Cash flow problems? Use these 12 steps in your accounting functions to reach all your business' goals in 2015
I've come across many businesses who get overwhelmed with all their accounting functions and goal setting strategies at the beginning of the New Year.
They often complain that they set goals but never achieve them.
Because they're unachievable! Or they're not applied realistically to the business or accounting function.
If you don't plan properly, your business will have cash flow problems. And you may get unnecessary penalties and interest from SARS!
But you don't have to be one of these businesses. Follow my 12 steps to correctly plan for all your accounting functions in 2015 and increase your cash flow!
Compliance is key to staying on the tax man's good side
Set reminders for all your important SARS submission deadlines and meet them! Click here to see what they are in 2015 http://www.sars.gov.za/Pages/Important-Dates.aspx
Pay your PAYE, Vat and taxes on time. So you don't pay unnecessary penalties, interest and lose money. For all you need to know about taxes and 100% legal ways to save on taxes this year, click here...
Get a yearly tax clearance certificate.
Pay your CIPC annual duties on time and avoid deregistration at the CIPC! For more information on CIPC and how to comply with the Companies Act, simply follow this link…
Manage your financials with well thought out budgets
Make sure every invoice you receive from your supplier's meets SARS requirement. You'll have all the relevant documentation ready to submit to SARS. For the comprehensive guide to tax invoices and claiming your input tax in only two steps, simply click here…
Prepare a well thought out cash flow budget for the year. Your cash flow budget is a living document. It's a tool you should use to set goals and manage your funds. So update this budget regularly and compare it to actual results. Identify potential cash flow problems today. Here's how…
Create your operations budget and make sure you include your expected sales and expenditure forecasts. Compare this budget to last year's, and make sure you set reasonable and achievable goals. Remember, your operational budget differs from your cash flow budget! But you need to know how to avoid the common mistakes! Click here…
Calculate your most important financial ratios - breakeven, current ration for the previous year. Forecast these ratios for the current year based on the financial budget you prepared. If you aren't happy with these calculated ratios based on your budget for this year, determine how you can achieve them. Look at increasing your advertising, debtor's collections etc.
Communicate your budgets and forecast with your team, management and staff. Get their input and buy in. This will make the targets you've set more achievable.
Reverse engineer your budgets. Ask yourself the following questions and answer realistically:
What do you want in the bank as the cash balance; and
What net profit before tax would you like to achieve?
Now, calculate what turnover you'll need to get to the figures in your answers above. Then calculate what your expenses should be to get to this turnover. This way you can see where you should be spending more to achieve certain sales e.g. advertising.
You can halve the time it takes to do all your complex financial calculations, simply follow this link…
Work out your breakeven point and allocate your resources correctly
Work out your breakeven point. Set this as your minimum target. Make sure that no matter what, your business achieves this breakeven in turnover through invoices you issue. This will help your cash flow and you'll always have debtors to recover monies from.
Is your business involved in projects and contracts? Use a project report that shows you the income less expenses per project to check if you're making money on that specific project. This makes you think about all your clients and the effort you put in to that project and helps you make an informed business decision. For example, should you renew the contract or project if you're making a loss, or would it be better to focus your resources elsewhere? Or should you add more staff to make the project more profitable. Then take the step!
There you have it. Now you can set realistic goals for your business for 2015 and never pay unnecessary penalties again!
Discover how to improve your cash flow and eliminate simple accounting mistakes with this one tool…
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