If there is one thing that all small businesses need to be concerned with, it is the financial side of their business. In this blog post, we will take a look at some of the most important pieces of financial news and advice for businesses today.
This includes the following:
- Excel modeling
- Unbilled hours
- Bookkeeping advice
So, let’s get started…
Have you considered using Excel modeling to reduce financial risks?
Financial modeling in Excel can save businesses time and money. It can create a sense of stability about the future and encourage you to spend your time on more worthwhile aspects of your business that will pay off in the long-run.
One of the major benefits of utilising financial models is that it reduces the risks your business plans on taking in the future. Good financial models evaluate the risk posed by various actions, along with identifying opportunities and gaps in your business.
You can see the costs and perceived benefits to taking a particular action and weigh it up accordingly. It could be a huge decision or it could be something simple, for example, changing the firm who provides you with your malleable iron pipe fittings.
Of course, no financial model system is going to be foolproof. You can’t predict everything all of the time. However, the more experience Excel consultants have, the more likely they’ll be able to produce accurate financial models that stand the test of time for your business.
Working in conjunction with specialist Excel professionals will ensure that the data put into your forecasts is relevant and that you’re not missing any factors. Because of this, Excel consultants will ask plenty of questions about your business and how it works. Don’t think this is intrusive. These Excel professionals have worked on dozens, if not hundreds, of financial models and they know what information it takes to create one of the more successful ones.
Unbilled hours costing micro-businesses £11.4bn a year
It is believed that micro-businesses, i.e. companies with ten employees or less, are missing out on a total of £11.4bn per annum in terms of unbilled hours, as research conducted by YouGov for FreeAgent, the cloud accounting company, has revealed. This equates to £280m per week, which is a truly astonishing figure, meaning that small companies are both undervalued and underpaid as a result. The survey, which polled 500 micro-business owners, also revealed some other startling findings.
The main reason for these unbilled hours is the fact that small business owners feel overwhelmed when it comes to their accounting commitments. In fact, the research revealed that 34 per cent of respondents feel this way, with everything from payroll to invoicing to financial reporting leaving them confused and out of their depth.
The YouGov survey also found that only eight per cent of respondents stated they track all of their time while 63 per cent of business owners confessed that they don’t actually track or record any of their time at all. This means that almost two-thirds of small businesses are missing out on money for the sheer reason that they do not time track.
The survey also revealed that micro-businesses are working more hours than what they are billing for, concluding that on average these small companies will work for an additional thirty minutes of time per every hour they bill for. Essentially, this means that most small businesses are billing for an hour’s work for every hour and a half’s worth of work.
Furthermore, eight per cent of business owners revealed that they spend a minimum of three full days working on their business’s accounting commitments while 23 per cent of respondents stated they spend more than a full working day.
FreeAgent believes that this extra time spent on accounting leads to approximately 2.4m unnecessary days that are spent per month on accounting throughout the entire UK sector for micro-businesses. This can seriously halter productivity levels, which is why it proves much more beneficial, both in terms of cost effectiveness and company efficiency levels, to take advantage of a fixed-fee accountancy service
All things considered, the survey conducted by FreeAgent shows how micro-businesses are clearly struggling when it comes to their accounting commitments. A lot of business owners are spending their time on tasks that they don’t get paid f
or, which is halting efficiency levels and can also make it difficult for such companies to grow. Business owners should really take a look at this area of their company to see whether it would be more efficient and profitable to take another approach or seek outside assistance.
Improving your bookkeeping efforts to reduce financial losses
A lot of businesses are guilty of not having their books in check, which is where financial problems arise. This is something that can easily fall to the bottom of the to-do list. However, you can’t neglect this responsibility, as it could lead to serious consequences, especially if you are investigated by the HMRC. Read on to discover some simple yet effective things you can do to improve your bookkeeping habits.
Get your invoices up to date – The first thing you should do is make sure that all of your invoices are up to date. Have you sent invoices for all of the work that has been done so far? If not, now is the time to do so. You certainly don’t want to get yourself in a position whereby you need money from your customers yet you haven’t invoiced them quick enough in order to be able to demand it. Once you have done this, you should then see whether there are any open invoices that have not been paid yet. If this is the case, it is worth chasing up on them.
Record your out-of-pocket costs – We all have the intention to record all of the out-of-pocket expenses we incur, yet most of us forget, or we simply say ‘it’s only a few pounds, it won’t make much difference’. However, this all adds up, and you can put all
If you are feeling unsure as to what counts as a business cost and what does not, your accountant should be able to help you out. So, keep hold of all of your receipts, whether you have purchased new pens or envelopes, and make sure you record them to so that you will be able to claim for them and make your money go further.
Categorise your expenses – Not only do you need to record all of your business expenses, but you need to ensure they are categorised properly as well. There are many benefits to this. Not only will you be able to keep track of where your business is spending its money but you will also be able to make certain that you are claiming the correct tax relief amount on your expenditure.
Check your books in relation to your bank account – The next thing you need to do is make sure your books are aligned with your bank account. If the amount of money that is in your bank does not correspond with the balance you have written down in your accounts, then there is a problem, and this is something that won’t go away – you will have to investigate it to get to the root of the issue. This is why you need to continually check that both your bank and books match.