With the UK officially in recession* and the cost of living rising sharply, there are a few things your accounting software can do to help you weather the storm, and with very little extra work for you.

* UPDATE: On 15th March 2023, in the Spring Budget, the Chancellor announced "In November, they (the OBR) expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023... today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%".

Cashflow forecasting

If cash is king, then keeping an eye on your business cashflow is an important first step. Do you know how much money is coming in and when? Do you know how much you need to pay out and when? Does the income cover the outgoings? Most accounting software can show you reports to answer all of these questions. Some can give you a more sophisticated prediction based on your usual and future transactions.

Overdue invoices?

Take a critical look at the money coming in. This is the simplest way to improve your cash flow. You’ve already found the customer, negotiated the sale and done the work, you’re just waiting for a payment. Do you have a robust system to track which invoices have been paid? Reminding and chasing customers for overdue payments can be done automatically by your accounting software. You can choose how often reminders are sent and always have a clear view of which invoices are overdue.

Time to pay

Think about your payment terms on your invoices. Many businesses will offer 30 or 60 days to pay but is that timescale acceptable for you? Most people are used to paying straight away for goods and services in their everyday life. Imagine getting a 60-day invoice for your weekly groceries! You can determine your payment terms so if you prefer ‘on receipt’ (that’s straight away), 7 days or 14 days your software can easily apply this for you.

Ways to Pay

Think about giving your customer easy ways to pay – a link to pay online is often easier for the customer than setting up a payee in online banking and avoids any errors in copying bank details across. Most software can produce an invoice with a link to pay using payment services. Fees can be as low as free depending on the service. You can set up recurring payments for regular customers meaning they don’t have to do anything to pay your invoices.

If you always sell services or good in person, another payment option to consider is a card payment machine. Fees can vary for the services but usually you will get your money in the bank straight away.

Accounting software

Accounting software itself usually incurs a monthly cost but some are available free of charge if you hold certain bank accounts. You can obtain software for as little as £108 per year and there are many more benefits than those described above. See more on the blog below
06/09/22 Accounting Software: What's in it for me?

If you need help choosing or setting up accounting software, or with credit control in your business, please get in touch.

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