In the world of small and medium business management, a proper budgeting system and cash flow management are essential for attaining success and long-term growth.
For small businesses that lack a steady stream of income (such as companies that cater to seasonal demand), attaining these two vital components is especially vital for success and sustainability. However, a lack of knowledge can make it significantly difficult.
It may be quite difficult to fathom the idea of attaining proper cash flow management and budgeting without a constant stream of income, but technology has provided a new way to attain results sustainably—cloud-based accounting.
How does cloud-based accounting technology provide a sustainable solution?
One of the biggest barriers that concern small businesses with regard to budgeting and cash flow management is that the task requires more labour than their inconsistent stream of income could afford.
With the help of cloud-based accounting technology, however, small businesses with limited income now have no excuse to roll out several key processes and stay updated on their financial position.
As opposed to keeping a bookkeeper and an extra worker or two on retainer to tabulate costs, cloud-based accounting technology allows small business owners to keep abreast of their company’s financial health.
It is a modern solution that feeds small businesses the right data and helps keep them on track. It makes it a whole lot easier to manage any small business’s cash flow and maintain its budgeting tight enough to keep the company running smoothly all-year-round—even if its income doesn’t.
Aside from cloud-based accounting technology, what else can your small business use?
While it may be easy to see how well your small business could function with the help of cloud-based accounting technology, it is also important to consider that more stability and smooth operation can be achieved with more tools. There are two additional key practices that can help you keep your finances in order, even with a limited budget.
Having a rolling 12-month budget
A 12-month budget that can be used to keep yourself and your own business sustainable every day of the fiscal year. Creating a rolling 12-month budget not only allows you to stay disciplined in terms of spending and financial control, but it also gives a clear idea of what points in the budget can be improved with the use of removal or outsourcing.
Properly anticipating large expenses through forecasting
Another important component for ensuring that a small business manages to stay in financial shape amidst challenges posed by inconsistent income is adequate preparation—mostly in the form of a forecast of large upcoming expenses. After you’ve come up with your monthly rolling budget for the year and started to get a hang of your cloud-based accounting system, the final step in the preparation process is to tabulate and budget large expenses, such as:
- Income Tax liabilities
- VAT liabilities
- Investment opportunities
Although having a limited or seasonal stream of income definitely poses a challenge that can become quite overwhelming, putting the right practices into play can help your business stay afloat. That is especially so when it comes to financial management and cash flow maintenance. By taking the tips discussed in this article into consideration, you can set your business up for success and ensure its growth over the long term!
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