There are various key factors to the success of a business. A great sales process, good internal processes and knowing your finances. There are many more but I would definitely like to focus on the finances.
All too often small businesses like to use cash, customers also like to pay cash, in the belief they will get a better deal. The excuses for using cash are getting less and less with the way technology is moving. Paying bills has never been so easy what with Apple pay, I-zettle, paypal card readers, internet banking and the endless list thereafter.
If you want to have a successful business you need to get your building blocks right from the very start. Using cash can really only lead in one direction, poor control over your finances. It’s expensive to bank (unless you use the post office), if you get cash in your hand you are less likely to record it correctly as it will burn a hole in your pocket, and you may end up spending it on personal bits and pieces. If you spend it on a business expense there is a chance that you will lose the receipt therefore can’t get the deduction for it.
Ok, some businesses can’t avoid taking cash like retail for example, but the processes will be in place to record each sale via the till, and then a robust system of recording cash expenses.
The building blocks I highly recommend to my clients are:
- Use your business bank account, credit card, prepaid cash cards, anything that leaves a trace of what you are spending and what you are getting in. I am fully aware that some banks love to make it a misery for business people to open a bank account.
- Record your sales in a method that best suits your business. Sales invoice, point of sale till, carbon copy receipt book. Whatever works for you, after all you know who you are so work with it not against it. Make sure there is a clear trace from that sales invoice to your banking.
- Get invoices and receipts for every business transaction you make.
- Have a process for storing all this information because they are not much use to you if they are blowing about the streets of Glasgow, are they!
- Remember the more proof you have of your business income and expenses the more chance you have of getting the correct figures in your accounts and the less chance you have of falling foul of a tax investigation. If you want to chat to me about your building block please feel free to contact me and I would be happy to point you in the right direction.
Now for the tips.
- Tip 1 Get a google drive account. You can take pictures with your smart phone and send it directly to your google drive account never losing one of those pesky receipts ever again, alternatively sign up with Receipt bank and go down that route.
- Tip 2 Card readers etc do cost you money but banking cash costs you more.
- Tip 3 When banking more than one cheque or a mixture of cheques and cash take a note of who paid you and the invoice number it relates to. This demonstrates the clear link between sale and banking and also means you can get a grip of what is still due to you.
- Tip 4 If your spending habit means you are in your works vehicle when buying materials, keep a folder or a box in your car/van and every time you spend something put the receipt in the folder/box. It takes 2 seconds to do, so you have no excuses.
- Tip 5 if you get invoices via emails or have to down load them from a supplier, set some time aside each week or once a month. Make a list of the suppliers the bill you this way and cross them off the list once you have downloaded/printed the invoices off. See my blog titled The invoice Grave Yard.
Remember I am only a phone call away if you need some help with this.