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New Year’s Resolutions for Small to Medium Businesses

As we move into a brand new year we have some great New Year’s Resolutions for small business owners to help keep their finances looking healthy in 2019.

  1. Be Realistic about your Budget – you should be able to look back at your monthly finances and get a reasonably sound idea of what an average month looks like for your business.  Create a pragmatic budget to plan for the financial year ahead and stick to it as much as possible.
  2. Accounting Software – there are so many types of accounting and payments software available that you should find one that will suit your business requirements.  You could choose a product that focuses on a particular area of business or opt for an all in one solution that will include expenses, accounts payable and receivable, to gain a holistic view of your business finances in the coming 12 months.
  3. Tackle Cash Flow Problems – negative cash flow could lead to problems for smaller businesses. Make it a priority to crack down on bad cash flow and late-paying customers, to keep things ticking over smoothly. Consider negotiating shorter payment terms with customers, adopting invoice factoring, or looking into credit control automation.
  4. Keep Up to Date Accounts – this will give you a clear idea of how your business is doing financially and will also make it easier to obtain business funding should you need it in the coming year. 
  5. Stay Within Credit Limits – small business owners often find overdrafts, business credit cards or revolving credit facilities a helpful buffer when it comes to maintaining a steady cash flow.  However, it’s vital that you don’t exceed the limits as this may have a negative effect on your business credit rating and may harm your chances of getting other kinds of business finance such as a growth loan.  If you find that you are regularly getting close to your business credit limit, then you may need to take a serious look at6 your budget and financial plans.  A business that regularly gets close to credit limits or often uses an unplanned overdraft will raise red flags with potential business lenders.
  6. Don’t Mix it Up – make sure you keep your business expenses and your personal expenses separate.  Many small businesses start off organically (perhaps by progressing from sole trader to limited company) without setting up separate business accounts.  If your finances are mixed up in this way, it will be difficult for potential lenders to get an accurate idea of your business profile.
  7. Plan for Tax Bills – it’s vital to have a plan in place for paying your business tax bills.  When the payment is due and what type of tax you pay will depend on your business and this will need to be budgeted for.  Make sure your tax bill does not become overdue as HMRC has begun taking a more aggressive approach when it comes to chasing overdue taxes.

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