Even when times are normal, keeping your books and accounts is a challenge – what more with various changes that have come about, including Brexit, the Covid-19 pandemic, and changes in business rates in the UK? Many business owners are facing a host of changes, and staying on top of these changes can be challenging. If your challenges with bookkeeping and accounting are already pretty overwhelming, it can be more difficult to manage at this time. One thing you can do right away is to break down your accounting and bookkeeping tasks, so they are ‘bite-sized’ and more manageable. But what else can you do to accurately and efficiently manage your records and accounts as a small business in 2021? Here are the best tips.
Always record any transaction
You may already know the importance of recording every transaction, but we can’t stress it enough. The fact is that every transaction matters, so you need to record this as soon as you can. In the past, you may have recorded your transactions on a spreadsheet or ledger, but in today’s times, it’s easier (and more convenient) to record it in special software, preferably cloud-based.
Every time you have a purchase from a customer, note it down and record how much the customer spent. When you purchase something or pay your staff or a supplier, note this down as well. Make it a point to keep all your business receipts for a minimum of six years. When you record your transactions, it’s not only for legal purposes – it’s also to make sure you stay on top of your spending, monitor your incomings, and get a better perspective on how much you are earning.
Seek help from professionals
There may come a time when the task of managing your accounts can be too overwhelming, or you don’t have enough time to do it, so you may want to seek help from professionals. You can, for example, outsource the task to a professional accountancy service such as the central London accountants at GSM & Co. With a professional service, you can free up your time and benefit from more peace of mind knowing that an expert is taking care of it for you.
Keep an eye on your cash flow
Another way to make your bookkeeping and accounting tasks more manageable is to keep an eye on your cash flow. Your cash flow is the money entering (and exiting) your business, with your income including payments and government grants, if any. Your cash expenditures will include your invoiced payments to suppliers, the salaries of your staff, your rent, and your utility bills.
If you have a steady flow of cash, you should be able to settle all your expenses. But if you don’t have money coming in, your cash flow will dry up, and you can’t make your payments. It’s as simple as that. The concept behind proper cash flow management is simple, but it can be quite a challenge for many businesses. There are various ways to keep an eye on your cash flow and manage it more efficiently, including having a good system for credit, making use of sales forecasting, and cutting unnecessary expenses. You can also apply for low-interest loans and grants from the government, and in the same vein, you can consider other financing options from investors and lenders.