7 Bookkeeping Tips To Save Your Holiday Season
As Christmas fast approaches, businesses everywhere are likely to see a slack period as employees and clients take time off for celebrations – even if it means staying home, practising social distancing, and spending time with loved ones virtually.
This also means that the revenue of small businesses is likely to go down somewhat, a trend that will continue into January as people recover from New Year festivities. Plus, with staff celebrations, your in-house business expenditure is likely to go up.
This is the time when many small businesses lose out from not having planned their finances. If you think you could use some help, here are some expert bookkeeping tips to help you avoid those post-Christmas financial blues:
1. Know your cash flow
The first step to successful holiday bookkeeping is knowing the details of what is coming in and what is going out. Keeping your receipts safe is a big part of this – you should ideally have a designated online folder where all your receipts go rather than distributing them in random places such as email, desktop, cloud drive.
Or, why not try the XERO app? Simply photograph your expenses and send them straight to your XERO account.
Moreover, knowing your cash flow does not just mean keeping track of your office bills – it also means knowing precisely what products or services you have sold to your customers.
It is a good idea to invest in project management software for complete transparency on how much work there is in the pipeline and how much each task is worth, along with a breakdown of the time it takes you to complete the tasks.
You can even use XERO’s built-in project management software for a small monthly charge.
2. Track your business expenses
While it isn’t always possible to avoid unexpected expenses, you should try to forecast your business expenditure for the quarter or year as far as possible.
One way to do this is by keeping a proper record of all your expenses, including supplies, payroll, insurance, rent, utilities, and so on. You should also budget for an emergency fund that you can use if any unexpected bills crop up.
We recommend using the Float app which allows you to try different budget scenarios and links seamlessly with XERO.
3. Chase late payments
Now is the time to give your customers a friendly nudge about what they owe you. Do not be shy about following up with customers who are behind on their payments, especially if they are in the habit of not paying on time.
If you use XERO, leverage its built-in reminder system and check your aged payables every week or month to ensure customers don’t fall behind.
You can even add a late payment fee for delays beyond a specific date. At the same time, be sure that you pay off your creditors promptly – and if you happen to be struggling, reach out to them and arrange a more favourable payment timeline.
4. Change your payment terms
If you’re looking to boost your cash inflow before Christmas, consider altering your payment terms to benefit you more. For instance, you can charge an upfront payment before a project begins, especially if there are some project expenses you need to cover at the start.
You can also reduce your payment terms from, say, a month to two weeks. Be sure to include all this updated payment information in your invoices to avoid confusion. Plus, if you perform special services such as a rush job or a last-minute project add-on, don’t hesitate to charge your client extra.
5. Work out your tax deductions on expenses
Some of your festivity expenses might be claimable, and some are not. Before going all out on your (virtual) Christmas celebrations, therefore, look up which expenses (including client presents, staff presents, office celebrations, and cash bonuses) have deductions and which have extra tax liabilities attached. This will help you plan your expense budget better so that you can have a good time without dreading the bill.
6. Try cloud accounting tools
Cloud accounting tools have completely changed the game for business finances. With a tool like XERO in place, you can handle all your finance-related tasks such as payroll, invoicing, reporting, and expense claims from one comprehensive dashboard.
Cloud-based tools also have the advantage of high security, unlimited storage, easy scalability, and access from anywhere. That means if you take help from an external bookkeeper, you can access real-time information quickly and maintain control of your data.
7. Dedicate time for admin
Admin-related tasks might be last on your priority list, but to avoid having to wade through a pile of paperwork right before Christmas, it is ideal that you set aside some time for admin work every week. This also helps to clarify what is happening on a day-to-day basis and take any corrective action you need to.
Get professional help if you need it
If you are struggling to manage the ins and outs of bookkeeping along with your primary business, you can consider outsourcing the job to a professional. An experienced bookkeeping service provider will save you time and money and advise you on making the most of tax returns.
Thankfully, Agility Bookkeeping is fully equipped to handle all your bookkeeping tasks and enable you to put up your legs and relax over the holidays. If you’re interested, please complete the contact form, and we will get back to you for an initial, no-obligation chat.