Finance

From tips on handling cashflow to obtaining government grants and setting up a credit control system; our finance section contains everything you need to know about raising investment and managing your small business money.

How to Charge Interest on Late Payments

How to Charge Interest on Late Payments

Late payments are something to be avoided – they can halt your cashflow and, ultimately, stymie your business practices. Charging interest on late payments can be a good way of counterbalancing any cashflow difficulties and persuading debtors to pay up. Your right to collect interest on late payments is protected by law, and customers who refuse to pay interest can face legal action – though legal recourse should always be a last resort. This guide will help you: Establish whether and when to charge interest. Calculate the amount of interest owed. Persuade customers to pay. Should I charge interest? Remember that the interest you collect may not be worth the drawbacks that doing so will incur, especially if the debt amounts to an insignificant sum. Ask yourself the following three question... »

Planning Your Business Exit: What You Need to Know

Planning Your Business Exit: What You Need to Know

Aside from starting up, how you handle your exit is possibly the most important and tricky stage of your life as a business owner. Too many owners spend years carefully growing their business – only to mess up their exit plan and see their hard work go to waste. This article is intended as an introduction to exits for business owners, and should be a helpful starting point when putting together an exit plan. We cover how to plan for an exit and set your objectives and the different ways you can actually exit a business. You will then learn how to perform specific types of exit, namely trade sales, management buy-outs and handing over the reins to a family member. How should I plan for an exit? Start early. When you started your business, it’s likely you had an eventual exit in mind, ... »

Basic Budgeting for Your Small Business

Basic Budgeting for Your Small Business

When starting a business your head is often filled with grandiose dreams of becoming the new leader in your sector or changing the way the market works with your offering – it is unlikely that the prospect of drawing up a budget was what excited you about becoming an entrepreneur. But budgets are absolutely crucial in keeping control of your business and ensuring you have a realistic roadmap for success. This article will provide you with an introduction to creating a budget – we cover sales, costs and cash budgets, and how to convert these into a projected balance sheet. Finally, we examine what to do when your actual figures differ from predictions, and the steps you can take to address this. How do I draw up a sales budget? A sales budget essentially predicts how much you expect to sell... »

How to Float Your Company

How to Float Your Company

Unlike floating on a lilo there’s little relaxation to be had when floating your business. The process can be simultaneously exhilarating and terrifying, and unless you get it right, could see you spending vast amounts of time and money. You should always seek professional advice when planning a float. However, it doesn’t hurt to understand the basics. This guide will help you decide whether floating is a good option, choose a market, appoint advisers and manage the process. What are the benefits to floating my company? There are a number of different benefits that come with floating a company. One of the main reasons for floating your business is to raise capital. Floatation often involves the creation of new shares, the purchase of which can bring in much needed cashflow, and help offset... »

How to Implement a Cost Control System in Your Business

How to Implement a Cost Control System in Your Business

Although it might be a painstaking process, assessing your business costs and implementing a cost management system is worth it. Smart cost control can bring immediate benefits to your company, as well as lay the foundations for greater efficiency going forward. But it is important to cut costs wisely – only slashing away here and there will just bring about worse quality and poor morale. Read on for comprehensive information on how to properly introduce a cost control system into your business, and how to avoid some common pitfalls. What are my first steps in cost control? Before you look at cost-saving measures, your first step in controlling your overheads is to look carefully at what you’re currently spending. Start by identifying your ‘cost centres’. Cost centres are the parts of your... »

A Small Business Guide to Credit Control

A Small Business Guide to Credit Control

As a small company with limited resources, a late-paying customer can represent a cashflow nightmare. You need to have stringent controls in place if you plan to extend credit to customers; if you have a lax credit policy, it could spell the end of your business as unpaid invoices reduce your ready cash to zero. This article explains how to develop a proper credit control policy for your business. We cover how to check a customer’s credit and how to decide how much to lend them, then move on to everyday systems for credit control. You will also learn how to chase up debtors and late payers successfully, and how to deal with the often tricky scenarios posed by dealing with larger companies. How do I check a customer’s credit? Before extending credit to a new customer, it is important to che... »

A Small Business Guide to Managing Your Creditors

A Small Business Guide to Managing Your Creditors

Your relationship with your creditors is a major determining factor in the overall health of your business – get it right, and they can be a valuable friend in times of need. Get it wrong, however, and dissatisfied creditors could spell the end for your business. If you always pay creditors on time, there is rarely a problem. However, late payment from customers, wastage, poor sales, and a million other potential incidents could see your cashflow suffer, and it is in these situations that a good relationship with creditors is crucial. In this article, we cover how to manage your creditors smartly. You will learn how to identify the most important creditors, and how to manage them with a clear, transparent payment policy. We then cover how to deal with specific creditors, including your ban... »

Managing Cashflow in Your Small Business

Managing Cashflow in Your Small Business

It is no exaggeration to say that cashflow is the lifeblood of your business. You can be as profitable as you like, but without ready cash in the bank to fulfil your obligations, your business could run into serious trouble. In this article, we cover the basics of cashflow management for businesses. You will learn about the main elements which affect cashflow, and how to use them to draw up a cashflow forecast, which you can use to deal with problems before they occur. Finally, we look at how you can use credit control, cost control and sales to improve cashflow, and the various external finance options available to boost your financial health. What makes up my business’ cashflow? Essentially, your cashflow refers to your actual cash balance at any one time. When looking at cashflow, you a... »

The Importance of Working With Clients Who Have Good Credit

The Importance of Working With Clients Who Have Good Credit

As a business owner, finding new clients can be an exciting and even joyous experience. Whether you are a B2B or B2C operator, when someone in need of services selects your work above that offered by all others, it is an excellent feeling. Once you have been hired, you are certain to do your best and deliver the agreed upon work within the time limit specified, and once you have done so you issue your invoice. And wait. And wait. And wait some more – until it becomes clear that your client is either unreliable or severely disorganised. The clients that you were once so pleased to have secured have now affected your profitability, cost you money and potentially prevented you from completing projects on time for other clients. While it may not be possible to get them to pay up fast, you can ... »

7 Ways Small Businesses Can Avoid Late Payments

7 Ways Small Businesses Can Avoid Late Payments

Running a small business demands juggling sales, customers service, managing staff, bookkeeping and 101 other jobs. Business owners work to their limits to run and grow their firm and the stress can be made much worse when you’re worrying about getting paid for it. Late paying customers has become a massive issue for small and medium business owners, with many owed billions in outstanding payments and being forced to borrow in order to keep cashflow going; whilst chasing late payments and managing the administrative burden also causes a huge strain on resources. So what can business owners do in order to avoid or at least reduce the impact that late payments may have on their business? Here are seven tips to help you keep your firm’s cash flowing: 1. Do your research: Seek busi... »

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