Chris Ridd, Managing Director of online finance app Xero, offers his seven tips to keep your business finances in order over summer.
Small business owners tend to epitomise the ‘workaholic’. They are notoriously hard working and it’s rare to come across someone who regularly takes time off from the business. Those who do find themselves on holiday (often reluctantly), know how difficult it can be to switch off from the business and not worry what might be happening while they are away.
Recent figures from The Australian Bureau of Statistics show that, in the year ending September 2011, full-time employees stockpiled 129.6 million days of leave, worth $40 billion in wages. In a recent nationwide survey of small business operators, American Express found that the average entrepreneur takes just 11 days leave per year with 40 per cent admitting they haven’t taken a holiday at all in the last year.
It’s really not surprising that holidays can be such a challenge for small business owners. When the success of a business starts and ends with you, taking a break usually means dozens of extra work hours before and after the holiday just to catch up. Team this with constantly checking emails and checking in with the office while you’re away - it’s hardly the best recipe for relaxation.
As many small businesses have found, the prevalence of mobile technology allows them to keep an eye on things while they are away from the office, making the concept of holidays far more realistic. It is possible to put your feet up for some much needed R&R and still come back to a successful business.
With the Christmas, New Year and the summer holiday season upon us, here are some tips to keep your finances on track while you’re enjoying some time in the sun. Your family, your sanity and ultimately your business, will thank you.
1. The office in your pocket
Mobile devices – smartphones and tablets – and the apps that go with them are some of the easiest ways to quickly and productively manage work away from your desk. The Apple App Store and the Android Marketplace are full of business-focused applications. Apps like iTerminal will process credit card payments, the Insight for Basecamp app is a sophisticated project management tool and Quickoffice enables you to open and edit Microsoft documents on your iPhone.
If you haven’t embraced these apps already, do some quick research before you close the office and download the most useful tools for your business.
2. The quick check in
If you’re one of the many small business owners who tend to check in regularly even when on holiday, it’s a good idea to check on accounts too. This way, you can get real-time information on your actual cash flow position and you can chase up debtors or pay bills to avoid overdue penalties.
Checking on finances regularly, rather than once a month, ensures you don’t have any fires to fight on your return from holiday.
3. Embracing the cloud
You don’t have to continually drop into the office during your holiday. Cloud computing allows you to have secure remote access to all your online accounting information, anywhere with an internet connection. Similarly, mobile accounting apps mean that managing accounts becomes easy from a smartphone or tablet.
4. Finance on the go
Small business owners can use mobile technology to keep on top of bills. Imagine using your smartphone’s camera to take snapshots of your expenses rather than having to hunt in pockets and bags at a later date.
The Xero Touch app allows you to attach electronic copies of receipts so you can speed up the expense claims process. No more returning to work after a well-earned break to a mountain of paperwork. This app also allows you to create, approve and send invoices from your phone in addition to tracking late payments.
5. Forecast and negotiate before you leave
With accurate cash flow forecasting, you can see whether the summer holiday is going to be a challenging cash-flow period. Take some time out to review this before you leave for the holidays and if times look testing, negotiate with your suppliers on payment terms. You’ll often be surprised how many suppliers and partners are open to this after you explain the situation.
Similarly, you can talk to your accountant about the possibility of staged or delayed tax payments. This can sometimes incur interest or additional charges so factor that into the discussion.
6. Pre-empt your finance deadlines
To avoid spending time crunching numbers while you’re away, look at your finance and accounting obligations for the break period and plan ahead. Talk to your accountant to ensure that any payroll obligations are covered and your BAS is submitted. Set up automatic bank transfers for your recurring business costs to avoid a pile of bills and late fees when you return.
7. Work with your accountant
Small business owners are increasingly treating their accountant as their CFO. It’s a great idea to embrace this trend and make the most of the business relationship. Use online accounting tools, including features such as live bank feeds, which give your accountant real-time visibility of your finances.
Having an extra set of (very experienced) hands on board means that their expertise can help manage that part of the business more effectively and spot any potential problems.
Chris Ridd is the managing director at Xero Australia. Xero is online accounting software designed for small business and their advisors. www.xero.com