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Accounting Tips for SMEs

The UK is home to hundreds of thousands of SMEs. Many of them are successful, but a significant percentage of them struggle at one time or another. Firms tend to find managing certain day-to-day functions difficult, especially when things take off and the orders flood in. One of the biggest challenges is keeping accurate accounts.

These tips are here to help you to overcome those issues:

Little by little

It is always a good idea to do your accounts every day. If you do this, they will always be up to date. Keying in your invoices and bills each day need not take long, and doing it daily will save you a lot of time in the end.

This ensures that there is no rush to complete your accounts at the end of the tax year. If you do so, you will be left sorting through piles of paperwork, electronic invoices and emails. Inevitably, things will have be lost and your accounts will be incomplete.

Use the information contained in your accounts

Surprisingly, many SMEs do not use the valuable information that is locked away in their accounts. Using the right software, firms can produce profit and loss reports and cash flow predictions that enable them to manage the business effectively, and even make a bigger profit.

If you keep good accounts, you can tell within minutes how a rise in the cost of materials or a change in exchange rates is going to affect you. This will allow you to make an informed decision about whether to up your prices or absorb the additional cost.

Pay attention to cash flow

While we are on the subject of reports, we need to mention the importance of monitoring cash flow. Many firms do not do this, which is one of the reasons so many companies fold. They just do not see cash flow issues coming. This means that they do not have the time to arrange short-term finance to take them through what is often a short-term period where cash is short.

Consider employing a professional

Keeping accurate accounts and interrogating that information can be complicated. To do it right, you will have to buy specialist accounting software and learn how to use it. This software is not cheap and learning to use it takes time. Add in the fact that often the person who keeps your accounts could be employed elsewhere in the business, perhaps serving customers or making sales, and you can see why it is worth considering employing a professional accountant.

Posted by Mark
September 4, 2015
Small Business

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