The holiday season is a time filled with busy days and full nights, making it difficult to sometimes focus on the financial health of your business. It is easy to lose track of time during this season, especially when your business is busy and clients want their work completed quickly.
For many, the end of the year means the end of the fiscal year as well and brings another aspect into this busy season. Luckily, we have come up with five bookkeeping tips to help you prepare for the upcoming year while maintaining a focus on the financial health of your business.
Create a Budget
As mentioned, many businesses begin to slow down through the months of January and February. This means that you should create a budget for the months ahead that includes anticipated expenses. Take consideration of rent, payroll, accounts payable, and any other expenses that your business will incur. Now that you have an idea of your expenses.
If you don’t manage your cash flow well during the festive season, your employees’ paycheques might bounce because you don’t have enough funds in your bank account. To avoid such a situation: Make sure your cash reserve is sufficient to cover your employee's salaries for at least two months.
Remember to Collect Debts
Create a list of outstanding debts, and focus on collecting them before the holiday period ends. This ensures that you have the necessary cash available through this season, as well as the slower months of January and February (for many businesses). This is also beneficial as it allows you to start the new year with a fresh set of books.
In the same way that it is crucial for you to receive all payments before December 31, it is just as important for your external vendors that they do the same. Being punctual with your accounts payable is also important to create goodwill with your vendors as it can benefit your firm in the long run. If you have received invoices from them, send out a reminder to send you bills before December 10. If you get them any later than that, you might not be able to clear and pay them in time. On the other hand, if you want to avoid payments in December to increase your cash reserve for the new year, you can try working out a plan that is agreeable to both parties.
There are many ways a business can save money, especially during the holidays when business is slow and the office may be closed for extended periods. For example, you may be paying for services that are not utilized during the holiday season. Simply cancel the subscription and wait for the new year to re-evaluate.
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Cloud Bookkeeping, Inc.
3281 E. Guasti Road, Suite 700
Ontario California 91761
Tel: +1 (909) 952-3804