Keeping on top of the finances of your franchise is really easy – on the surface of it; you just need systems and control mechanisms. If these are put in at the outset, you will always have the information to hand that you need to understand your business; and that gives you the informed knowledge to pinpoint any changes that you need to make.
Too often franchises are set up in a whirlwind of funding and excitement. Setting up premises, taking on staff, stocking up – you soon end up with a pile of receipts and invoices which grows month on month. When you are busy, getting on top of your finances gets pushed to the bottom of your priorities because it has become a monster and it’s just easier dealing with the day to day concerns of running your business.
If this is you, then here are 5 steps that will turn the monster into a helpful friend.
1 Cash flow management
Your franchisees are relying on you so it’s important to get on top of your daily income and expenditure. Running out of cash is not an option! There are plenty of easy to use software packages available like Xero and its associated apps, that will make this a lot easier, although initially there may be some past months’ work that needs to be considered too. Dependent upon your situation, it may make sense to bring someone in to help you – there are lots of bookkeepers around who have the staff available to do what you just don’t have the time to do – sort out and record all of that income and expenditure, get on top of that cash flow and give you a clear picture of your financial status.
2 Keep up-to-date accounting records
Not just occasionally but daily or weekly at the worst, whenever is convenient, at the end of the day or first thing in the morning, record all financial transactions. Using bespoke software linked to your mobile phone or tablet will make this a lot easier for you. Or again, pass it on to your friendly bookkeeper.
3 Visibility – costs and income
Once you have got your records up to date, you will be able to do some simple analysis. If you feel confident enough you can do this yourself but again, bespoke software will make the job easier, as would a reputable bookkeeper. Setting up appropriate benchmarking and monitoring franchise performance is vital. One poorly performing franchise could potentially jeopardise the reputation and finances of all.
4 Credit control
Managing how quickly you are paid can make a big difference to your cash flow. Being on top of your accounting records will enable you to ensure franchises keep within the terms you have set and protect your cashflow. Franchisee businesses will suffer if credit terms are breached – so set up systems to help them keep this under control.
We all know, HMRC doesn’t wait. The worst thing for a franchisor is to be landed with a large VAT bill when they haven’t allowed for it. Franchises need to be monitored to ensure they are all compliant – poor compliance will put all at risk. There are a number of other taxes to consider too – corporation tax, income tax and of course MTD possibly needing to be factored in if your turnover reaches the threshold of £85.000pa. Being on top of your business’s finances will mean there are no shocks and you will have been able to plan and put aside money to keep the taxman happy.
Whether you take on your business finances yourself or use appropriate software and look for assistance from a reputable bookkeeper, facing up to these responsibilities isn’t an option. Take action now to protect your franchise and put the systems and control in place to ensure you are always compliant and have the information required to keep your business growing and your franchise reputation protected.