How do we manage our money?
Many people come to us wanting to know the secret around managing cash flow in the business and whether we have any tips and tricks.
In business, we know the 20th of the month is a daunting time. Especially when you also have GST to pay and staff wages. Even worse is when you seem to be paying all of your invoices on time, yet your debtors aren’t paying.
While it is difficult to have a one size fits all method, we can give you some ideas about what we do here, at iif Chartered Accountants.
Here are some tips they may help you.
- Have a good system accounting system
Cash management is quite a difficult task so why not let an accounting system do it for you? By having a good accounting system, we are able to see in real time, how much cash we need to have aside for invoices and larger bills such as GST.
- Send invoices as soon as possible
As soon as we are able to invoice for a job, we do. The sooner that you invoice, the sooner you can get paid. We know that this is not always the case which is what leads me to the next point.
- Have a set process for debtors
99% of people intend to pay your invoice in full and on time but often, for some reason or another, this doesn’t happen. Making sure that you have a process that is followed is key to collecting your money. We know that it can be an uncomfortable process but if you don’t get paid, you don’t have a business.
- Credit Cards can be your friend
I know a lot of people squirm at the thought of a credit card but if you stay on top of it, it can help you through some of your larger expenses that you have to pay. By using your credit card, you are able to delay the cash leaving your account. But please, please, please make sure that this is paid off, in full, before any interest is charged.
- Set cash aside
Setting up different bank accounts for major expenses can be very effective. These expenses can include GST, wages and rent.
We have found that it is best whenever a client pays our invoice to put a portion in our GST account, then wages and finally the rent account. We then pay off our credit card and we can rest easy knowing that all of our “major” expenses have been paid.
Don’t forget to follow us on twitter @iifCA for updates on the team and the business world!