A good accounts department can help make your life easier in 2023. If you don’t already have one, now is the time to consider using a Virtual Accounts Department, says Sarah Daly
The last few years were a rollercoaster for business owners as Brexit, COVID-19 and the impact of the war in Ukraine hit input costs and supply chains. As we face into 2023, there is no let up in sight. Costs are rising and a number of significant changes coming into effect this year (like Statutory Sick Pay) will add to the financial burdens on businesses.
At times like this, it’s essential to keep a close eye on your income streams and watch for potential problems like a slowdown in demand, late payments, supply issues, and unbudgeted additional costs.
Technology
Look for opportunities to automate administrative tasks. The more time that you can free up from administration to focus on revenue-generating activity, the better. Technology provides lots of tools to assist you in areas like accounts and payroll. If you’re not already using these tools, ask your bookkeeper or accountant for recommendations.
Budgets
Budgets are an essential planning tool. Last year’s actual costs need to be reflected in this year’s budget. Review what you spent in 2022 and keep inflation in mind when preparing and/or updating your 2023 budgets and forecasts.
Get paid on time
Make sure that you invoice on time and make it easy for your customers to pay you. This is a really effective time saver as it minimises overdue payments which you would otherwise have to chase. Monitor what you are owed and if a customer is late making a payment, follow up promptly to minimise the risk of bad debts building up.
Review energy and input costs
Energy costs have become a major worry for businesses and consumers alike. Review what you are using and see if you can identify areas where savings can be made — turning off equipment that is not in use, for example. If it’s a while since you last looked at suppliers, now would be a good time to check whether you can obtain better value by switching to another energy provider. The same goes for your other utility costs.
Remember to monitor your actual costs against what you budgeted for on an ongoing basis. Reviewing your management accounts at least once a month is the best way to do this. If your actual costs are higher than expected, you need to understand why and update your budget accordingly.
Bookkeeping and accounts
Your accounts system should help you track what is coming in and going out of your business day-to-day. If it is properly set up, and if all relevant information is being entered accurately and on time, your system will highlight trends and help you spot potential problems early enough to deal with them before they get out of hand. If you’re not getting this information from your existing system, it’s worth asking your bookkeeper to help you access the reports you require.
Merging or Selling your Business
For some business owners looking to improve their work/life balance, exiting the business may be on the agenda this year. Merging or selling won’t make life easier in the short term because of the time involved in finding the right partner and agreeing the terms of the deal, but it helps if you have done some forward planning. Your accounts need to be in good shape as potential purchasers will want to assess how your business is performing. As well as your financial accounts, they will also want to see management accounting information such as forecasts, cashflow projections and information on creditors and debtors.
If your bookkeeper can’t provide the information you need, it may be time to look for outside help. Virtual Finance Departments like GroForth provide a range of accounting supports for companies who need to access additional bookkeeping, accounts, cashflow management and payroll services
