Finances are a difficult subject to breach when managing a company. You have ongoing costs; you have expenses, taxes, debt – there is a lot at play when it comes to managing a business account. With so many incoming and outgoing deposits, your money can easily seem like it is in a state of flux, with the tides ebbing and flowing. The secret to a successful business, however, is not to let the river run its course.
You need to be completely aware of where your money is going, how you can improve your expenses and, above all else, how to keep track and on top of all the rules and regulations that are applicable at the moment.
1. Improve Your Business’ Efficiency
Improving your business’ efficiency is one of the best ways you can reinvest into the structure of your company. To make your company and your employees more efficient, you will need to start first by asking your employees what hiccups or time-wasting tasks they have to do during the day. If your inventory team has to update your production team manually, and vice versa, this is a huge waste of time and energy. You can reduce this time by installing the right software programs throughout your company so that your different departments automatically talk to and update each other.
This program should be able to request more products when inventory levels reach a certain number. Your HR department should be able to automate tasks like payroll. Just remember to ask your employees first so you can invest in the processes that are the biggest culprits to time and money waste.
2. Reduce Utilities
Reduce utilities and save big. You can do this by implementing several strategies all at once. From upgrading old appliances and machines, to simply installing energy-efficient lightbulbs or a timer so you never run the risk of powering your whole office for the night.
You might even be able to reduce your expenses further by switching energy providers. Rather than just price-compare, see if there are tax benefits to switching. Going from a traditional energy provider to one that sources only from renewable energy could give you the ability to claim tax back and allow you to market your company towards the more earth-conscious citizens of today.
Not only that, but consider the UK’s recent declaration of being in a climate emergency, businesses can expect more regulations, fines, and higher taxes for practices that harm the earth. Use fossil fuels, higher taxes will likely come into play. Plastic, higher taxes. Already the UK is set to ban several single-use plastics by 2020. To stay on top of your financials, reduce costs, and future-proof your business aim to reduce your utilities, make your company more energy efficient.
3. Go Paperless
Going paperless is a great way to cut a massive amount of costs from your business. You do need to be careful when you go paperless, however. Though it can save you a lot of supply and printing costs (as well as storage), you will need to make your data redundant in its place. This means storing your data in secure locations. To make your data redundant, you will need several servers storing your data, so if one goes down, your information is still safe. Thankfully many companies are turning to Cloud storage. Many of these companies automatically offer redundant storage options, allowing you to keep your financial information secure in servers in multiple locations. In turn, you can reduce or entirely eliminate your paper usage.
4. Keep Your Records In Order
Add metadata and organise your data (especially your financial data) properly. You will need to create a uniform system of doing this, and then train each and every one of your employees. If you do not, then data that is stored with metadata could just as easily be lost. If two employees tag the same expense with different phrases – one the full word, the other an abbreviation – you might still lose your records.
5. Know Where Your Money is Going
Review all your subscriptions and payments every month. This way, you can stop a recurring expense that you don’t need from draining your accounts month after month. It can also be useful in spotting fraud. Don’t let your company get scammed or stolen from, and instead review your expenses.
Another way you will need to review your expenses is to ensure that the services you are paying for are the best ones for your company. This is why you will want to evaluate your suppliers and the companies you hire.
6. Evaluate Your Suppliers
Whether you work directly with a warehouse or manufacturing company to produce your products, or you buy them wholesale, you will always want to evaluate your suppliers. See if you are getting the best product or service for the price. Sometimes it is worth looking elsewhere for a cheaper rate, other times it is best to seek out a higher quality company so that you can enjoy a higher level of quality than you did before.
The point is you need to know exactly where your money is going. You also need to know that it is a good and necessary investment. If you order a service and find that it didn’t improve your business significantly, then it is best to cancel before it rolls over to the next month.
7. Stay on Top of All Financial Regulations
Reducing ongoing expenses is a great way to boost profit margins, but it is not the only financial responsibility you have. As a company, you need to ensure that you stay up to date with all the rules and regulations as they come. These rules change yearly, and not knowing about a new tax rule is no excuse.
There are two components you must be aware of at all times.
Tax
Tax laws change yearly, and for good reason. In most cases, changes are made to reflect inflation. It is for this reason that the personal tax allowance increases year after year. That, of course, is not the only way taxes change, especially for businesses. Items are taxed separately in order to encourage businesses and consumers to stop using them. Tax breaks are given for companies that adopt preferred practices.
Staying on top of these tax laws is essential, especially if you work beyond the borders of the UK. With Brexit coming up, this can complicate matters significantly, which is why hiring a dedicated accountant to help you comply with all the applicable tax laws is essential.
Minimum Wage
Minimum wage laws also change yearly in accordance with inflation in many cases, and it is your responsibility to stay up to date with all of them. If you don’t, you could be investigated by the HMRC.
8. Hire an Accountant
An accountant can help you stay on top of your books and keep track of all your finances for you. If you were previously doing this yourself without a degree or certification, then you are likely doing the bare minimum. Hiring an accountant can help you stay on top of your finances and make the right decisions. It is also crucial to helping you reduce your taxes, expenses, and ensures that your employees will be paid correctly and on time.
9. Hire a Specialist
If the HMRC investigates you for any reason, you never want to take chances. Always hire a specialist from Gilbert Tax Consultants to work on your case for you. Whether your company is undergoing a tax investigation or your VAT records need to be checked, or anything in-between, they can help you right the situation and get out of it as fast and pain-free as possible.
With as many changes to the rules and regulations, as well as costs and expenses, it can actually be surprisingly easy not to be 100% compliant with the law. That is why you need to have an accountant to manage your finances for you and why you must hire a specialist to help you if you have been contacted by the HMRC.
10. Conduct Market Research
Last but not least, remember that you must be strategic when it comes to bumping up your prices. Small increments are necessary in order to keep up with inflation. You might also need to increase prices to keep your company afloat and profitable. The secret is to conduct market research so that you can find the highest price your customers are willing to pay before switching to a competitor. A great way to encourage higher prices is to provide exceptional services or products. This aspect of your finances will always be in flux, so be willing to increase or decrease the price in accordance with the economy. If your customers are pinching pennies in a recession, lowering the cost can encourage them to continue to buy from you.
Conclusion
Finances are a complicated and yet integral part of any business. You need to do all you can to stay on top of every expense and every purchase. If you don’t, you could run the risk of going over your budget or worse, being investigated by the HMRC.Getting on top of your finances this way does take time. That is why when you commit to improving the financial structure of your business, you will want to implement and install the right systems and data management programs from the start.