Posts

Financial issues that keep you awake No.1 – Managing cash flow

We’re finally at the end of this week’s countdown of the top 6 finance-related issues that keep business owners awake at night!

 

It’s also World Sleep Day, so it’s worked out perfectly. In case you haven’t been reading up to now (boo) here’s the rest of the list:

 

  1. Being as tax efficient as possible
  2. Understanding your business’s profitability
  3. Not knowing how your business is performing
  4. Finding funding
  5. Up-to-date bookkeeping

 

So what’s number 1? Here it is…

 

Ready…?

 

It’s in the title of this post anyway – it’s managing cash flow.

 

Clearly managing cash flow is the most worrying issue – with nearly three-quarters (74.3%) of respondents citing it as a current or previous concern.

 

Breaking that down further reveals that 31% considered it an issue that they are working to resolve.

 

40.7% said it used to be an issue, but they’d now resolved it.

 

Only 2.6% said it was a problem that they hadn’t got round to addressing yet.

 

This shows that although worrying about cash flow is a problem for many, it is more than possible to tackle it.

 

The worry about cash flow is understandable – your business needs cash in order to survive.

 

In comparison to another similar problem – profitability – cash flow is concerned with the cash you have in your business right now as opposed to the cash you’re owed.

 

Of course, you could be owed all the money in the world, but if you don’t have it in your business now then you can’t pay your bills.

 

So it’s obvious why it’s the number one issue on KPMG’s report.

 

The report does reveal how the business leaders solved the problem, however.

 

According to the anecdotal evidence, the answer was to move to cloud-based accounting software and change internal business practices:

 

“Lack of up to date management info [was a concern]. Switched to cloud-based system; was very successful.”

 

“Ability to produce monthly reports without having someone creating them in Excel… Implementing and customising CRM allows us to report weekly again without someone having to produce the reports.”

 

“Using a programme like Xero has been very successful.”

 

For the changes to internal business practices, the respondents even mentioned cash flow specifically:

 

“Cash flow was a major concern, so we adapted our reporting to make it more accurate so we had a clearer idea of our present and future cash position.”

 

“[Addressed] cash flow and profitability… by involving the staff in targets for success [and] altering our terms of business to invoicing on the date the ‘deal is done’.”

 

The anecdotal evidence is backed up by the statistics. When it came to moving to cloud-based accounting software, 54.5% of respondents said it had been “extremely successful” in solving their problem.

 

A further 24.1% in addition said it had been “quite successful”.

 

Cash flow isn’t a problem that comes under the usual remit of a hired accountant, so this could be why it is a problem.

 

Through cloud-based software, a business owner can get a clearer picture of how they’re doing and “run a tighter ship”, so to speak.

 

Naturally, this is going to help them sleep easier at night.

 

Before concluding this week’s blogging about the KPMG report, I’ll mention that the statistics show that the more finance-related issue a business owner has, the more disturbed their sleep patterns are.

 

By giving more tasks to their accountant, finding an accountant who can help, or moving their financial forecasting to cloud-based software, they are significantly reducing the issues that are causing them stress and keeping them up.

 

It’s also creating an environment conducive to success and growth, where an entrepreneur can concentrate on promoting their business and selling their products.

 

Overall, if you want to put your financial issues to bed and grow your business too, go here:

 

https://www.madenotborn.com/accountancy/

 

David

Financial issues that keep you awake No.4 – Not knowing how your business is performing

According to KPMG Small Business Accounting’s recent survey, the 4th most common financial issue that affects the sleep patterns of business owners is not having an up-to-date picture of business performance.

 

Luckily, this seems to be a problem that a lot of the business leaders have been proactive in trying to resolve.

 

2.6% of the 250 respondents said it was a current concern they hadn’t addressed yet.

 

However, 22.6% had it down as a concern that they were actively trying to resolve, and 24.1% said it used to be a concern that is now resolved.

 

Ultimately, even though not knowing the current state of your business’s performance is a big problem experienced by many, it is an issue that seems quite easy to address.

 

The worry would come from either sitting at home, or up in bed, not knowing what the exact income from your day’s trading was.

 

Even worse, you may not know what your outgoings were.

 

If you’re absolutely convinced you’re not breaking even, or if there’s a nagging doubt at the back of your mind, then you’d struggle to sleep.

 

You could of course call your accountant, but that’d have to wait ‘til morning. It doesn’t help your cause at that exact moment in time.

 

Which is why the remedy for this problem is, as the report states; “Deploying technology”.

 

Namely, the technology is cloud-based accounting software so you can access your business accounts at any time.

 

“Lack of up to date management info [was a concern]. Switched to cloud-based system; was very successful.”

 

And;

 

“Using a programme like Xero has been very successful.”

 

In fact, bringing in cloud-based accounting was the most effective remedy overall, with more than half (54.5%) of respondents deeming it to have been “extremely” successful – with a further 24.1% stating that it has been “quite” successful.

 

The statistics speak for themselves.

 

If you need it too, you can find a list of recommended accounting software programs in our Guide to Accounts for Small Businesses here:

 

https://www.madenotborn.com/courses-money/

 

David