With inflation back with a bang this year, effective financial management and reliable forecasts are more important than ever. Now is the time to use the information in your accounting system to help you identify opportunities to make savings.
Your business accounts contain a lot of information that can help you streamline processes and improve profitability. Here are 10 key areas to check.
- Accounts system: If you are not already using a cloud-based accounting system, now might be the time to make the move. When correctly implemented, these systems are cost-effective, save time and help you make better business decisions. Previously on this blog we shared tips on how to assess the pros and cons of cloud accounting.
- Costs: With energy costs soaring, this is definitely the time to review your current spend on utilities. Look for opportunities to obtain better value — eg by switching energy provider.
- Sales: Use the information in your accounting system to analyse which are your most profitable products/services. This will help you plan what to focus on in the coming months.
- Invoicing: Issue invoices promptly and make it easy for your customers to settle their account. Services like GoCardless may be worth considering if you want to facilitate recurring payments through direct debit.
- Debtors: Keep a close eye on your debtors and promptly chase any money that you are owed.
- New customers and suppliers: Depending on your business, consider running a credit check before taking on new customers or suppliers. Automated credit checking systems provide access to real-time information that can help you avoid high-risk customers and/or expensive mistakes.
- Stock control: While it is generally good to avoid holding too much stock, supply chain difficulties in the current market may mean that you need to hold more stock than usual. Check that your stock control policy is appropriate.
- Rent: Attitudes to remote working changed a lot during the pandemic as businesses realised that facilitating remote working did not necessarily undermine productivity. Take advantage of the experience and lessons learned to decide whether you can reduce your requirement for office accommodation and make savings on rent.
- Outsourcing: Assess the pros and cons of outsourcing non-core functions. Depending on your business, this can be a good way to free up staff time and/or overcome recruitment difficulties. However, if you decide to outsource payroll or bookkeeping remember to check that your service provider is properly qualified and has the necessary resources to deliver the level of service you require.
- Recruitment: Finding employees is a challenge for many businesses at present with a shortage of skilled workers in various sectors. You may need to pay more to attract and retain staff so check that your salary forecasts are realistic.
With inflation rising and economic uncertainty still an issue for many businesses, reliable accounting information and effective financial controls will be critical tools in the months ahead. It’s not just a question of having access to accurate bookkeeping information, it’s also about knowing how to use that information to improve your bottom line. If you need assistance, GroForth would be happy to help. For details of our services, check out our bookkeeping page.