Financial Controls
The
primary controls of any business are the monthly balance sheet,
profit and loss accounts and cash-flow forcasts. Learn how to prepare and maintain
these figures. Computor software makes this easy now.
Management
Accounts
Management
accounts are simple, but essential systems to control your
money and include accurate costing, budgeting, profit analysis
and bank reconcilliation.
Keep
The Bank informed.
Find
out who your bank manager or business adviser is. Let him
read your business plan and be brave, if he supported you
at the start, keep him informed. Send him copies of your profit
and loss account each month, even when things get a bit tight.
He will respect you for this and be more prepared to help
when you need to expand, or work through a bad spell.
Keep
your paperwork up to date
Take
time to deal with the admin. It is not as much fun as making
or selling your products, but is just as important and you
cannot deal with the other essential financial controls if
you are behind with the paperwork
If you know that
you are not going to be able to keep on top of this process,
get someone else to do it for you. There are plenty of reliable
book-keeping services who will keep it up to date for a modest
monthly sum, freeing you up to concentrate on making money.
Getting paid
When supplying new customers, you will require cash payment or payment in advance, until you know them well enough to allow credit terms ( if you must ). If credit is taken you should act quickly if there is a delay in settling the account.
Similiarly, if you trade 'business to business' you must learn the signs of a business in trouble and, again, act quickly and decisively, to ensure you are not the one who doesn't get paid.
Some signs are:
Slow or part-payment of invoices.
Avoid taking calls.
Lost invoice, ask for a copy.
Querying an overdue invoice.
Reducing regular order size.
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