by Kylie Short on June 28, 2010
Being in business for yourself can seem like a roller-coaster ride at times. There are the incredible highs and then there are the incredible lows. Despite this we continue to work in/on our business which can seem to be a bit crazy at times to those not in business themselves. I know that my family and friends have all thought I was a bit looney for being a small business owner but what can I say except that I love what I do.
The key for me has always been flexibility and the willingness to find new solutions. When working from home stopped ‘working’ for me, I moved into an office space. When I had more work than I could handle I found subcontractors and employees. When my IT became painful I researched and found new solutions.
Here at Tilda Virtual Services we’re all about change and we constantly ask ourselves, ‘is this the most efficient way to do this?’ ‘how can I improve this process?’. We look for ways in which to make ourselves more efficient, we keep up to date on the latest toy on the market and we’re not afraid to sit down as a team and say ‘hey, this isn’t working for me/you/the client’ and to me this gives us an advantage over other businesses in the same industry.
So let me leave you with a question. What are you doing that needs changing and adapting? Are you honest with yourself about being flexible? Could your business do with a bit more flexibility?
by Kylie Short on June 21, 2010
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by Kylie Short on June 18, 2010
Cashflow can make or break a business and it’s something we as business owners don’t do very well.
So what is cashflow exactly?
Quite simply, cashflow is the movement of money both in and out of your business over a certain period of time. So if your cash is flowing out of your business and not back in at roughly the same rate, very quickly your business will run out of cash to pay it’s bills and you’ll be out of business.
So how can we manage our cashflow?
One of the first things we do here at Tilda Virtual Services with a new bookkeeping client is to take a look at the Aged Receivables report. We try to determine the accuracy of the report, the total amount outstanding and the periods in which the amounts fall. This report alone will tell us if the business is controlling it’s aged receivables effectively to remain solvent.
To manage your cashflow you will need to create an Aged Receivables Procedure. You need this procedure to make sure the relevant people within your business know when and how to follow up outstanding invoices. You need it to know how you will manage your cashflow.
Think about how you supply your product or service. Is it project based or ongoing? Do you have repeat business or are your clients/customers purchasing only the once? These questions will assist you in deciding on what trading terms suit your business. For example: let’s say you are a website designer who works with clients once only on a project basis. Your trading terms may very well be 50% deposit and 50% on completion. Or let’s say you are a Virtual Assistant who has some project based clients but the rest are ongoing repeat projects. You may decide to invoice once a week/fortnight or monthly depending on when your own bills and liabilities are due and that they are due 7 days from date of invoice. Once you have determined what your trading terms are, you are ready to move onto the next step in creating your AR Procedure.
Now it’s time to to think about how long it is between the supply of product/services to the time you get paid. If you supply a product/service on the 1st the month but invoice monthly on the 31st with trading terms of 30 days from date of invoice, effectively you are waiting 60 days+ to get paid. Does that seem right to you to have to wait that long to get paid? Can you see how if you changed how often you invoice and reduce your trading terms, you’ll get paid quicker?
You also need to think about when you’ll start to follow up overdue invoices. Do you call them on day 8 of your trading terms to find out when you’ll be paid? Do you send a reminder letter? Do you send a statement? Once you have decided on the sequence of events, write it in your Aged Receivables Procedure. Don’t forget to create the templates, phone scripts and record keeping forms to add with the procedure. They are all important elements of your new procedure.
Once you have done all the hard work of figuring out when you’ll invoice, how long until the invoice is due, when you follow up overdue invoices then start to actually do it, you should start to see an immediate difference to your bank balance. The idea here is to make sure your invoices are getting paid regularly and on time to make sure you can pay your own suppliers.
If you need assistance in creating your Aged Receivables Procedure, contact me today. I have templates for sale that you can use and I can coach you through the process. Don’t wait until your suppliers are hounding you for money before you start managing your cashflow. Start today and see the huge difference it makes to your business.
by Kylie Short on June 17, 2010
Systems and procedures aren’t something we as business owners think about, particularly in the beginning when it’s just us working in the business. We’re busy getting our logo’s done, domains registered, websites created and finding clients to even think about procedures.
But as a business grows, as the number of clients increase and as we take on team members it soon becomes very clear to the business owner that systemising your business is the key to future growth.
Let me tell you a story. Once upon a time there was a VA who started her business with one client. She would write down her projects and tasks in a notebook and everything was fantastic in VA-Land. The client was happy and the VA was happy. Soon enough the VA became busier and busier. She now had multiple notebooks for all her clients but being such a visual person, found it difficult to remember where she was up to and what she needed to do each day.
The VA started using a whiteboard the size of her office wall to track everything and that worked for a period of time until she signed up her first Associate/subcontractor and became a Multi-VA. Why was the whiteboard no longer working? Her trusty sidekick lived in Kentucky USA while she lived in country NSW.
The VA then hired an employee and more subcontractors. The business grew too quickly and there came a point where the employee quit and the VA was overwhelmed. She didn’t have time to find another employee or subcontractor and felt she had to do the work of two people just to keep the business moving and her clients happy. Needless to say that if the VA had created her procedures and systemised her business, she would have been able to find a new team member quicker than you can say ‘I need help’.
Learn from my mistakes. Take the time TODAY to systemise your business. From recording how to reply to potential client emails to how to answer the phone. Procedures on when to follow up overdue invoices through to how to show your clients you care, systemise everything. Not only will it free up your time it provides a framework in which all your team members or staff know exactly what is expected of them and why. It will reinforce your brand, your professionalism and it will allow you to grow your business consistently knowing that you have the ability to cope.
So to end my story, I recently took two weeks off from my business and left it in the capable hands of my project manager Melinda and the rest of my team. The business continued to work efficiently and my team dealt with everything in my absence including dealing with new clients.
Start writing down the things you do everyday and how you do it. Systemise as you go through your day and before you know it, you’ll have a procedure manual that just needs to be made pretty.
by Kylie Short on May 13, 2010
You recently decided to finally hand over your bookkeeping to a professional so you could spend more time on your business. Good for you!
You’ve done the hard work in finding your bookkeeper either through networking or through a referral from a friend. You’ve met with prospective bookkeepers, spoken to them about what they can do for your, how it will be done, what the end result will be and how much it will cost and now comes the hard part… handing over.
I can’t tell you how many times I’ve heard “I’ve just got to catch everything up before I hand it over to you”. If I had a dollar for every time I heard that phrase, I could probably semi-retire!
The whole reason why you’ve decided to hand over your bookkeeping is because it’s taking up too much of your time to get it done or because your really really bad at it.
If you attempt to catch up your bookkeeping before you hand it over, odds are that you are creating more work for the bookkeeper which is going to cost you more money.
Typical issues I see with new client bookkeeping:
- Bank account doesn’t reconcile so therefore you ‘fudge’ the bank fees;
- You entered a cheque but can’t find it so you enter it again;
- Your customers have paid you too much so you’ve ‘fudged’ the payment
- Insert your own mistakes here.
If I can educate business owners on one thing it would be to NOT catch up their bookkeeping before handing it over. Doing a little bit of repair work or forensic bookkeeping is ok but if a client’s books are that bad I’ll often say no. I can’t do it for you because it will cost you too much money to fix.
Most business owners don’t realise just how important keeping their bookkeeping up to date and correct actually is. They’re too busy in the day to day aspect of their business that they underestimate the importance of bookkeeping.
So please, on behalf of all the bookkeepers in the world, DON’T catch up your bookkeeping, just hand it over! Your cheque book will thank you!
