September 2013

It's that Cash thing again stupid!

What's the biggest challenge in expanding your business? Is it resources or is it winning orders? Is it IT? In fact your most likely challenge, even if you don't realise it, is going to be funding. Yet that seems counter intuitive because more sales equals more income - so what's the problem? It's simple to explain - it's a timing difference, in short the money goes out before more money comes in. That's the bit that needs financing. where's it coming from and how much do you need?

If you've got a cash pile then maybe you've no problem, at least until it runs out, otherwise you'll need to do what most expanding businesses don't do and that is plan. A Cash Flow Forecast is the basic tool but for most businesses that's a challenge. Who is going to produce it and how? What's the basis - are there any sound up to date Management Accounts from your Sage, Xero or other system?

This applies most directly to businesses that sell on credit to customers however even those which are paid at point of sale still have to finance the extra stock, selling and admin resources in advance. There's nothing more sad in business than seeing a 'successful' rapidly expanding company go bust and the most likely time for this is when coming out of a recession, just like now.

On the positive side good cash planning will enable you to expand without this restriction and boost your profits.

A short Action Plan:

1) Make Cash Flow top of the agenda

2) Review, tighten and implement your Credit Control system

3) Check and chase your debtors

4) Plan your cash flow for at least a year

5) Ensure you have sound, up to date accounts as a basis for planning Take 5 minutes to think this through - it could save your bacon

Anthony Pilkington,  

MD BookCheck Ltd  

I wandered securely on a Cloud.........

Talking about "The Cloud" is becoming common nowadays but nine years ago when we first hosted Sage, I was the man from Mars. No one would risk it, mainly because it was simply 'too new'. We used it for clients who didn't need to know! With the advent of new forms of accounting software such as Xero, naturally in the Cloud, with massive marketing budgets it's become normal and indeed arguably preferable to the old fashioned software on the local pc.

Is it here to stay - no question! We reckon it's so important that we have embraced Xero alongside Sage as the two online systems we offer. The days of locally installed and supported software are numbered. The benefits of The Cloud are considerable - far less cost is the most obvious, to buy, to maintain and to use. IT department costs are usually an accepted overhead but why not challenge that cost.

As to security I know where I would put my money, the Cloud every time compared with the average client backup. OK one has to be realistic and reckon that there is a risk of downtime but unless you're running a mission critical or time sensitive system then this should be manageable.

Speaking to accountants, as I do a lot, what's become very common is the enthusiasm for sharing accounting systems live with clients (as if BookCheck hasn't been doing that for nine years!) so I smile a bit - the new world has arrived. It's a great advantage to share - it helps, it binds, it supports and it develops a client relationship and so easily.

Anthony Pilkington, Managing Director, BookCheck Ltd