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5 Ways to Improve the Financial State of Your Business

London, UK (24/12/2008)

Even the most efficient businesses need to make regular assessments of their finances and check they are still in good health, so why not take a few minute to go through this list, to improve your business’s prospects for 2009!

1. Review Your Business Plan.
Every business should have a business plan but worryingly. 54% of businesses have no formal business plan.  So if you do not have one, now is a good time to think about it. The Local Bookkeeper offers an affordable business plan service which is associated with the London Business School. Once you have your business plan you should review it regularly - make it a living document.   Businesses often tend to deviate from the plan and fail as a result of a lack of preparation. Your plan should be the guiding path that your growing business takes, to ensure that mistakes are minimised. You should have regular management accounts to ensure you are meeting or exceeding your targets.

2. Take the time to look at how you can better manage your cash flow.
Everyone knows that cash is king! The biggest key to the success of any business is to ensure your cash is managed well.  Being able to identify ways you can manage costs and improve your cash flow is crucial. Frighteningly, many businesses are unaware of their true financial position as they do not take into account their current and future cash position. It is essential that businesses of all sizes have a ‘financial cornerstone’ to advise in their business, for example, a professional  bookkeeper will be able to advise you on how to better manage your cash flow and forewarn you of any shortfalls.

3.    Start running credit checks and develop an aged debtor system
They say the best cure is prevention; this cannot be more true when it comes to customers who will not pay on time.  £18.6 billion is owed to small businesses by unreliable customers and a great proportion of these could be avoided with an effective credit control system in place.  It can be difficult for a small business owner - they do not want to risk losing business by placing a more forceful hand on a regular customer and often feel they cannot spare the time to follow up outstanding debts, so outsourcing this service could be ideal. The Local Bookkeeper can provide you with this service to increase your cash flow without upsetting valuable customers.

4. Start assessing your progress using current reports instead of historic end-of-year accounts
Having regular Management Accounts allows business owners see what direction their business is heading instead of seeing the potentially damaging effects of something that happened 18 months ago, in an end of year report, at which time they are unable to do anything about it. Having the benefit of seeing what is happening to their finances on a regular basis, allows the business owner to be fully equipped to make sensible decisions, to guide them away from any foreseen difficulties and promote a healthy cash flow. A qualified bookkeeper will be able to supply you with this financial assistance and will work with you to make sure the information is relevant and informative.

5. Dispel the myth that any business is ‘too small’ for professional financial help or does not need it.
As long as your business has incoming and outgoings, you will need a professional bookkeeper. A qualified and experienced bookkeeper will take away the burden of the paperwork to help business owners apply their time to the more important everyday tasks involved in running their business.  In some ways, smaller businesses need this help even more, as their smaller cash flow needs to be carefully guarded and utilised in the best way.  Employing a trustworthy bookkeeper will help avoid pitfalls and a professional bookkeeper will be an asset, not a drain, on resources. 

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