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Keeping up with the cash-flow

Posted 16 Oct '20

It’s a fine art balancing the incoming and outgoing expenses in your business.

Your business performance might seem like it fluctuates depending on what due date is next. Your next BAS lodgement, superannuation payable, project claim, finance repayment, incoming invoice and so on.

At times it might look like you’ve got a lot of cash on hand, and give a sense that your business is thriving, but is it true profit? Or is it just money on hold for your next tax obligation, supplier or the bank?

Understanding the numbers in your business, by getting clear on what money belongs where and when, will give you a massive advantage in scaling, making decisions and running a profitable operation with positive cashflow.

So how can we stay on top of the numbers in our business?

There are a few places you can start!

1. Know your business

Take ownership of your numbers. By working out the following in relation to your business performance, you can set targets that will give you a strategic focus. How many of the following questions can you confidently answer?

– What are your key business drivers (key factors that influence how you generate sales)?
– What are your direct costs or direct cost margins (costs associated with manufacturing and delivering your products)?
– How much does it cost to run your business?
– How much do you need to make to pay for your people (costs incurred to staff your business & forecasted growth)?
– What is your Gross Profit and Net Profit margins?
– What is your Profit and Loss ‘Break-even point’ (the minimum sales needed to cover all costs)?
– What is your Cash ‘Break-even point’ (the minimum sales needed to cover all commitments)?

Don’t worry too much if the answer to this is NONE! This is where we can help you work it out and assist in building strategies to achieve your targets. Send us a message today.

2. Ensure you’re up to date

If you have old our outstanding liabilities, bringing these up to date is crucial to building your business. Whether BAS, PAYG, Super or tax returns, one day the ATO will request these from you and it is always better to attempt to lodge them before they do.

Even if payments will need to be made, the ATO offer support and arrangements. If you think you might have outstanding liabilities, reach out and we can investigate for you.

3. Keep clean records

The better records you keep, the more accurate your numbers will be. This will help you to track your cash, produce reports, always have information you need on file for finance, banks, the ATO or your accountant of course.

If bookkeeping is one of those things that will always be a last-minute priority for you, why not get in touch with our Empire Bookkeeping team. Working with an external bookkeeper gives you the peace of mind that everything is up to date when it should be. Oh, and bonus, we will then send you reminders of your obligations as well!

4. Use a calendar System

Just like you use your calendar to plan out jobs, client meetings and personal events, you should also use your calendar to plan out your small business lodgements/payment reminders. You can track super, BAS, renewals or whatever you need to help you stay ahead.

5. Use the ATO

If you’re struggling through COVID-19, need a payment plan, or want to easily be able to access your outstanding obligations then sign up for MyGov ID and the business portal. By doing this you have access to mail they have sent you, what lodgements you have due, help from the ATO and more.

6. Use Xero to your advantage

Step one – if you don’t have Xero, get it. Step two – if you do have Xero, set it up to it’s full potential! You have access to automatic payment reminders and online payments for invoices to help you collect cash faster, reporting tools, account watchlists, graphs and more on your dashboard making it easy to track performance.

7. Ask for help

Whether it’s understanding the key drivers in your business, clearing overdue ATO lodgements or getting assistance with your bookkeeping. Never be afraid to ask for help.

We love seeing you succeed and know that healthy accounts fuel successful businesses. So please keep these tips and tricks in mind.

If you need help with your business accounting or lodgement obligations please get in touch with us today.

Phone: 07 3124 0244

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