12:47pm Wednesday 28th January 2009
When in Business whether a Sole Trader or a Ltd Company it is essential that your outgoings do not exceed your incomings. This sounds such a simple statement, but during the years of Debt Advice for businesses it never ceases to amaze us how often people do not know how much is going out of their Business, or exactly how much a job or contract is costing them.
This is basic business sense and essential for the health of your organisation. Please see our top tips below: 1 Whether your business is a new business or has been running for years, take the time to sit down and work out all your business expenditure.
2 Once you have worked out your expenditure is there any savings you can make? Check phone contracts, if you have a website look at hosting contracts, look at printing costs etc, and look at all non essentials.
3 How much do you really take out of the business for wages? Sit down and analyse your personal budget. This is straight forward if you are a Ltd Company, as you generally pay yourself a wage, but a sole trader can take out monies at any time. Even £200 extra per month can put a strain on your cash flow.
4 Keep your accounts up to date and check your Cash Flow and Profit and Loss regularly.
5 Look at your marketing, what is working? Have you methods in place to check that your marketing is working. If you do not you could be wasting money.
6 Ensure your invoices are sent out as soon as possible. Late invoicing can seriously affect your cash flow.
7 If someone owes you money the first priority is to find out what their circumstances are. If they categorically can not pay you, seek advice as it could be an expensive and very time consuming going to court and incurring costs on monies that you may never recover. 8 If someone owes you money and they could pay, you must try and recover the money; again advice is available on the best solution for you.
9 Always seek advice early if you know problems are occurring. If you allow a company to trade when it's insolvent and there is no prospect that its financial condition will improve you may be personally at risk. Additionally, if the company goes into liquidation, administration or administrative receivership, the administrator, receiver or liquidator will review your actions when submitting their report to the Department of Trade and Industry. This may result in you being prohibited from being a company director for a period of between 2 and 15 years.
10 Do not obtain a loan to pay a loan and this can become a classic way of debt spiralling out of control and one of the most common reasons for clients businesses to fail.
For further advice on any of the above contact Wenta on 0845 371 0891.
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