How to keep on top of cash flow: 5 essential tips, by Vives Pons

Tips  to cash flow and set up a business in Spain and Costa Blanca

A drop in orders, a shortage of work, rising costs, slowing demand, weak margins. All these things can damage a small business. But ultimately, the only reason to board up the door and bring in the receivers is a lack of cash.

Setting up a Business in Spain and Costa Blanca

You started a business because you’re good at what you do. Many small businesses are, yet so many still fail. Tragically, many of them had plenty of customers and a strong order book, but ran out of cash, either because invoices were paid too late or the bank wouldn’t extend credit. To avoid that happening to you, follow these five tips for keeping on top of king cash.

Plan your cash flow

The worst thing for a business to do is believe it has no control over cash flow. Don’t leave it all to your customers. You can influence what jobs you take, how much you pay for materials and services and when you are paid. But you need to forecast and plan, and you need to learn to pull the right levers.

Do you know how much cash the business will have in a week, a month, three months or a year? If not, then you don’t know what sort of jobs are best to take. A big job might be more profitable – great if you have plenty of cash in the bank. But if you need cash in the next eight weeks and the job is four months long, you might be storing up trouble.

In truth, working with reliable, quick-paying clients can be better than working on big jobs, at least initially. If it means slightly slimmer profits, well, it’s better than not being able to pay yourself (or worse).

Keep bookkeeping up to date every day

Bookkeeping is a chore so easily put off, particularly if you’re the one doing most of the actual work. But if you don’t keep the books up to date, then cash flow will come back to bite you. You’ll kick yourself if you could have done something about a cash flow problem if only you’d known earlier.

Fortunately, there are tools available that take the grind out of bookkeeping and help you keep on top of it every day. Online bookkeeping software can be accessed from anywhere, so you can check and update it on your smartphone or tablet while out and about. Modern technologies mean there’s no reason to get behind with the books.

Invoice on time, get paid on time

Keeping your books up to date is the first step in making sure you get paid on time. The next is making sure you invoice as soon as you can. Software tools are now available to help small businesses automate much of the invoicing process, picking up data from purchase orders and drawing up customer details from your records.

If you’ve invoiced quickly, you can let your customers know when you expect to be paid. Some customers will run longer-than-standard payment terms, say 60 days. But there’s no reason not to remind them as soon as the invoice is overdue – or even just before it falls due. And try to persuade customers to pay by bank transfer rather than check, as it will speed up the process.

Keep the bank happy

Your bank accounts can be integrated with online bookkeeping software, making it easier to make quick cash flow decisions. Accidentally going over your overdraft limit can be a painful mistake. Being proactive will help you keep your bank onside and gain access to finances when you most need it.

Explore alternative financing options

If you know you’re going to need cash in the short term and renegotiating with the bank is out of the question, there are other forms of finance which are preferable to damaging your credit rating. Ask your customers if they’re interested in early payment discounts, as they might be looking to save money. Some clients will also offer invoice finance though a third party, while online markets will buy invoices from you and offer rapid access to cash, at a price.

Cash is the most important thing for any small business owner to master. Get it under control using these tips, and your business will be in a superb position to flourish and grow.

No matter what kind of work you do, if you want to succeed running small business you need to master the books.

Vives Pons offers you the best software for small businesses in the market. SageOne:

  • Easy to use, you don’t need to known accountancy.
  •  We include SageOne in our monthly fees.
  • You can make and email to your clients invoices and quotes.
  • Totally connected with Vives Pons.
  • Access with you mobile phone.
  • You can plan your own taxes quarterly.
  • Vives Pons help you to organize your business.

Please, ask us for a quote. We offer you good prices according to your needs. Vives Pons & Asociados offer you tax advice & tax planning.

10 questions to ask yourself before starting your own business in Spain

Start-up a business in Spain and Costa Blanca

Deciding to go off on your own is no easy feat and it shouldn’t be a decision that is made overnight. People choose to start their own small businesses for a number of reasons, often taking a huge risk in order to make their dream a reality. Afterwards you’ll have consider several points which accounting companies as Vives Pons will be able to advice offering integral services for business. But, don’t worry: one step at a time!

Because there is so much at stake, it’s important to know exactly what you’re getting in to and more importantly, if you have what it takes. We’ve compiled this list of 10 questions that every aspiring entrepreneur should ask and answer honestly before quitting their job and starting their own venture in Spain and Costa Blanca.

Do I enjoy a challenge?

As an entrepreneur, you’ll be faced with numerous challenges, many of which will be ones you’ve never had to deal with before. You need to ask yourself how you normally react when things get tough and you’re faced with trying times or situations. If challenges make you want to run in the opposite direction and avoid them at all costs, then you should think long and hard before taking the plunge. On the other hand, if they excite you and motivate you, then you’re off to a great start.

Am I a self-starter?

As we’ve mentioned in the past, part of the appeal of becoming an entrepreneur is the fact that you get to be your own boss – this can either be a blessing or a curse. When you’re running your own business, there won’t be a manager or boss telling you what to do or peering over your shoulder. You’ll be responsible for motivating yourself and getting things going, so if you’re prone to procrastination, then you’ll likely need all the help you can get.

Am I passionate about what I’m going to be doing?

Pursuing your own business dreams takes focus, hard work and long-term commitment, and the reality is, that if you’re not passionate about what you’re doing, then it’s much harder to have the right attitude. Believing in what you’re doing or offering is a great motivator and the easiest way to secure success.

How am I at handling the unknown?

When you go out on your own, you’ll be entering new territory and possibly one with which you are not very familiar. You’ll be faced with issues and decisions you may never have been faced with in the past, and this is scary for some. If you see handling the unknown as an exciting challenge and you’re good at thinking on your feet, then you’re likely to be fine as you embark on your own business journey in Spain and Costa Blanca.

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Am I a creative problem solver?

Entrepreneurs need to be able to think out of the box, especially when it comes to finding solutions to problems. If you lack problem-solving skills and go into a blind panic whenever you’re faced with a complication, then you need to decide whether or not having your own business is really the right way to go.

Is my idea profitable?

If the first step is to believe in your business idea, then the second is to be sure that it can make you money. Any time someone starts their own business, they run the risk of it not working out, but you can be sure that they knew right from the beginning that there was a need for their service or product, hence making it likely to be profitable. Thorough research and extensive testing has to be conducted beforehand to ensure that the idea you’re on to (as well as how you end up marketing it), is in fact one that can bring home the bacon.

What is my USP (unique selling point)?

When you first enter your particular market, chances are you’ll be met by lots of competition. The key then is to differentiate yourself and your product from the rest. Having a solid marketing plan in place will help to ensure that you do that successfully and that you prove to potential customers that you can do it better than anyone out there.

Have I adequately assessed the financial risks involved?

There are of course many risks that go hand-in-hand with starting your own business, one of which is financial. You need to be as prepared as possible from a money point of view before taking the plunge and this will only be possible if you thoroughly analyse what the risks are beforehand. Having access to funds is part of it because you need to feel confident that no matter what happens, especially in the beginning stages, you will be ok financially.

Do I have a solid foundation from which to launch my business?

Many entrepreneurs start working on their own projects months before they actually quit their day jobs, so as to give themselves time to save and prepare for the journey ahead. Ensuring you have a solid foundation by the time you start your own business is vital, and this includes having a clear business plan in place, as well as adequate funding and defined business goals, to name but a few things. Only once everything is in place, should you then quit your job to become a full-time entrepreneur.

Am I ready to take full responsibility for everything?

When you’re the one at the helm of a business that usually means that the buck starts and ends with you. Basking in its success is something every entrepreneur enjoys, but with the good, comes the bad as well. This means that you’ll be taking the credit when things go right, but then you’ll also be held accountable when things go wrong. Ultimately, when you own your business, you need to be ready to shoulder responsibility across the board.

Choosing to start your own business in Costa Blanca (Spain) can be overwhelming and wonderful at the same time. It takes great planning, dedication and laying of the groundwork beforehand if a business is to succeed, so it pays to know exactly what you’re getting into before you take that brave leap. If the answers to the above questions are generally positive and enthusiastic, then you’ll know you’ll be giving yourself the best possible start to something hopefully great.

While you’re doing that, Vives Pons & Asociados accountants in SpainCosta BlancaDenia together with Sage One will be there making sure that all your online accounting and tax planning needs are taken care of.

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