Give your business’ finances a spring clean

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With the clocks now having sprung forward and the new tax year upon us, what better time to give your business’ finances a spring clean?

There are a number of steps you can take to ensure that you make the most of 2017-18 and to set your business up for future success.

The most important ingredient for any business looking to make money is its customers. But while most customers will help your business flourish, some can be disruptive or difficult.

On reflection, you may decide that they are taking up too much time and money, or you may feel that they are increasing the risk of reputational damage to you and your company, preventing your business moving forward.

The pragmatic solution is to review your customer base and end any relationships that might be holding your business back.

Another set of key relationships for business owners are with suppliers. As with your customers, it is a good idea to periodically review whether you are getting the best from your suppliers.

You might wish to look at whether you could negotiate discounts as a long-standing customer or whether you could obtain a better price for quicker services elsewhere.

Maintaining a healthy cash flow is similarly vital for any business. After all, running out of cash could mean that your business is no longer able to trade.

Taking stock of your cash flow from time to time will help you identify any patterns so you can put plans in place to protect your business during quieter or costlier times of the year.

To help you with this, it is important to ensure that cancelled invoices and bills are closed and that this is reflected in your books. You can use credit notes to ensure that anything that has been cancelled during the year does not appear in your profit and loss account.

Also important to the maintenance of a healthy cash flow is being careful and consistent about how you categorise different items of expenditure.

This will help you more accurately keep track of how much you are actually spending on different supplies and will also mean your accountant is better able to reallocate different items of expenditure to different categories if necessary.

Link: Five ways to spring clean your business books