Manage the money
This practical guide is Step 6 of our Startup Kit written by Emma Jones, founder of Enterprise Nation. The course walks you through turning your idea into a thriving business.
Keep the books in order by raising invoices in good time, being on top of cash flow, and filing tax returns and company documents on time and in order. In short, keep the finances in check and the books up to date. It may not seem as exciting as making sales or developing your product or service, but it’s a vital part of running your business, so it’s important to get it right from the start.
Cash is king
It’s a very well-worn phrase in business, but cash is most definitely king. You need to see your cashflow – how much money is in the bank, how much is owed and whether this covers your outgoings. It’s easy to monitor this using accounting software and online banking.
Get paid and pay others
A key part in healthy cashflow is making sure you get paid and get paid promptly. How you get paid will depend quite a lot on your type of business and whether you are selling direct to customers or to other businesses. If selling directly, you will mostly be paid immediately. If you are dealing with other businesses, the chances are most will expect to pay on invoice and will expect a credit period in which to pay. Be prepared to offer credit terms, but be careful about how long you give, how much credit you’ll allow and who you offer this to.
If you need to buy in products or services from others as part of your business it’s always worth seeing if you too can arrange credit terms with suppliers. This should help you balance payments in and out. This isn’t always easy at the start and you may have to pay upfront to begin with, but it is something to request. Having built up a good relationship with your supplier it should be a natural next step.
Be on time with invoicing and keep a record of amounts outstanding. My accounting software lets me track my invoices, including the client, invoice amount, invoice number, date submitted and date paid and easily create professional invoices. Here’s a sample invoice template.
Your invoices should be a simple document with basic details. The less cause for question on the invoice, the faster it will be paid.
Find out who should be named on the invoice, where it should be sent and whether you need to include any sort of order reference number. When dealing with large companies in particular, this sort of thing can make a big difference to how quickly you get paid.
Hopefully your clients and customers will always pay promptly, but occasionally you might need to remind them. Do this politely and clearly. It’s often sensible to send a monthly statement to a client detailing any outstanding invoices, and usually that’s enough to spur them into action.
Cash is king as they say and I've teamed up with Xero to help you to keep better control of it. If you're a small business with a turnover of up to £82,000 you can access exclusive offers and discounts that'll help save you money and time, including 50% off Xero and free Enterprise Nation membership. Find out more
About Emma Jones
Emma is founder of small business network Enterprise Nation. Emma has since written a number of best-selling business books, including Spare Room Start-Up, Working 5 to 9, Go Global and the StartUp Kit. Emma was awarded an MBE for services to enterprise in 2012.