A cash flow crisis is every business’s worse nightmare. Many South African businesses are facing a cash flow crisis as a result of the COVID-19 pandemic and lockdown restrictions. We explore the few beneficial ways acquiring an accounting service during a cash flow crisis can help your business survive. When it comes to accounting services, SureBooks is the partner that will help your business move past this stressful time.
How to Survive a Cash Flow Crisis with Accounting Services:
We look at a few of the benefits of acquiring accounting services during your business’s cash flow crisis.
Find the Cause of Your Cash Flow Crisis:
You will be acutely aware that your business is in a cash flow crisis, but you may not know how this happened or what is the main cause of the financial strain. These are a few of the possible causes of your business’s cash flow crisis.
Reduced Sales: This is the first and obvious reason why a business may be experiencing a cash flow crisis. From external circumstances such as the COVID-19 pandemic to business faults such as not keeping up with current trends, there are numerous reasons why your business may be experiencing reduced sales.
High Expenses: Your business is making more sales than it ever has before, but you are still experiencing a cash flow crisis. How can this be? A possible explanation is that your business expenses are too high in comparison to your sales.
Slow Invoicing System: If your business is based on an invoicing system that is slow, then the cash flow into your business will be slow.
Incorrect Pricing: When you first started your business, you may have placed a low price on your products or services to try to kick-start customer interest. As your business grows, you may be sitting with a cash flow problem due to this low-cost pricing model.
Slow Collection of Receivables: There are numerous reasons why businesses hesitate to collect the funds that are owed to them. They may value the relationship with their clients or feel awkward about asking for money. There are many cases where a cash flow crisis could have been avoided if the business collected what they were owed on a timely basis and reduced the costs of their money collection process.
No Emergency Fund: Most businesses go through financial seasons. If your business sells bikinis, you can expect there to be a decrease in sales over winter. Your business will need an emergency fund to carry your cash flow through these low-income periods otherwise you will experience a cash flow crisis. Financial dips can also be unexpected, and if you do not have an emergency fund, you will be faced with a cash flow crisis.
You need to understand where your cash flow crisis is stemming from to make an accurate plan as to how your business will handle it and survive. Accounting services will step in and analyse your current financial statements and arrive at the problematic areas in your business. You will know whether it is a slow collection of receivables or a decrease in sales and can therefore start acting accordingly.
SureBooks offers accounting services aimed at providing you with peace of mind. You will not be lying awake at night wondering how it all went wrong. Rather, you will have perfectly organised books and a clear plan as to how to move forward from this current financial crisis.
When in a cash flow crisis, it is easy to allow the stress to take over and simply slash as many of your expenses as possible. Reducing expenses is a solution to a cash flow crisis, but the expenses you choose to decrease are also important for the survival of your business.
We have listed some recommended expenses to decrease.
Service Costs: Analyse all your current monthly service costs, such as your banking fees, insurance, phone plan, and internet provider costs. Do some research on competitors and see if there is a less expensive service provider. We recommend taking these rates to your current service provider and asking if they will match the competitive rate.
Change Suppliers: Find a supplier that offers cheaper rates for the products you need for your business. It is important to still retain the quality of your products, as a cheaper supplier may mean products of lower quality and this can lose some of your heavy user customers.
Optimise Production: Assess your production process and look for any faults in the system. Does your current production system take too long? Is there waste that could be sold rather than discarded? Do you have more employees than necessary to operate your production system? These are all factors you need to take into consideration and cut your costs where possible.
Marketing: You simply cannot afford to slice all your business marketing expenses, but you can save money by changing your marketing tactics. One way to reduce costs is to move away from traditional marketing avenues and start embracing digital marketing. For example, using social media as a marketing channel can cost you less compared to traditional marketing channels.
Virtual Office: If your business can go online, then make the change. Working virtually has never been easier with the number of online resources available to businesses. A virtual office is a quick way to reduce your overhead costs, such as utilities or rent, and therefore decrease your expense during a cash flow crisis.
You may be wondering how acquiring the additional expense of accounting services is going to help you during a cash flow crisis. The cost of the accounting service is outweighed by the numerous ways the accounting service will help you reduce other expenses. For example, accounting services will be able to highlight your fixed and variable expenses, and therefore come up with a solution to cutting expenses correctly.
Another major way accounting services can help you reduce your expenses is with your taxes. We know what you are thinking, but no, your accounting services are not going to help you evade your taxes. At least an accounting service that is worth your trust should not suggest this. There are numerous ways accounting services can help you survive a cash flow crisis simply by monitoring your taxes correctly.
Avoid Tax Correctly: There are numerous legal ways that you can reduce the amount of tax your business pays. An accounting service will be aware of the specific ways your business in your industry can avoid tax. This will help reduce your tax expenses and can be a saving grace if your business is experiencing a cash flow crisis during the tax season.
Avoid Tax Penalties: Paying your tax on time is critical to avoiding tax penalties. The penalties for late tax payments can be steep and can be the cost that ultimately destroys your business during a cash flow crisis. An accounting service will make sure that all your tax is paid on the correct date and therefore avoid any unnecessary costs.
Every business needs someone to handle the accounts. Outsourcing to an accounting service is a cheaper alternative to hiring an in-house accountant. You also avoid the costs of bookkeeping mistakes when you outsource your business’s accounting requirements.
SureBooks’ accounting services are focused on ensuring that your business grows. We will be able to quickly and accurately highlight the expenses your business is facing and help you make the best decisions on cutting expenses to ensure that your business survives. A bonus to SureBooks is that our accounting services are an affordable option for small businesses.
Keep Books Up-to-Date:
One of the main reasons a business ends up in a cash flow crisis is because the business finances are not being kept up to date. Expenses start to spin out of control and you are left feeling overwhelmed and in a cash flow crisis. An accounting service will keep your books up-to-date so that this is never the reason why your business faces financial strain.
At SureBooks, we understand that as a business owner it can be difficult or stressful to stay on top of your business’s financial situation. Our financial managerial efficiency will ensure that your books are always kept up-to-date so that you are always aware of your business’s financial situation and can make the best decisions.
Avoid Another Cash Flow Crisis:
After experiencing a cash flow crisis, you will not want your business to go through another one. Accounting services are an excellent way to stay on top of your business’s financial situation and therefore have ample warning if your business is teetering on a crisis again.
Another way accounting services can help you avoid a future cash flow crisis is with cash flow forecasting. Your accounting services will analyse the last few years of your business’s cash flow and then use this information to forecast the expected future cash flow. An accurate cash flow forecast can help avoid your business experiencing another cash flow crisis.
SureBooks is here to be the partner that helps your business succeed. Our accounting services are purely focused on handling your accounting needs accurately and efficiently so that together we can help your bottom line grow continuously.
Tips for Handling a Cash Flow Crisis:
We have thrown in some extra tips for handling a cash flow crisis. When SureBooks is your small business accountant, we will ensure that all these aspects are thoroughly explored and handled.
Alter Your Budget: You are going to need an altered budget when your business is experiencing a cash flow crisis. Sit with your accountant and create a new budget for your business that takes the cash flow problems into account.
Sell Assets: For a quick in-flow of cash to help tie your business over, an option you have is to sell some liquid assets.
Alter Payment Terms with Suppliers: Have a discussion with your suppliers and ask for altered payment terms where you can pay smaller increments over a longer period or delay your payment dates.
Invoice Early: Send your invoices to your clients earlier so that cash can start flowing into your business sooner.
SureBooks is a small business accountant. We offer both accounting and payroll services to ensure that all the finances of your business run smoothly and comply with all regulations.
The SureBooks team is comprised of qualified accountants with years of experience. We have handled the finances of small businesses across a diverse range of industries. We can offer your business the best financial management and advice to ensure your business succeeds in your industry.
When you combine our experience with our commitment to ensuring that your business succeeds, you have found a valuable partner for your small business.
Acquiring SureBooks accounting services for your business is a sure way to survive your current cash flow crisis.