The new financial year gives small- and medium-sized businesses (SMBs) the chance to review their performance and identify areas for improvement.
Peter Nicol, director, RSM Bird Cameron, said, “There are some things SMBs should keep in mind to ensure their success in the new financial year, such as retaining reliable cash flow oversight and implementing sound financial processes.”
RSM Bird Cameron suggests five tips to help SMBs improve their financial position and ensure a successful new fiscal year.
1. Cloud if you can
Cloud-based accounting software helps SMBs to be more efficient. This technology gives businesses powerful online tools at a fraction of the cost of enterprise-grade accounting platforms.
Peter Nicol said, “Businesses need to make sure their available internet infrastructure can support reliable cloud-based accounting services. Depending on your location and its internet coverage, this solution might not be ideal. However, if broadband access is no problem, cloud-based solutions can give you a big boost without major up-front costs.”
2. Keep in touch with your advisor
The only real way SMB owners can truly know all of their financial options is by meeting regularly with their business advisors. This can help business owners keep up with the latest trends, regulations and opportunities that could affect their businesses.
Peter Nicol said, “Catch up at least every quarter with your business advisor, even if it is just for a coffee. It’s important to bounce ideas around and discuss ways you can improve your business. Your advisor can provide ideas and perspectives you might otherwise miss.”
3. Create a cash flow budget
Creating a cash flow budget is essential for a successful business. A cash flow budget records the cash you expect to receive and pay out over a period of time, meaning you can make informed decisions when projecting business achievements or planning for additional growth.
Peter Nicol said, “If you know your cash flow situation, then you can accurately forecast, understand your immediate break-even point and be in a better position to make educated decisions on new business opportunities.”
4. Follow up your debtors
If a business is owed money, it is the business owner’s right and responsibility to make sure it is paid. While most customers can be expected to honour their debts, business owners should not be scared to have a conversation with debtors who are behind on payments.
Peter Nicol said, “Often, I see business owners worried they will offend their debtors. They shouldn’t be concerned about offending people. Timely debt payment is a healthy part of the customer-supplier relationship. It is important to develop the skills for these conversations and have systems in place that provide the necessary reports so you can chase non-payers.”
5. Have a plan to increase your profits
Businesses should create a plan to increase profits. They can do this by looking at ways to reduce costs or increase their customer-base.
Peter Nicol said, “Collectively, even small changes can lead to increased profits. Reviewing the business plan with your advisor can help you make these changes and put you on the path to future success.”
About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the seventh largest network of independent accounting and consulting firms in the world.