Imagine your company bank account is actually your own personal money.
Would you check what’s in it?
Would you be interested to know your mortgage, food bill for the month, your electricity, the gas bill. And knowing that what’s left in the bank at the end of the month, is potentially yours to spend as you wish (your disposable income.) Then the key is to not treat your business bank account any different.
You will have fixed bills in your business just like you would personally. It’s a little different in that the Directors income is only guaranteed, once all payments have been made and accounted for. Please remember to keep money back in the account to cover VAT, PAYE, Corporation Tax and Self Assessment. The last thing you need is sudden surprises at the end of the year.
At the very least you need to be keeping a manual ledger book, even if you don’t go down the route of using Accounts software. Keep this updated a minimum of once a month. To not do so will leave you not knowing whether you are making a profit or a loss. To keep this updated regularly will allow you also make instant decisions that change the course of the way you do business.
We are still seeing far too many companies coming through the doors, not thinking this area is of important concern.
You are working in the dark, with the lights off. Be careful not to hit the wall, or the door. (an analogy I know but think about it)
If paperwork is not your strong point, after all your services or products are why you are in business in the first place. Use someone to help you, whether it be a friend, member of staff or outsource this altogether.
Talk to companies who have this already in place and ask them how they feel it has changed the way they work. If you know you are making a profit, things can only look up.
Remember the main reason for companies going out of business in their first two years is because they didn’t know they were running out of cash, until it was too late. The bank balance gives you a false sense of security, it will never tell you, you are running out of cash, until its gone.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
