THE start of the new financial year signals the perfect time for a small to medium-sized business to conduct a performance review on itself, according to RSM Bird Cameron.
Director Peter Nicol says there are a number of ways businesses can improve their financial position to ensure a successful new fiscal year.
"There are some things SMBs should keep in mind to ensure their success in the new financial year, such as retaining reliable cash flow oversight and implementing sound financial processes," Nicol says.
RSM Bird Cameron's top five tips
1. Cloud if you can
Cloud-based accounting software helps SMBs to be more efficient. This technology gives businesses powerful online tools at a fraction of the cost of enterprise-grade accounting platforms.
"Businesses need to make sure their available internet infrastructure can support reliable cloud-based accounting services. Depending on your location and its internet coverage, this solution might not be ideal. However, if broadband access is no problem, cloud-based solutions can give you a big boost without major up-front costs," Nicol says.
2. Keep in touch with your advisor
The only real way SMB owners can truly know all of their financial options is by meeting regularly with their business advisors. This can help business owners keep up with the latest trends, regulations and opportunities that could affect their businesses.
"Catch up at least every quarter with your business advisor, even if it is just for a coffee. It's important to bounce ideas around and discuss ways you can improve your business. Your advisor can provide ideas and perspectives you might otherwise miss," Nicol says.
3. Create a cash flow budget
Creating a cash flow budget is essential for a successful business. A cash flow budget records the cash you expect to receive and pay out over a period of time, meaning you can make informed decisions when projecting business achievements or planning for additional growth.
"If you know your cash flow situation, then you can accurately forecast, understand your immediate break-even point and be in a better position to make educated decisions on new business opportunities," he says.
4. Follow up your debtors
If a business is owed money, it is the business owner's right and responsibility to make sure it is paid. While most customers can be expected to honour their debts, business owners should not be scared to have a conversation with debtors who are behind on payments.
"Often, I see business owners worried they will offend their debtors. They shouldn't be concerned about offending people. Timely debt payment is a healthy part of the customer-supplier relationship. It is important to develop the skills for these conversations and have systems in place that provide the necessary reports so you can chase non-payers," he says.
5. Have a plan to increase your profits
Businesses should create a plan to increase profits. They can do this by looking at ways to reduce costs or increase their customer-base."Collectively, even small changes can lead to increased profits. Reviewing the business plan with your advisor can help you make these changes and put you on the path to future success."
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