant to verify their qualifications, whether they are a traditional accountant or a cloud-based accountancy firm.

    Transparent Pricing

    Most small business owners would agree that bookkeeping is a worthy expense. Outsourcing it can save you not only time and effort, but a great deal of money as well. It can help you make better business decisions and maintain better control over your company’s finances.

    That being said, you still want to ensure that you aren’t spending any more than you need to spend on your accountant! When you choose a digital or cloud-based accountant, you will usually find fees listed upfront on their website. You can also find important information like terms of engagement so that you know what you’re getting into before you decide who to hire as your business accountant.

    Talk to an Online Accountant Today

    If you have any questions about cloud-based accounting or you’re wondering if we’d be a good fit for your business, contact us today! We’d be happy to answer your questions and help you get started.

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