The festive season is just around the corner, which means it’s not long until the New Year arrives - bringing with it the inevitable dilemma about whether you need to make any resolutions to change your life, or business, for the better.
But rather than waiting for January 1st to arrive before you decide whether to make a change, you may actually find that the pre-Christmas period is a much better time to draw up, and start, your resolutions.
In this article, I will look at four possible changes to consider for your business.
1) Sort out your Self Assessment
If you’re one of the millions of people that have to submit a Self Assessment tax return, you may be starting to feel a sense of dread about the looming January 31st deadline for filing - if you’ve even started thinking about it at all! Many people wait until December or January to file with HMRC, or face a last minute dash to get it in during the final hours of deadline day, but it’s actually a far better idea to tackle Self Assessment early.
By submitting your tax return to HMRC well in advance of the deadline, you’ll ensure you don’t end up rushing everything at the last minute, so you’ll be less likely to make mistakes and you’ll save yourself a huge amount of stress in the process.
2) Tame your business books
Managing the books is rarely the most exciting or fun part of running a business, but it’s one of the most important! Well-managed accounts are the cornerstone of any successful business and without them you’re unlikely to know how much money you’re making or how much tax you need to pay.
By making bookkeeping an integral - but manageable - part of your working week, you’ll ensure you have a much better understanding of your finances. Even just taking an hour a week to review your bank transactions, manage your invoices and log your expenses will provide you with up-to-date, valuable data that shows you how your business is performing - and means you’ll be more informed to make important decisions for your business in the future.
3) Collect your cash quicker
Many small business owners worry about potentially offending customers if they follow up an overdue invoice and start demanding money - but it’s actually very important to do this, because if you don’t have money coming in to pay the bills, your business is going to struggle to survive.
So rather than risk falling behind when it comes to chasing up clients who owe you, make sure that you stay on top of your overdue invoices. Try setting clearer payment terms and make sure your customers know when they have to pay you; and then that they keep to these terms. Of course, when clients are in genuine difficulty you can give your them more time to pay, but being strict about your payment terms will help you deal with those customers who repeatedly fail to pay you on time for no reason.
If you’re worried about managing or chasing your invoices, you could also invest in specialist invoicing or accounting software that will send out automatic reminder emails to customers when they don’t meet your payment deadlines. You may find this easier and quicker than chasing them manually, and that it’s especially useful if you don’t want to have that awkward phone conversation about money with them.
4) Review your customer & supplier lists
It’s important to keep your customers happy, so they’ll (hopefully) pay you quickly and recommend you to their friends. But remember - not every customer is beneficial for your business! Sometimes you’ll have customers who take an eternity to pay you, question the integrity of your work or who argue and quibble every last detail on their invoices, and you may find it better in the long run to politely point them in the direction of another supplier.
By reviewing your customer list, you’ll be able to not only identify problematic customers and part ways with them, but you’ll also be able to see those who you really enjoy working with. Armed with that information, you may want to ask these customers whether they can refer you to their friends, or you could introduce a dedicated referral scheme so that they receive a reward for every person they successfully introduce to your business.
In a similar fashion, it’s a good idea to make a list of all of your suppliers and review them too.
Check whether any of them regularly make mistakes, or don’t supply you with what they promised on time, or if they who would go the extra mile for you, to help you fulfil a rush order from a customer. Check and see whether there is anyone who could supply the same, or better, quality goods or services, but who is based nearer to your office, or can offer a lower price or bulk discounts. Just remember that the cheapest option may not necessarily be the best to go for - as you don’t want to risk damaging your own reputation by using inferior quality suppliers!
By Emily Coltman FCA, Chief Accountant to FreeAgent