Due to the unprecedented challenges 2020 has thrown our way, businesses have had to adapt quickly to new hurdles and coronavirus-related restrictions. However, with the year coming to an end, it is essential to get set for the year ahead with budgeting, effective cash flow management, plus forecasting and management accounts.

Business planning is the first step in helping you to achieve your company’s goals.

Budgeting

One of the main elements of any business is budgeting and calculating expenditure months and years in advance to guarantee you stay on track and manage cash flow effectively.

Some of the examples of expenditure and outgoings include daily expenses, emergencies and repairs, energy and utility bills, insurance, marketing & advertising costs, one-off payments (office parties), payroll, planned investments, professional fees, rent, taxes, upgrades and vehicle-related fees.

Cash flow

One of the most common determinants in business insolvency is having a disorganised cash flow, such as less money coming in and more money going out.

Current research has even shown that late invoice payments are the cause of one in five company insolvencies. At an especially challenging economic period, it is essential now more than ever to assure that you are managing your cash flow effectively.

Small and medium-sized enterprise (SMEs) need to think efficiently about business arrangements, such as who you conduct business with.

Securing a contract with a larger organisation, who has a reputation for delayed payments, may not be the best use of your resources.

Instead, it may be better to consider acquiring numerous smaller contracts with reputable companies, which will help to spread the risk, form relationships and most importantly, ensure a good flow of cash.

Forecasting and management accounts

If the events of 2020 have taught us anything, it is that businesses must forecast for the unexpected. Forecasting is an essential step within business planning, and our expert advisors can help you to ensure it is as specific and thorough as possible, to produce a definite cash flow model.

Additionally, thriving businesses are only as strong as their plans, why is why monthly management accounts should be a principal consideration for companies.

These accounts and the information they store is essential for keeping on top of cash flow and should include balance sheets, cash flow statements, plus profit and loss reporting.

With an overview of your business’ performance, through the management accounts, it enables you to set objectives, anticipates any obstacles and forms your business strategy.

From knowing the strengths and weaknesses of your business, such as its daily performance, it will enable you to react suitably to any unprecedented challenges that could occur, before it is too late.

For help and advice, contact our expert team at Glazers today.

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Glazers is a well-established and progressive firm of accountants based in North West London.