Business tips

Alexander Shatov Ctzhgbsxwli Unsplash

Digital Marketing Seminar

Does your company website deliver the best possible impression of your business? If not, you need to fix it.

When someone arrives at your home page, you only have a few seconds to grab attention and tell a customer why they should choose your company.  Does your current home page deliver on these aims?

Wednesday June 22nd from 4pm – 5.30pm.

Join us in person at Tax and Trust or remotely with Zoom.

Speakers:

Michelle Nunes-Vaz – talking about marketing budgets and KPI’s

Tom Steward from Trigger digital Ltd on the topic of Brilliant Websites – What makes them great

Register now!

Registration of interest

Name

 

Sharks

Learning to make good business decisions

Making good business decisions is easier to do when you have excellent information at your fingertips – and that’s the value of having great reporting at the heart of your startup.

Any cloud accounting software worth its salt will offer you straightforward ways to run your financial reports and track your important metrics. That’s standard in the new digital world. And this level of reporting gives you real, tangible data on which to base your decision-making. But good decision-making isn’t just about the numbers.

As well as having an effective understanding of your finances, you need a sense of what’s good for the business, how decisions will impact on your growth and what your future path looks like.

Run management information at least once a month

Modern cloud accounting software makes it easier than ever to run detailed, up-to-date reporting on your financial position. With the click of a button, you can run numerous in-depth reports and statements that show your past and future position. Doing this regularly gives you a wealth of financial information on which to base your decision-making and strategic thinking.

At each stage in your business growth, you’ll have to make important decisions about your next step – so, it’s important to think about the financial implications of any new projects, the amount of cash in the business and the availability of new sources of funding.

Use metrics and projections to inform your decision-making

Setting up a custom dashboard to monitor the most important metrics and key performance indicators (KPIs) is definitely a good idea. Most accounting apps will let you tailor your dashboard, so you can pick and choose from KPIs that are most relevant to your startup.

Set clear and democratic targets for all of your main KPIs and track them on a weekly basis, so you’re monitoring the financial heartbeat of the business. If cashflow is looking poor, look at freeing up some cash, or borrowing money to fill the gap. If sales revenues are dropping, put some renewed vigour into your sales activity, or get a new marketing campaign underway to raise awareness of your most profitable products and services.

Talk to your team when scenario-planning

You may be the sole owner of your business, or you may be part of a bigger team. But the reality is that no one person can make all the decisions in a busy business. To get the best overview of a challenge, or to come up with an effective way to grab a potential opportunity, you need to talk it through.

Talk through the current threats and opportunities and run through as many different potential scenarios as possible. What’s the best-case scenario, and how can you achieve it? What’s the worst-case scenario, and how do you plan for it, if things don’t go according to plan?

Work closely with an experienced external adviser

When you’re working in the business 24/7, it’s hard to see the business in an objective way. Your judgement on some issues can be overly emotional and clouded by internal or political factors. Working with an experienced accountant, business adviser or business coach brings a fresh perspective to the business – both financially, strategically and emotionally.

Having a trusted external accountant on the team definitely helps you get your numbers straight. But they can also bring their knowledge and experience to bear on your strategic thinking, your decision-making and the impact of the business on your own mental health and wellbeing.

You can open up to them about your worries, share your aspirations for the business and bounce strategic ideas off them – taking some of the pressure off your shoulders.

Track how you’re measuring against your goals

To meet your goals and make good business decisions, it’s helpful to monitor and track your progress against these targets. If you refer back to your reporting and KPI metrics, you can easily measure your performance over time – and take action if progress is starting to slip.

Areas to keep an eye can include your:

  • Cashflow position – to make sure there’s enough cash in the business to keep your project moving forward and heading towards the agreed end goal.
  • Sales figures and revenue – so you can see how you’re tracking against your sales targets and if the intended revenue from the project is being achieved.
  • Budgets and expenses – to check that you’re not overspending on your project and that the team is being sensible with costs, expenses and essential overheads.
  • Gross margin percentage – so you can keep the business profitable and aim to meet your profit targets for the period, or year-end.
  • Growth against targets – to keep the business performing well and growing at the rate you predicted to meet your growth target for the period.

Making a few bad decisions along the way is all part of the learning process. But by monitoring your performance and talking to the best advisers, it’s easier to keep the business on track.

If you’re needing help at any stage of planning out the next step for your business, please do get in touch. We’ll help you set up the best possible management information, to help guide your decision-making.

Towfiqu Barbhuiya Xkarbducuee Unsplash

9 Tips for reducing debtor days

Debtor days refers to the length of time it takes clients, on average, to pay you for the work you’ve done. A higher number of debtor days means clients are taking longer to pay you. A lower number of debtor days means clients take less time to pay you, which means there’s more cash available for your business to use.

In the construction industry in particular, debtor days can average as long as almost three months. Shortening that length can have a huge impact on your cash flow.

When your clients consistently pay on time, you’ll avoid the dreaded “feast or famine” cycle. You’ll be able to pay your vendors, suppliers, and employees on time, and, not least of all, yourself. Additionally, if clients start taking too long to pay you, you may leave money on the table in exchange for collecting anything at all.

Implement these nine tips to get paid without delay.

1. Provide payment terms upfront

Before you start working with any new client, always provide your terms in writing. Clearly state your rates, payment due dates, and your policies regarding late payments – including any fees you’ll charge on balances owing. Make sure your client signs the agreement indicating that they are aware of your terms and conditions. Don’t work with any client who refuses to sign.

2. Understand your client’s payment process

Large clients may have lengthy payment processes that require invoice verification. They may also receive dozens, or even hundreds, of invoices on a regular basis. As a result, their policy may be to pay invoices only on certain days or only after so many days have passed from receiving the invoice.

If possible, submit your invoices with their payment cycle in mind. If they only pay on the 15 of the month, get your invoice in before that date, so you can get paid this month instead of next. Make sure your invoices have all the information your client needs to quickly and efficiently approve your invoice. Have a checklist of all the information to include so they can approve it without coming back to you with questions.

3. Invoice immediately

Invoice as quickly as you can. If you invoice on completion of a project, have your invoice ready to go by the final day, so you can send it right away. Every day you wait to send an invoice is another day you’ll wait to be paid.

If you’re currently preparing your invoices manually, switch over to an accounting system with automated billing. You’ll never forget to invoice a client, and you’ll eliminate errors. You’ll also be able to see when the invoice was sent, who it was sent to, and when they viewed the invoice.

4. Follow up on invoices

Send an invoice reminder before payment is due. People forget about their invoices, or invoices get misplaced, and a simple reminder can go a long way to helping clients remember.

Call your customer immediately when a payment is past due. Ask for the status of the invoice and if there’s anything you can do to speed up payment. Sometimes a simple change, like including a purchase order number on the invoice, can speed up processing times.

5. Reward early payers

Consider offering clients a 2% discount when they pay their invoice within ten days. In this scenario, a $1000 invoice would be reduced to $980 – not a huge loss for you, but an attractive cash-saving incentive for your customers. It can be worth it if it frees up cash for your business.

6. Charge interest

As part of your terms, specify that if a client’s payment is past due, a weekly fee of 2% will be added onto the total until funds are received in full. If the client goes past due, charge the interest.

7. Get paid upfront

Collect a partial deposit – or the entire amount in full – before you begin a project.

8. Suspend service

Stop your supply of products or services until you receive payment. With this tactic you’ll avoid the accumulation of an even greater loss with a consistently late or non-paying client.

9. Stay on top of who owes you

Monitor who owes you money and how much on a weekly basis so you can act fast if a customer hasn’t paid on time.

Final thoughts

Perhaps the most important tip for encouraging prompt payment is excellent communication. Be clear on your terms and ensure you send out your invoices promptly.

When you follow up on a late invoice, ask when you can expect payment, and agree on a date.

If the money still isn’t forthcoming, consider your legal options. You may not want to resort to legal action, but it’s important to send a message not only to that unpaying client, but also to others that you will take necessary steps to ensure payment.

Want to grow your business? Our Free Resources will Help