Updated: 4 December 2020
The new year is just around the corner and, while this year has been stranger than most, there’s a lot to look forward to in 2021. With vaccines on their way, business owners can start to plan and, most importantly, get their finances in shape for the coming year. To give you a helping hand, we’ve rounded up the financial resolutions you should consider making in anticipation of a brighter 2021.
To start the new year on the best foot, you’ll want to spend some time reviewing your current financial targets, budgets and processes to identify any key priorities and spot any inefficiencies that may be negatively impacting your business.
See if you can simplify your bill and invoice payments to save you time managing your cash flow. There are already some good tools out there for this, like Sage Business Cloud Accounting and QuickBooks, so check those out to see if they could benefit your business.
You should also take the chance to review your business, product and public liability insurance policies to make sure they’re still relevant for your current business practices.
Switching energy providers could help you save some much-needed cash. Check price comparison websites like USwitch, Money Supermarket or Compare the Market to see what you could be getting for your hard-earned money.
If you have company mobile phones or business WiFi, you should also shop around for the best deal on these as well. You might be surprised at the savings you could make.
Cash flow is always integral to your business’s success. Maintaining a steady stream of cash flow allows you to ensure that any expenses are covered and you can prepare for the unexpected. To help you keep that cash flow stream steady, you’ll want to ensure you issue invoices for goods and services promptly so that you can get paid swiftly.
Chasing late invoices can be a headache, so you may also want to take a look at revising your invoice payment terms and conditions. Reformat your invoice template, make due dates clear and visible and provide easy-to-follow payment instructions to try and encourage serial late payers to pay you on time — your bank balance will thank you for it.
Most business owners will face some form of debt. Whether it’s in the form of credit cards, overdrafts, a loan or asset finance, business debt can be a healthy way to inject extra funds into your business and improve your cash flow. You just need to manage it wisely.
Firstly you’ll want to review any debt you have, what the interest rates are and how much you still have to pay back on each. You can then consider whether consolidating or refinancing them is a good option for you. This could combine your debts into one single payment, or help you to reduce costs.
One way to do this could be taking out a loan under the Government Coronavirus Business Interruption Loan Scheme (CBILS). The scheme has some unique benefits, such as the Government paying the first year’s interest and any upfront fee on your behalf.
Learn more about refinancing your business debt with a Government CBILS loan.
As well as looking at existing debt, it’s worth considering if you need additional finance to achieve your business goals for the coming year. From managing cash flow, Brexit related changes, improving systems, buying equipment, or even branching out into new areas to grow your business, finance can help you take your business forward.
There are many finance options around, but one you should definitely consider for this purpose is the Government’s CBILS loan scheme. Its features are uniquely tailored to help SMEs. For instance, as personal guarantees aren’t required on loans up to £250,000, you’ll get added peace of mind when borrowing through the scheme. In addition, taking out a CBILS loan through Funding Circle means you’ll get a 12 month payment holiday on your loan, giving you greater flexibility to make the right choices for your business.
An important part of ensuring you get the best deal on any business finance you take out is making sure your business has a good credit score. A high credit score can mean lower interest rates, longer terms and higher offers on any finance you want to take out, so it’s worth spending some time to improve your business credit score.
There are a few things you can do to improve your credit score over time:
If you can try and stick to as many of the above steps as possible, you should see your credit score gradually start to improve over the coming months.
As anyone who’s been following the Brexit situation closely will already know, the exchange rate has fluctuated quite a bit since 2016. That fluctuation can sometimes mean that if you’re transferring to or withdrawing money from abroad, you may not always be getting the best deal possible.
Though you won’t always be able to do this, monitor exchange rates online using comparison sites like MoneySavingExpert regularly so you can try and spot when the exchange rate is at its best. If you have to travel for business, avoid exchanging money at the airport and be sure to use a business credit card that doesn’t charge foreign exchange fees or charges for withdrawing money abroad.
If you’re looking for more information about how to manage your foreign exchange strategy, check out our blog with Western Union.
Throughout the pandemic, businesses across the country have realised the importance of using the latest technology to stay connected while working from home. Taking advantage of new technology can help other areas of your business too, such as your accounting, project management or sales leads, and provide better cost-benefit than more traditional means.
To learn more about some of the best applications and software we’ve found in 2020, check out our full article on it.
As a business owner, you often have to don many hats — salesperson, manager, marketer, accountant and beyond. But that can sometimes leave you stretched a bit thin between a multitude of priorities, so as you come into the new year, it’s worth considering bringing in some professional help to get your finances in order and take 2021 by storm.
Having either an external accountant or someone in house to keep an eye on your finances can take a bit of the pressure off you, while also potentially saving you money in the long run. A professional accountant or finance advisor will be able to spot those little inefficiencies where you could optimise and make your money go further, so it can cover the upfront cost of getting someone else on board.
To ensure you’re in the best financial shape for 2021, you’ll want to make sure you’ve filed your Self-Assessment tax return by 31st January. Being late on filing your return could cost you penalty fees and interest charges, so it’s important to make it one of your biggest priorities coming into the new year if you want to avoid those.
Make sure you’re taking advantage of any and all the tax reliefs on offer to you, such any expenses, and declare all of your income.
It’s important to remember that when taking a loan your business is liable for the full loan amount. The CBIL and BBL schemes provide a guarantee to the lender, not to the business.
All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.If you have any questions, please speak to your professional adviser or seek independent legal advice.
CBILS and BBLS are managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. They are not authorised or regulated by the PRA or the FCA. Visit british-business-bank.co.uk.