Accountants: What They Can Do For Your Business
Making your company grow in these times can be challenging but not impossible. After all, growth is measured by the profitability of the company at the end of the month, quarter or year. Helping you in this challenge are accountants and financial advisors. In the city of Cardiff, accountants have expanded their services to include financial advisory and consultation. This means, they are a proactive accounting firm that helps you run the company not just by tallying the financial data, but explaining it and giving you options. For such a robust city as Cardiff, if you have a business there, you should get a Cardiff accountant for their availability. It is also different when the accountant is local apart from accessibility; local knowledge is a premium, especially in a business and trading city like Cardiff.
These advisors should be able to do the following for you:
- Give you an internal audit. They will give you a snapshot of how your company is doing as well as summarized view of how your company has done. The snapshot or quick audit gives you a brief picture of your company's health while the summarized view may take some time especially if it's an audit for the year but the result is that you will find out how your company has been doing for the past year.
- Give you an explanation of how your cash flow is. This is important because it enables you to know when you need cash. Some companies are very liquid in the sense that it constantly generates cash sales, albeit some may be in small quantities, still the cash is coming in. Other companies may not have enough frequency in cash sales, but when it comes, it floods. There are some companies that operate this way and if you know that your company belongs to this type of cash operation, then perhaps the need for available cash during those lean months may be sourced in a variety of ways: internal generation, cash infusion from new investors or creating a revolving letter of credit with a banking institution. Either way, there is a cost to getting this cash, or the input of this cost should be recognized as an expense, for if it is not seen that way, there may be shortcomings in cash flows, or huge discrepancies in financial projections.
- Give you the options for growth. Your company can grow by expansion, or contraction. The key to this is to get the current data and see if you can become more efficient and right size your company or take an aggressive stance and do marketing and expansion activities.
Some Useful Tips For Managing Your Business Finances
One of the most important things that you, as a small company owner, have to take care of is your small business financing. Huge amounts of money are thrown away every year by small businesses simply because they are not running their financing efficiently. This is also the area of small business where entrepreneurs struggle most, since you cannot work without money-cash flow is the lifeblood of the business.
Small mistakes and lack of knowledge can be sources of serious problems and costs. However, you don't need to be professional economist to know how to avoid them. Here is some advice that will help you establish a healthy relationship with your business finances.
At the beginning you should consider the professional assistance you may need. If you need money to start your small business, you must get a loan. Many banks can help you with that, the most important part is your small business plan and a clear idea of in which direction your company is going to develop. Besides, you will probably need a trusted bookkeeper who can help you deal with all of the mundane tasks on regular basis (and save you a lot of money and stress). But be sure to understand the various types of bookkeepers and how to avoid fraud.
The first thing you will need to do for your business is to establish a sound financial budget. Open a special bank account for your business only. Try to keep your business transactions and household accounts completely separate. Do not borrow from one to another, no matter how tough the going gets. One of the biggest mistakes is to mix business with household finances.
It is also important that you keep your bank account under control. You may have a bank consultant and a bookkeeper, but you should also have some kind of your own tracking the quotes and work in progress as well as sales invoices. Your bank balance should agree with your book keeping.
Do not give credit terms. Your income depend on your agreement and sales skills. You must ensure that clients know that payment is required on completion, of course it's much better if you can get part or full payment up front. You must discuss, write down and agree terms of trade, supported by the contract which will protect you. Keep under control when invoices are due to be paid. This is the only way to have your invoices as frequently as possible, and not to lose your own money.
As in all categories of life and business, for finances is the crucial to know your targets. For example, if you need to advertise due to not having a shop front, you should consider very carefully where you advertise and how much money it costs to reach each one of your prospects. Marketing and attracting customers can be very interesting and many business owners get lost in all that, spending much more money than they have planed. At the beginning, but also once and while, set sales targets and monitor them, comparing actual results with projections regularly.
And don't you forget that each fresh started business rarely shows any profit within the first 3 months, sometimes even much longer. This is the fact you should keep in mind when planning your monthly budget. Be realistic-do not overspend but don't you either starve your business-since you mustn't let your business run out of money. Start small and work your way up.
Purchase Order Finance – Your Tool For Unlimited Sales
Do you sell to the government or to large companies? Do you regularly get purchase orders that stretch your company's ability to deliver? Lastly, if you had financing to cover all your supplier costs, could you sell more? Much more?
If you answered yes to any of these questions, then purchase order financing could help your business grow.
Purchase order financing is a way of financing sales that has been gaining popularity with US and Canadian businesses. It offers a very simple proposition. If you have an order from a large credit worthy business (or government agency), then the financing company will provide you with the necessary funding to fulfill your supplier payments and make the sale. Call it sales based financing. It works well for resellers, distributors and wholesalers, although it can also be used in other industries.
Here is how purchase order financing works. Let's say that you own a company that has been getting progressively larger orders, tightening your cash flow. After setting up a purchase order financing agreement, this is how your sales financing would work:
1. You get an order from a client
2. The purchase order finance company handles up to 100% of your supplier payments (by direct payment or letter of credit)
3. The order is fulfilled and the goods are delivered
4. The transaction is settled, once the client pays their invoices
As you can see, purchase order financing allows you to leverage the resources of the financing company and allows you to increase your sales. With PO financing, lack of cash flow will never be a reason to lose a sale.
As opposed to a business loan from a bank, purchase order financing is very easy to obtain and can be set up in days. The main requirement is to have valid orders from good commercial or government clients. Most banks won't offer this type of financing, but you can get it from a factoring company. As a matter of fact, purchase order financing and invoice factoring are frequently combined to help reduce the costs of the transaction.
So, if your purchase orders are piling up, be sure to consider financing with purchase order funding.
Learning the Basics of Business Credit Cards
Entrepreneurs have the option to use business credit cards because the features are specifically made to benefit any types of businesses. Business cards work similarly like conventional individual cards because they allow cardholders to purchase goods and services including through phone or the internet.
But how are they different from personal cards? They are different in the following ways:
o Unlike personal cards, business credit cards are issued using the name of the company. All debts make using this card are under the responsibility of the company and not the individual
o Certain spending controls are fixed on the card. Some limitations in terms of spending and restrictions on ATM withdrawals will apply.
o Each cardholder has management reports where purchases are itemized. This is to ensure the company can keep track of each cardholder's expenditures using their own cards.
o Most business cards come with complimentary features such as discounts and insurance
However, before you apply for business card, it is best to identify types you can choose as well as the different features each one offers. Generally, they offer unique features such as:
o Better security compared with carrying larger amounts of money to make purchases
o Using business credit card is much cheaper as compared with using cheques
o Better spending controls
o It allows entrepreneurs to separate business and personal expenses
o A great benefit for employees who do not have to use their own funds to make certain business purchases
What are the different types of business card?
Each card is different depending on the card company. However, there are two types of business cards and they are charge and credit.
Charge Cards
This require cardholders to pay their balances in full when the bill is due or else they will pay higher fees and charges. These cards are ideal for larger companies where cash flow is high enough for all debts to be cleared by the end of the month.
Credit Card
This allows you to make minimum payments on a bill but interest charges will apply on any outstanding balances. It is best for small or medium-sized businesses where cash flow may be unpredictable.