Valentine's Day: business relationships
Today's Valentine's Day, when people pay closer attention to the relationships they have with their loved ones.
But this Valentine’s Day, why not think about how to improve some of the other relationships you have as well, including those with the people your business brings you into contact with?
Here's how how keeping your books up to date can not only help you keep track of your profit and cash flow, but also improve the relationships you have with the people in and around your business.
Identify toxic customers
If you issue invoices regularly, and make sure that you keep track of money coming into your bank from your customers, you’ll have a clear and accurate record of which of your customers pay you quickly – and who takes longer to pay.
Slow-paying customers can be toxic to your business. They put a brake on your cash flow, and even if you use FreeAgent’s automatic reminder tool to chase them for payment, you will still be anxious about when they’re going to pay you.
This anxiety is a waste of the energy you could be spending on your good customers, or winning new customers.
Valentine’s Day is a time of year to nurture good relationships, not bad ones. So is it therefore time to weed out your toxic customers - or at least speak to them directly to see if they might be able to pay you any faster?
Know when to pay suppliers…
If you keep track of any bills that you’re not going to pay straight away, you can make sure that you don’t miss your supplier’s deadline for payment.
Paying your bills on time will mean you are not being a toxic customer yourself, and your suppliers will be happy to go on dealing with you.
They’ll love you even more if you pay them early…
…which may not be straight away!
If you pay your suppliers before the bill is due, will that put a squeeze on your cash flow?
You might, for example, find you need that money to pay your staff wages later in the month.
Don’t rob Peter to pay Paul. Paul may be very happy with this but Peter certainly won’t be!
Get more from your accountant
Too many small business owners still depend on their accountant to either do their bookkeeping from scratch or to correct a lot of mistakes.
If your books are already accurate (and your accountant should provide training to help you get to this stage), then your accountant can act as a trusted adviser to your business, instead of a bean counter.
For example, given timely correct information, your accountant could tell you how to save tax, or help you make sure you’re charging your customers enough money. Isn’t that more valuable than adding up columns of figures?
If you mould a better working relationship with your accountant, you’ll love the benefits that this will bring for your business.
Keep on the right side of the taxman
HMRC may charge interest, surcharges and penalties if you file tax forms late, or don’t pay on time.
If your books aren’t up to date then you won’t know how much you can expect to pay – and you could find yourself confronted with a big tax bill and no time to put money aside to pay it.
Don’t forget, for example, that if you’re registered for VAT, the VAT you charge to your customers isn’t yours to keep. You must pay that over to HMRC. Consider keeping a separate bank account for that money so that you’re not tempted to spend it.
You’re unlikely to ever love the taxman, but you should at least try to have a better relationship with HMRC - so you’ll avoid any unforeseen tax heartache in the future.
Keeping your books accurate and up to date can really help improve your relationships with lots of people in and around your business. Shouldn’t this Valentine’s Day be the perfect time to start loving your accounts properly and letting these relationships flourish?
- Video: self-employed business expenses by HMRC
- Finance Bill 2017-19: Making Tax Digital back on the agenda
- A little goes a long way: pension prep for freelancers
- 4 ways to keep your business ticking over while you travel
- Business on the beach: five holiday reads for freelancers