As a small business owner, tradesperson or contractor, what does accounting mean to you? End of year financial reports, GST returns, and balance sheets? If that’s the case, let us introduce you to the fun side of accounting!
But first, let us introduce ourselves... With a head office based in Wanaka, New Zealand, surrounded by beautiful lakes and mountains, Findlay and Co Accountants are focused on keeping work and lifestyle in balance, for ourselves and our clients. Just like you, we love to get out into the great outdoors and enjoy time away from the office, workshop or job site. That’s why we appreciate nifty solutions that make business life simpler (and more fun), so we have more time to get out on the boat or bike, the ski field or the rugby field, or just relax on the beach.
Here are our three top suggestions on how using savvy accounting can lead to better cashflow, less paperwork… and ultimately a better lifestyle!
1. Get the right tools
Just like having the right tool in your tool belt, having the most efficient software is critical for your small business. If you want the most effective and up to date tools, cloud-based solutions are where it’s at.
- Project/Job Management & Time Tracking: Utilize a job or project management tool such as WorkflowMax to stay up-to-date on the progress of client work so you can send invoices as soon as work is completed. Expenses and purchase orders are stored directly against a job, so can be clearly displayed on your invoice. The time tracking feature allows your team to enter their time directly into the software so there’s no guess work when it comes to billing.
- Xero, Beautiful Online Accounting Software: Run your financials from anywhere, view cash flow reports, create and send invoices, schedule payments, pay bills, and more. This means you can take a day away from the office or job site and still check remotely on how the business is doing in real time. Furthermore, the WorkflowMax job management system can be integrated with Xero to create a complete end-to-end business solution.
2. Get efficient with invoicing
If you’ve got the right tools there’s no need to wait until the end of the month to do your invoicing. Here’s how to reduce the time between completing the job and getting money in the bank:
- Define short payment terms. If you’ve completed your work in a matter of hours or days, why wait six weeks for payment? Make your terms of trade clear from the start, in contracts or quotes with your customers and on your invoices. 14 days is common and even seven days is unlikely to be a problem for most well-run companies. You can certainly invoice and expect payment straight away from customers who have no established history with you.
- Send invoices promptly and regularly. Ask for your client’s email address and send the invoice straight after work is done when it’s top of their mind. Or, in the case of on-going work, send invoices on a regular basis. This doesn’t need to be a monthly cycle, consider fortnightly invoicing so debts do not mount up. Hello cash flow!
3. Chase up the slow payers
Again, good accounting software is key to keeping an eye on outstanding debtors, and takes out much of the effort involved in the follow-up process.
- Keep track of the figures. You can't chase debtors if you don't know who owes you money! If your accounts are currently kept on scraps of paper or in an old spreadsheet then it's time to upgrade to cloud accounting software like Xero. Time to get your house in order!
- Send prompt reminders. Send reminders to late payers as soon as invoices become due. Automated email reminders are a good start. If there's no response within two business days, follow up by phone. The best way to deal with a late payer is to prevent them becoming a late payer in the first place. Be proactive about this.
Keeping things ship shape may not be your thing, but managing efficient systems and making use of smart tools is a better way to do business. The best bit is, you reap all the rewards: more time, less stress, better bank balance. So get hold of the tools you need today to become a smart operator!