Tag: business advice

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Why bookkeeping software will help with MTD 

MTD (Making Tax Digital) will require businesses to keep digital records and to make quarterly submissions to HMRC. Clearly using bookkeeping software will help businesses to comply with these requirements but there are all sorts of other benefits that will help to offset the cost. 

  • Professional looking invoices (and quotes) emailed to your clients 
  • Recurring invoices emailed to your regular clients automatically 
  • Link to your till system to save you keeping scraps of paper and Z readings 
  • Links to your bank statements to save you typing in the information manually. Linked with AI to suggest the bookkeeping 
  • Link to card payment system so that you can get paid before leaving site and no need to chase invoices 
  • Link to DD collection system so no more debt collections calls 
  • Scan your bills and expense receipts and use AI to suggest the bookkeeping 
  • Remote access for client, accountant, and bookkeeper to keep everything up to date and to access that information 
  • Up to date information at your fingertips for management decisions, dividends, and loan applications 
  • Up to date information for cheaper/faster year end accounts preparation for shareholders, investors and loan/mortgage applications 
  • Link directly to loan application systems for faster finance 

Exactly what is available will depend on the cloud software that you choose but these are all fairly common features so why would you spend more time trying to work around the requirements? 

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Show me the money 

Spring seems to have brought renewed optimism and, in spite of macro economic conditions, many of our clients are looking at expanding their businesses. Business confidence in the Southwest is generally positive. 

Here are some useful links for businesses seeking finance in the Southwest. 

  • Founder Catalyst creates all of the legal paperwork and helps founders to manage investor engagement. 
  • Meet the Funder South West – Engine Shed and British Business Bank collaborate to share conversations with funders. 
  • Considered Capital is a great place to start if you’re not interested in equity funding. 

We are also happy to make introductions amongst our client base and other connections where appropriate so do let us know if you’re seeking finance or fancy investing yourself. 

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Tax Tip – MTD for self assessment 

The Spring budget announced an extension of the MTD scheme to £20k income businesses from April 2028. The limit applies to your total income (not profit) from sole trader business and rental properties. 

We are encouraging our clients to be ready from April 2025 so that we have a year to get used to the quarterly deadlines and keeping up to date digital records. For any clients that we put onto the scheme early we will have access to a dedicated MTD team to iron out any glitches.  

The official dates and limits are: 

April 2026 £50k 

April 2027 £30k 

April 2028 £20k 

TBC limited companies  

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How to avoid burnout 

We seem to live in a real hustle culture where working longer hours is seen as a good thing. As you know I’m a great believer in using technology or delegation to work more efficiently in a shorter period of time. But sometimes we still go through intense periods of work. 

  • Set yourself realistic goals and timescales. Unless you have a TARDIS you can only do so much in a particular time period so you may have to settle for 80%. Decide which 80% is the most important. 
  • Take regular breaks throughout the day to eat properly and exercise or just walk around the block (in daylight hours if possible but moonlight is better than nothing) 
  • Practice self care and relaxation techniques. I find that repetitive exercise doesn’t just help my body but also gives my mind an opportunity to relax and unwind. Exercise endorphins are also legal drugs! Don’t make yourself work harder than you would expect of your team. 
  • Recognise the signs of burnout early and change your behaviour sooner rather than later. 
  • Get support from colleagues or a business coach to help you set realistic goals and to give you some accountability. One of my coaching clients had a goal to lower her golf handicap which meant getting out to play/practice regularly.  
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Tax Tip

As we go into the new tax/payroll year don’t forget to tick the box to claim your Employment Allowance to offset your employers’ national insurance. From 2025/26 this is a maximum of £10,500 per year.

Most small companies can claim unless:

  • You have just one director and that director is the only employee above the secondary class 1 NI limit (currently £5,000pa from 2025/26)
  • If you have a group of companies then only one company in each group can claim the allowance.
  • If more than half your work is in the public sector then you can not claim the allowance.
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How much cash should I keep in my business?

Another question to which the accountants answer is … it depends.

It depends on your cashflow forecast and the likelihood of all the money coming in on time. Next week I’ll give some tips on what to include in your cash flow forecast if you’ve never done one before and also some software recommendations if you need to prepare regular cash flow forecasts.

The general guideline is to keep instant access to a minimum amount that is enough to cover 3 months of costs.

If you’re a pre-revenue startup dependent on funding (common in the tech sector) then you will also want to track your run rate. This is the number of days’ cash that you have in your business. Work out your average daily costs and divide your cash balance by this amount.

If you are holding over £50k on deposit then Allica Bank are currently offering some good deals (they’re not paying me any commission 😉)

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Making cash collection part of your customer service  

Most small business owners hate chasing customers for payment. (The only exception I know is a client who used to send witty poems to late payers) This means that it gets left until the last minute when payment is long overdue. 

To be honest, this is one of the main reasons that I like to have clients on monthly payments settled by direct debit. Yes, it improves cashflow (and spreads the cost for our clients) but it also means that I only have to have positive conversations with clients. 

But you can build your payment collection into your customer service. 

When dealing with a new client or a particularly large project you can pick up the phone and call them before sending the first invoice to check that everything is all right. If there are any outstanding issues these can be dealt with immediately thanks to this proactive approach. You can also check up on any purchase order numbers and contacts needed for the payment process. 

Once the invoice is raised it is worth checking with their payment department that they have everything they need, all authorisations have been completed at their end, and when they make their payments. There is nothing more annoying than missing their payment run by a day. (Okay, maybe it’s more frustrating trying to get papers from certain clients in order to complete their tax returns in plenty of time but it’s still not great) Whilst small organizations will pay around the director’s availability to make payments larger businesses will be tied to a monthly pay run. 

If you know their regular payment date you will know when to start chasing as your invoice may have been missed off the list so you need to ensure that it is expedited. I once had a client pay the wrong company and they wouldn’t have noticed if I hadn’t (politely) chased them. 

If it still isn’t paid and you have completed your part of the contract (which was confirmed during your courtesy call above) then move to 7 day notice of legal action sooner rather than later. And don’t forget to add debt collection costs and statutory interest to the bill. Even if your customer is unable to pay the full bill they should be able to pay something on account. 

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Client retention

When thinking about growth it is all too easy to focus on acquiring new customers. But it is important not to neglect our existing customers too.

Does your insurance company do the same as mine and offers better deals to new clients than to renewing ones. After I’ve shopped around and told them that I’m leaving they then offer to ‘match’ their competitor. At this point I’m already fed up with the extra work they’ve created for me so I want better than a matched deal. And yet, if they just had an inflationary increase each year, I’d save the time and effort of looking elsewhere and take the easy path of letting the policy renew automatically.

Selling commodities on price is (relatively) straight forward; save your best deals for your best clients. For services and higher value offerings it is as much about customer service as price.

Having taken great pains to ensure that we have the right clients on board it is a lot easier to look after them than to let them slip away while you’re busy courting newbies. Looking after your existing client base is much cheaper and easier than marketing to strangers.

– Set your service levels and then work on improving them

– Set fair price increases for all

– Consider giving a small treat to your loyal clients. This might be early access to a new service or just a simple thank you card.

Never forget that your clients CHOOSE to stay with you and they can also choose to leave.

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How to scale your small business

Scaling a business can only go so far by selling more of the same. Once you have reached capacity you will probably need to look at a new, scalable business model that requires less of you, the business owner. For instance, offering service one to many instead of one to one.

Hudson Business Advice offers courses and group coaching as well as individual coaching so that I can optimise my time and make our services affordable for more people. My books aim to offer this too and we have a range of ‘products’ at different price point but, more importantly, different levels of my (limited) time

To free up more time you can look at using technology. Not just AI but other software too. At Minerva Accountants we use Apron or Hubdoc to speed up bookkeeping. These apps incorporate optical character recognition, machine learning, and other AI technologies to suggest coding, so our bookkeeper spends less time typing data and more time reviewing. With up to date bookkeeping, we can offer our client better advice.

You may also need to start delegating more. Not just to free up my time but I like to find people better than me at specific tasks/roles. You can use written procedures and reviews to ensure that work is carried out to the highest standards.

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How to improve your profit margins

If your profits are lower than you’d like and you’re not taking home enough money to cover your bills, let alone to make up for all the hassle of running your own business, then you probably need to look at your margins. (If you’re happy with your profitability then save 2 mins reading) 

  1. Look at your prices and increase those where possible. I’ve blogged on this several times before and it is a key component in many of our courses or you can purchase our mini-course on the topic
  1. Reduce your costs by simplifying and documenting processes so that you can use more junior staff 
  1. Reduce your costs by using more automation (dare I mention AI or are you sick of hearing about that too?) 
  1. Reduce your costs by negotiating better terms with suppliers 
  1. Improve your efficiency to lower your costs 
  1. Focus on selling more of your high-margin products 

Even doing just one of these things will help to improve your business 

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