Small businesses are being forced into receivership at a frighteningly high level as a result of the current financial crisis, according to statistics released by The Insolvency Service. Inevitably, fear is at an all time high for small and medium sized enterprises (SMEs) who are enduring market conditions that are only set to worsen. The prospect of insolvency is almost inconceivable for most SMEs after The Federation of Small Businesses (FSB) announced that 50% of its members would lose everything they own, including their home, if this were to happen to them. To help prevent this, financial transparency is key to helping small business owners maximise cash flow and keep afloat during the testing times ahead, according to The Local Bookkeeper (TLBK). Many SMEs second guess their performance, in comparison to previous periods, using quick estimates of their incomings and outgoings that are not necessarily representative of their true situation. The expertise of a financial management professional could be the difference between the ?make or break? of a business, especially in the present uncertain economic climate. In addition to this major problem, a small business can also have trouble staying on top of their admin and may end up with late-payment fees and fines. This can be incredibly time consuming for SMEs who do not have the time or staff. This time is stolen away and could be much more productively spent getting on with running the real business of generating money in the fashion they know best. The external assistance of a qualified and trustworthy bookkeeper would mean SMEs are kept informed of the latest changes in business legislation without them having to divert any attention away from concentrating on what they do best. In an effort to curb the soaring insolvency rates for SMEs, Alex King, TLBK?s Managing Director, is working with TLBK office owners that help SMEs local to them. TLBK have found that, in a survey of 100 people, a huge 72% are seriously worried about the recession; this worry could be put at ease with just a little bit of help from a qualified and experienced professional. Alex is advising business owners to get to know their actual financial position on a regular basis in order to understand where they are heading and avoid failure. Alex explains that: ?Many small business owners have no experience in running their business during an economic downturn and everything we read and see, hints that this is going to be a big one! Over the past 10 years, many small businesses have been able to obtain credit with ease, now with the near failure of the banking system and lack of credit available, many small businesses are going to struggle due to loans and overdrafts not being extended and very likely they are going to become another statistic if they do not take the right precautions. When business is good, many owners have neglected the financial side of their business but now is the right time to get help with their financial and cash management?. TBLK offers a package that is different from that of an ordinary accountant. They are a leading national bookkeeping and financial management network which specialise in assisting SMEs. These services are from local finance experts that are accredited to the Institute of Certified Bookkeepers and include everything one would expect from a traditional bookkeeper, along with management accounts, payroll and credit control. All this can be achieved at an accessible cost for smaller companies, without losing out on professionalism and reliability. This allows SMEs access to management information, with all its advantages, which will immediately provide insight into the business?s performance and help to avoid becoming a victim of the recession. Another problem SMEs face is recovering debts from customers. Outstanding payments can be extremely hard to collect when the threat of court action cannot be so quickly enforced. Many are also not aware of their legal rights and do not want to upset the relationship they have with the customer and risk losing a precious client. An outside credit control service would ensure payments were received on time to make sure the income of the business is not put in danger. Cash is king, and small businesses need to keep a watchful eye on their debts. TBLK have developed 8 steps to weathering the current financial storms: 1. Don?t panic! No matter how bad the situation may seem, there will be ways to make it better. Take a deep breath and pick up the phone? 2. Call in an expert who is accredited by the Institute of Certified Bookkeepers to be sure your finances are in the hands of someone reliable. 3. You should be given a clear outlook on what is happening with your cash and your costs, coupled with an ongoing management accounting service to identify your business?s successes and problems, advising you on the best way to remedy them before it is too late. You should be given a free initial consultation. 4. Order! Order! Keep records of everything. Always get a receipt for payments; always keep copies of invoices sent out; always maintain purchase invoices. Keep everything together in monthly folder ready for your bookkeeper to deal with. 5. Don?t Fear the Tax Man. Alex says, ?The VAT Man and the Tax Man are just people. They are not out to get you!? As long as they can see you are trying to sort things out, they will help you as much as possible. The worst thing you can do is to bury your head in the sand. Your qualified bookkeeper should be able to talk to them for you. 6. No More Mr Nice Guy. Slow payers tie up your money and stop you investing it in your own success. ?It can be very difficult to chase customers for payment when you are a local business and you have good relationships with people you work with,? Alex explains. However, you do need to ask for your money when it is owed. Better still, get your bookkeeper to chase payment for you in a firm and professional manner. 7. Counting the Costs. Effective management accounting and bookkeeping will also help you to spot where money is being wasted. There?s no point working like a slave to generate cash flow if you are leaking money on unnecessary overheads. 8. And Breathe?.Once the muddle is sorted out, you will probably just need a few hours a month of your bookkeepers? time to keep everything in order, so you can get on with the business of making money. A TLBK bookkeeper will give insight into the financial drivers of the business, provide up-to-date management information and equip the business owner with the tools they need to make educated business decisions. This solution gives businesses the greatest chance of not just surviving during the crisis but optimising their success in the full lifetime of their company and the vital role they play in the economy. ¯
Covid-19 (Coronavirus) Update
Coronavirus is having a huge impact on all sectors of business. Despite this, businesses are still having to manage their books, file VAT returns, run payrolls and most importantly their credit control processes. TFMC is continuing to provide our full range of services through this difficult time. For the latest information and support visit our Blog section or use our app with regular updates sent direct to your phone.