The key steps to take to deal with a real cash crisis are firstly to get to grips with your exact cash position and this involves preparing a cash flow forecast. Then you will need to both improve the control of the cash you have as well as identifying opportunities to create or free up more cash.
Understanding your position
A cash flow definition is the forecasting of a business’s real cash inflows and real cash outflows over a period; usually on a weekly basis for 13 weeks in a crisis, but sometimes on a daily basis in extreme cases.
You can buy cash flow software, but in practice a basic forecast can usually be prepared using a simple spreadsheet on which you set out in a logical structured way the expected timings of real cash:
– coming into the business from debtor receipts, loans raised or assets sold; and
– going out of the business as payments.
Together these will give you a net cash movement over the period which can be used to walk forward your expected cash position based on the assumptions you have made.
Controlling the cash you have and managing cash flow
You should then actively use your cash flow forecast to control the cash in your business by using it to make decisions on the timings of payments and what commitments you can make to creditors.
In preparing your forecast you should also be using it to examine your business. Read more
There is absolutely no doubt that business owners, especially those with small businesses should have a firm understanding of the basics of accountancy and bookkeeping. This is not to suggest of course, that they should be able to set themselves up as accountants in their own right, or indeed that they should be attempting to take the place that should rightly be filled by an accountant in their own business, but far too many business owners totally abdicate all responsibility for their business finances and hand it all over to their accountant, without the slightest idea what he will do with it.
This state of affairs is a very dangerous way to run a business of any size; a good business owner should be able to sit down with his accountant and discuss things, and understand what he is being told. Read more
All businesses need to make sure that they have someone looking after their financial affairs, small businesses especially tend to depend on the help and advice of their accountant quite heavily, often using him as a sort of unofficial Finance Director, but when it comes to the sole contractor, often trading as a Limited Company without the support of a team of colleagues to turn to, the role of their accountant becomes even more vital. Read more
Investing in property market has always been a popular option because of its lucrative returns. If you are new to property investment and are not aware of exactly what is required, be prepared for some hard work. It is because any of the following situations can conspire to make things a lot harder for you:
1. Interest rate changes (i.e. you should consider factoring in a rate rise of at least 2 per cent into your repayments);
2. Fluctuations in supply and demand (i.e. Read more
Interest rates have certainly increased over the last couple of months. This is due to many different reasons. However, probably the most significant of these reasons is the Market’s fear of the Federal Reserve easing it’s Bond Buying program, currently at about $85,000,000,000 per month! The current policy was started as an effort to prop up an ailing economy. Read more
Most small business owners understand about entering information into their accounting systems to help regulate and reconcile their business earnings and expenses. This also helps to make things easier at tax time.
However there are sometimes some things that aren’t entered into your accounting system that really should be.
The core entries are usually the same for most businesses. Read more
Business Mileage needs to be recorded at the end of each day and needs to start after the first appointment. Detailed logs are necessary in case of an IRS audit. Mileage is reimbursed at $0.55 per mile so a small error can equal large penalties. Many business owners log over 20,000 business miles a year and this tends to be one of the top 5 deductions for small businesses. Read more
Even though the GST has been in effect since 2000, there are many small business owners still making common errors. In the majority of cases, these mistakes have to do with people over-claiming their GST credits.
In order to avoid some of the more common GST pitfalls, you should keep it firmly in mind that the GST is a ‘transaction based’ tax, which means you should be trying to analyse every transaction to figure out the right GST action to take.
Below are some common GST pitfalls you should try to avoid.
Claiming GST without Valid Tax Invoices
If you’re registered for GST and hold a valid tax invoice, or recipient created tax invoice, you can claim a GST credit for purchases you made that cost you more than $82.50. Read more
When it comes to finding a good accountant, you first need to evaluate your specific situation and know what is the most important reason you need them. Depending on if you are going to use them for your business or personal life will change your requirements and possibly their qualifications needed, but overall the process should be the same. This article provides a good list of steps to start with in your search for a new accountant.
1.Obtain a strong reference list. Read more
Account reconciliation involves looking at an account statement and determining whether the balance shown in your records matches the balance shown by the bank’s records. For some, this leads to a headache, especially if accurate records have not been kept. However, this accounting activity is essential for knowing:
Whether the bank has made an error in computation Whether transactions were not completed Whether a client’s or customer’s payment was not received Whether a check you received bounced Your correct current financial situation Whether payments you made cleared or not
What Accounts Need Attention?
When running a business, reconciliation is not as simple as simply ensuring your business’s checking account is accurate. Read more