by Jean Knill

Created on: May 30, 2009   Last Updated: June 01, 2009

If you are the owner of a small business in a service industry or profession, you probably have to spend a lot of your own time providing or overseeing the service you offer. If you sell products after making or sourcing them, this core aspect of your business takes up many of your precious hours. But you could find yourself with lots of time on your hands if you don't find a way to schedule in time to keep tabs on your payments and receipts.

Payments and receipts equal cashflow. Among businesses that fail, a lack of attention to cashflow is a major contributor. There are many aspects to cashflow, some more obvious than others. Most of them fit in the following categories.

Aspects to Consider for Payments

1. Work out your break-even figure. To do this, you need to be able to predict your outgoings. Many will be regular amounts and some must be estimated. With a good accounting system such as QuickBooks, Sage or something similar, this could be a relatively simple matter. You also need to add a contingency amount to allow for unforeseen expenses. How conservative you make this will depend on how risk-averse you are. It might be wise to consult your accountant.

2. Pay your taxes on time. Put that money aside before doing anything else. Develop a positive attitude to them so you recognize that, if you have a lot to pay, that's good. It means that your business is doing well.

3. Keep your team loyal with a firm but even hand. Treat your staff fairly and avoid the extra expense of frequent recruitment, stress-related sick pay and replacing pilfered stock.

4. Keep your marketing budget down by looking after your customers. While it is important to keep on marketing throughout the good times, by far the cheapest way to stay in profit is by getting repeat orders from satisfied customers.

5. Keep in touch with your suppliers. When the economy is in the doldrums, we are all likely to go through bad patches, and if times do get tough, it's easier to negotiate paying in instalments if you have a good working relationship. Don't leave out your contacts at the bank. Share your successes and concerns with them. Be open and honest so they never have any nasty surprises.

6. Avoid using credit cards as much as possible. Unless it is paid off each month, putting debt on credit cards is one of the most expensive ways to fund your business.

Now let's look at the receipts, which are just as important.

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