Bookkeeping Services

10 tips to simplify your business finances with expert bookkeeping services

Running your business is a challenging task. Being the owner, you are bound to play several roles. Sometimes, you play the CEO role; other times, you have to manage your finances or become director of marketing departments to promote your business, and the list is neverending. Besides playing all these roles, you even have to manage your bookkeeping for your business. It is one of the most essential tasks if you want to keep your company afloat, even though it may not be your favorite task.

You are not alone in this boat. Several other business owners also do not find this activity fascinating. Business owners love to admire the ever-increasing profits but hate reviewing the ledger accounts and crunching numbers. However, bookkeeping is essential to your business if you want to track all your expenses and monitor growth. E2E Accounting can help you simplify your finances by providing expert bookkeeping services. With our specialist bookkeeping services, you can easily gain more insights into the feasibility of upcoming expenses and avoid any errors.

Below are 10 bookkeeping tips for small businesses to help get the hang of the bookkeeping process.

Tip 1: Try to keep your personal expenses and business expenses separate.

One fundamental business rule you must follow is to keep your personal and business finances separate! We are sure we are not the first to advise you to adopt this rule. There is a significant reason why everyone suggests you about the same:

  • If you keep your finances separate, you can easily differentiate between your personal and business expenses.
  • You can also easily monitor all your business expenses and avoid any unwanted costs.
  • If you have a separate business account, you can quickly build your credit score, which can be helpful to you in the future.
  • Maintaining separate finances will also give you a better view of your business budgets.

Wondering which bank is best for opening your business account? Check out the best banks in the UK to get started with your bank account for your business. 

Tip 2: Try to make bookkeeping part of your daily routine.

Making bookkeeping part of your daily routine is one of the best and simplest ways to manage your business finances. Rather than doing all the work in the last minutes right before your year ends and tax deadlines, this will only create a panic situation for you. It is always better to do a favor for yourself, take up this task every week, and make it a part of your routine. Block your calendar and prepare your routine checklist of all your tasks, including the following aspects of bookkeeping:

  •       Checking all the invoices
  •       Reviewing and paying all your expenses
  •       Categorising your incoming payments and expenses
  •       Recording the payments
  •       Recording all the receipts
  •       Balancing your business accounts
  •       Filing all the documents in the proper folder
  •       Compiling and reviewing your financial statements

This checklist will help you keep track of your records and stay up-to-date with your finances. You will also feel part of a business, as your books are clean and you can make informed decisions. If you find it difficult to make bookkeeping part of your daily routine, partnering with a professional bookkeeping services: such as E2E Accounting, can significantly lighten the load.

Tip 3: Try to keep track of your cash payments.

With increasing digitalization, even payments towards transactions can easily be made through various online modes. However, there is no hard and fast rule for avoiding cash transactions. The fundamental rule is that you need to pay extra attention while bookkeeping your cash transactions and not lose track of the cash. Following these guidelines can help you avoid cash-related hassles:

  •  Always keep track of all the cash related documents.
  •  Always keep your receipt book handy for every cash transaction.
  • Ensure that you are creating duplicate receipts; one record is for yourself and one for the customer.
  • Keep track of all your cash transactions on the cloud system, linking it through multiple devices.
  • Keep monitoring your cash receipts and cash flows routinely during the weekly bookkeeping task to ensure that all your cashrelated transactions are up to date.

Tip 4: Try to maintain all receipts.

As per the statutory norms, HMRC, IRS, and others can conduct audits for up to six years. It means that storing the records cleanly for at least six years is essential. However, the key benefits of maintaining all the documents in a sorted manner are:

  • Your debits and credits will be recorded correctly. Which means your accounts will show an accurate financial position.
  • You can also keep track of all your accounts receivable and payable.

To do so, you must practise saving all the receipts and invoices and jotting down all the essential notes. Store it by giving it a proper name for all the files and records. Also, ensure that all the records are stored digitally to avoid losing documents.

Having all your documents sorted and stored in one place will avoid chaos and frustration while closing the books.

Tip 5: Try to monitor your accounts receivable and payables.

Late payments will affect your business and relationships with customers or vendors. Also, chasing up the bills at the last moment will make your accounting difficult at the end of the month.

One of the easiest ways to avoid all these hassles is by monitoring your accounts receivable and payable. It is one of the most enjoyable works, especially for small businesses. Make sure all your bills and invoices are paid on time, and you remember all bills or invoices from your previous clients before you move ahead with your next project.

When your accounts receivable and payables are simplified, you will be ensured that all your cash flows are accurate and in constant movement.

Your weekly accounts receivable and payable tasks must include:

  • Sending invoices to the customers
  • Checking your bills, which you are required to pay
  • Clearing paid invoices and bills
  • Recording and tracking payments
  • Noting cash payments to ensure a clear document trail
  • Following up on any unpaid invoices

Tip 6: Try to set aside money for your major business expenses or recurring expenses.

Try setting aside the money for essential recurring expenses, such as rent, insurance, office supplies, etc. Following this practise will help save time for recording those expenses over and over. Setting aside such money will also help you properly budget for major expenses and keep track of such costs during your monthly budgets.

For example, if you are about to acquire an important project but need a larger budget, you can do this only when your expenses are streamlined. When the money is set aside beforehand for recurring costs, you can easily visualise how much your budget for the new project is over the period.

It can be tempting to push bookkeeping to the back of your mind, especially when you’re overwhelmed with other business needs. But bookkeeping should be a priority if you want to keep your business up and running. Set some time aside weekly to check your transactions and ensure they tally with your purchases. It will make things easier at the end of the month. Or you can get help from professional bookkeeping services like E2E Accounting to help you keep your books up to date.

Tip 7: Try to set aside money for paying your business taxes.

While you are keeping track of your business finances, it is also essential that you set aside a certain amount of money for paying your business taxes. You will not prefer to miss all the tax payments due to inadequate finances. When your books are well maintained, you will get an idea of how much tax you will pay for the financial year and accordingly set aside the relevant provisions. In short, tracking your finances is not limited to keeping track of your expenses; when you follow your finances smartly, you also set aside money for paying your business taxes. If you feel that you are unable to keep track of your business finances and set aside money for your taxes, partnering with a professional bookkeeping services: such as E2E Accounting, can provide you with effective tax advice and manage your finances.

Tip 8: Try to review financial reports consistently.

By regularly updating your books each week, you can easily pull your financial documents that are true and reliable whenever required. Your accounting software will help you quickly generate financial reports at the click of a button, be it for the current month, current quarter, year, or only for today. If your finances are readily available, you can share them with others whenever required. Therefore, it is always advisable to check your finances regularly.

Tip 9: Try using automated payroll systems.

Payroll forms one of the most substantial expenditures for your company. Sometimes, you pay your employees through bank transfers or manual monthly payments. However, this can at times create discrepancies. As an employer, ensuring timely payments to your staff can also help you build stronger relationships and trust within the team.

That’s why opting for automated payroll is the optimal approach to maintaining efficiency and punctuality for everyone involved in this process.

Tip 10: Try automating your record-keeping.

The most effective approach to simplifying bookkeeping for new businesses is to explore methods for automating recordkeeping, often achieved through the utilisation of online accounting software.

There are several online accounting software options available on the market that are tailored specifically for new businesses. These platforms typically provide users with a range of functionalities, which include fundamental day-to-day administrative tasks such as:

  • Automating bill payments
  • Generating invoices
  • Integrating bank account details and transactions
  • Utilising budget dashboards
  • Creating financial reports

By opting for automation for your bookkeeping processes, you’ll free your valuable time to concentrate on other aspects of managing your business. Nevertheless, it’s imperative to conduct thorough research before committing to a particular software solution since the needs of each business can vary significantly. If you find it difficult to use accounting software, partnering with a professional bookkeeping services: such as E2E Accounting, can significantly lighten the load of understanding and using software.

Conclusion

Delegate the task to experts. Do you know what’s even more effective than relying on software to automate your bookkeeping? By entrusting the responsibility to a professional bookkeeper. 

Your business demands your undivided attention, and sometimes the simplest choice is the wisest one – outsourcing tasks that you don’t have the time for allows you to concentrate on the tasks that truly matter to you. A professional bookkeeper possesses the expertise to handle the intricacies of bookkeeping, relieving you of the burden and enabling you to focus on revenue generation rather than documentation.

In conclusion, it’s evident that maintaining accurate financial records plays a crucial role in the success of small businesses in today’s fiercely competitive market. While the task may appear daunting, partnering with a professional bookkeeping services: such as E2E Accounting can significantly lighten the load and unlock numerous advantages.

E2E Accounting offers expert support and specialised knowledge to help small business owners streamline their financial management. By leveraging their services, businesses can ensure that their records are well organised, up-to-date, and compliant with tax regulations and other relevant laws. Get your finances in order with E2E and arrange a consultation to connect with one of our experts.

Payroll Services

8 Advantages of Hiring Expert Payroll Services to Enhance Your Business Growth

With the advancement of technologies and the evolution of the working culture, several companies, irrespective of their size, are now opting to outsource certain business functions. Hiring professional services has become a common phenomenon, and companies prefer them rather than hiring in-house experts and training them.

With the increase in digitalization and the availability of several platforms to rate the company, it has become effortless to go public, even for the slightest issue.

Consider the following scenario: you have made several efforts to acquire exceptional people to join your firm, but these potential talents are not joining you because they have heard that your company’s salaries are not paid on time or that payment problems occur. It will have a direct impact on the reputation of your organisation.

Companies are now opting to hire third party services for their various functions to save themselves from any such embarrassment. One such largely outsourced function is payroll processing. Salaries are directly related to the welfare of the employees and are one of the most important aspects of running the business effectively.

Believe it or not, it has become difficult for several companies to manage their payroll processes in-house. Therefore, they are now hiring professional firms like E2E Accounting to process payroll. E2E Accounting Firm is the most financially smart decision you can make for your payroll processing services, leading you to enhance your business growth.

Find out how many companies in the UK have opted for payroll services to process their payroll.

A whopping 61% of British businesses opt for payroll services for their company’s payroll process. And they have been doing it for a very long time. 

Hang on; this blog will eventually help you understand whether you need to hire payroll service providers to process your payroll. What are the benefits, and why is hiring them a brilliant idea for your business?

Who are Payroll Service Providers, and Why hire them?

Payroll service providers are the third parties who will take complete responsibility for your entire payroll process, from managing your employee’s salaries to other financial benefits. They will process all the financial transactions between you and the employees, which includes calculating their salary, bonuses, benefits, and any other reimbursements and making necessary adjustments, tax deductions, NI’s, and much more.

Why hire them is simple. Many businesses ask this question; if you are also thinking like them, you must continue reading until the end of this blog.

We know payroll can be done in-house, but you need proper finance and an HR team to take care of your payroll. But nowadays, firms also prefer operating remotely and hiring employees who want to work remotely. The benefit of remote working is that you can also employ international employees if they are highly talented. But it also means that you have to make international payments as salaries, and the calculations must be correct. But it also involves complex calculations and regulations.

The best way to avoid all these complexities is to opt for third party payroll services and let them handle it. Isn’t it the perfect way to distribute salaries to employees effectively?

Still have further questions? Below are the Eight reasons why you should consider third party payroll services.

1. Cost Effective

Whether you are paying salaries and benefits every week, every month, or every year, calculating and processing them is a time-consuming task. Though it seems easy to do, the fact is that it is entirely the opposite. Only if you have adequate knowledge of finance and legislation; you will be able to process it.

You must recruit an in-house professional at a high salary to process the payroll. You will also have to purchase payroll software, which can be expensive, and take training for the software.

To avoid all these hassles and adopt a streamlined approach, companies are now considering hiring payroll service providers like E2E Accounting to perform this task, which is cost-effective and saves both time and money.

2. Works well irrespective of the size of the company

No matter what the strength of your company is, whether you are:

  • A start-up with 10–50 employees or a large firm with over 5,000 employees.
  • Hiring third-party payroll services will help you save time to focus on other core areas.
  • Leading to your company’s growth.

You also avoid mistakes while processing the payments and avoid any discrepancies with the employees or government.

3. On time! Every time

If you are hiring experienced payroll service providers like E2E Accounting, be assured that your salaries and benefits are processed and released within the stipulated period every time! They are faster and process with complete accuracy compared to regular employees in-house.

4. Real-time Reporting

Generally, these service providers use portals or other systems wherein your employees are supposed to mark their attendance or fill out time sheets and further details. Since they are third–party people, complete transparency is maintained, and up-to-date reports are generated in real-time on the payroll status of employees and any other payroll–related matters.

5. Compliance

Hiring payroll services from firms like E2E Accounting ensures you comply with the ever-changing compliance reporting and legislation. All your RTIs will be filed on time, avoiding costly penalties.

6. Flexibility

Payroll service providers provide a flexible payroll solution that can be adjusted to match your company’s payroll processes and demands.

7. Data Security

These payroll service firms use the latest cloud-based technology for payroll management and work in accordance with industry-standard security measures to ensure your payroll and workforce management data is secure and safe at all times.

 8. One Company for All Locations

You don’t need teams everywhere if you have offices worldwide. You also do not need to engage with different payroll service companies. One company can handle your operations for all the locations, just like E2E does.

Points to consider while hiring third-party payroll services

If done correctly, payroll services may be helpful to your organisation. So, while hiring these professionals, there are a few things to remember. They are as follows:

  • Be careful while sharing data: When you hire payroll professionals, you share sensitive information about your employees. They can also determine the company’s financial situation. As a result, you must exercise caution and design a system that prevents data misuse. A legal document is essential.
  • Hire registered firms: Never trust a novice with your money. Hire only registered payroll service firms, such as E2E Accounting. It is always advisable to conduct background checks before making a decision.
  • Stick to your budget without compromising: True, you will have a budget in mind, but be bold and spend a few pounds on a reputable service provider. Never go for the cheapest price since you can lose everything.
  • Always provide them with updated information: At work, things change. Employees leave, and new ones are hired. Always keep your employees’ information updated and share it with companies.

Final Thoughts

When selecting a payroll service provider, ensure they understand employment and payroll regulations. Ensure you check the provider’s credentials to verify your trust in their capacity to provide the best payroll services. Also, ensure the provider has a comprehensive payroll solution that meets your needs.

E2E Accounting is a professional accounting firm in Coventry, UK. We offer a wide range of services, which include Payroll Processing, Monthly Bookkeeping, Year End Accounts, Tax Advisories, and Management Accounting. We aim to provide you with a complete understanding of your company’s financial performance, which can help you make crucial business decisions and lead you to enhance business growth. After getting detailed information about your business, we will review your company’s payroll process. 

We also provide additional services like updating your business trends, opportunities, threats, projections, and forecasting. Also, we prepare business reports on behalf of your company for compliance purposes and to coordinate with government agencies and concerned authorities.

Payroll, being a complicated process, must be in safe hands. For any expert advice, you can contact our team of expert advisors to see how our payroll and accounting services can help you.

Year End Accounting Services

Year-End Accounting Services: Your Pathway to Financial Prosperity in 2024

As the year ends, you must eventually evaluate your financial conditions and consider how to pave your way to prosperity in 2024. Year End Accounting services generally play a crucial role in helping you achieve your company’s financial goals. In this blog, we will basically explore the significance of year-end accounting services and how they can help you achieve financial success in the coming year. Indeed, E2E Accounting Firm might just be the most financially intelligent decision you can make for your year-end accounting services, leading you to your pathway to financial prosperity in 2024.

Assessing Financial Health

One of the significant benefits of opting for year-end accounting services is that you will get a comprehensive assessment of your company’s financial health. Your service provider will eventually review your income, expenses, debts, and investments to understand your financial situation. This analysis will finally help identify areas for improvement and help you set the foundation for your financial planning for the coming year. Meanwhile, Hiring professional accounting services like E2E Accounting can help you provide expert advice for your business by assessing the financial health of your company.

Optimising Tax

Effectively planning your taxes is essential to maximising your financial prosperity. End-of-year accounts services include all the necessary analysis for tax planning to ensure you can take full advantage of the deductions and tax credits. Thus, you can significantly reduce your tax burden and save more funds as investments to reach your financial goals. E2E Accounting will significantly help you provide expert advice on how you can optimize your taxes efficiently to ensure you take full advantage of your deductions and credits.

Managing Budgets and Expenses


Yet another critical cornerstone for financial prosperity is effectively managing budgets and expenses. Year-end accounts service providers specifically analyse all your spending. With the help of this analysis, you can quickly eliminate unnecessary costs and develop a realistic budget tailored to your financial objectives. E2E Accounting can help you prepare your budgets, forecast, and conduct a thorough analysis of your expenses.  This practical approach will ensure that you control your finances throughout the year.

Investment Strategy Review

Investments play a crucial role in the accumulation of wealth. Accounting professionals can help you assess and evaluate the performance of your investment portfolio and provide you with the necessary recommendations and strategies to help you align your investments with your financial goals. E2E Accounting can help you strategize your company’s investments. Thus, you will be assured that your assets are working for you and contributing to your long-term prosperity.

Debt Reduction Planning

Debts with high-interest rates can substantially drain your finances. Year-end accounting services generally include reviewing your debt obligations and helping you implement strategies to reduce your debts efficiently. E2E Accounting can guide you minimize your debts, improve your financial health, and free up your funds for future savings and investments.

Financial Goal Setting

Setting clear financial goals is essential to achieving prosperity. Your year-end accounts service providers or experienced accountants can specifically help you develop realistic, measurable goals for 2024 and create a strategic roadmap to reach these goals. Together with E2E Accounting by your side, this goal-oriented approach will keep you focused on your financial goal of attaining prosperity.

Risk Assessment and Insurance Review

Protecting your financial well-being is just as important as expanding it. Year end accounts services include a review of your insurance policies and strategies relating to risk management. We at E2E Accounting can ensure you have appropriate coverage to protect your finances against unanticipated events, which can help you achieve your financial well-being.

Conclusion

Year end accounting services are about more than just crunching numbers. They also ensure that your pathway towards financial prosperity in 2024 becomes easy. By leveraging the expertise of accounting professionals, you can evaluate your financial health, optimise taxes, manage budgets and expenses, and set clear goals by assessing risk, reducing debts, and planning investment strategies. With these services, you will be well-equipped to navigate the financial landscape and work towards a prosperous year ahead. Start the year on the right financial footing by investing in year end accounting services, and watch your financial dreams become a reality.

E2E Accounting is a professional accounting firm in Coventry, UK. We offer a wide range of services: Monthly Bookkeeping, Year End Accounts, Tax Advisory, Payroll Processing, and Management Accounting. Our aim is to provide you with a complete understanding of your company’s financial performance, which can help you make crucial business decisions and lead you to your pathway to economic prosperity in 2024. It allows you to review your company’s financial records after getting detailed information about your business. 

We will also provide detailed updates about your business trends, opportunities, threats, projections, and forecasting. We can also prepare business reports on behalf of your company for compliance purposes and to coordinate with government agencies and concerned authorities.

Accounting, being a complicated process, must be in safe hands. For any expert advice, you can contact our team of expert advisors to see how our accounting services can help you.

Accounting Services

7 Reasons Why Your Business Needs Professional Accounting Services

You’re the one who juggles all the responsibilities, diligently examining every aspect and giving your 100% towards the growth of your business. Yet, some critical areas, such as money management and other financial segments, can create confusion if overlooked or not rightfully focused. These corners are accounting, payroll, invoices, handling receipts, and following tax deadlines. If you miss all these corners, your business can fall from the edge.

What are professional accounting services?

Accounting work is one of the most critical aspects of the business. It is also time-consuming since it requires adept knowledge of bookkeeping and accounts. Professional accounting service providers are the ones who provide complete accounting services, right from managing your monthly bookkeeping to managing your payrolls, finalizing your year-end accounts, and filing your taxes within the set deadlines. They are specialised and have diverse knowledge in accounts and taxation. Additionally, these accounting service providers provide financial advice and guide you through budgeting and forecasting for your business to derive the best outcomes.

Taking into account these factors that emphasize the importance of concentrating on accounting, hiring a professional and experienced accountant. E2E Accounting firm might just be the most financially smart decision you can make.

7 Reasons Why Your Business Needs Professional Accounting Services.

Several small businesses think hiring professional accounting services is way too expensive for them and will not benefit their company. According to the survey conducted by Premierline, 40% of the small businesses within the UK are considering outsourcing their accounting services to professionals. 

1. Saving time

Being a business owner means having your plate always full. So, it is essential to have adequate time management for efficiently managing things and growing your business. But if you do not have experience handling your accounts and expenses, you will spend a lot of time on this task. Hiring professional accounting services like E2E Accounting can help you provide expert advice for your business finances and handling your company’s accounts, payroll, and taxes. It will help free your plate from financial matters and save time for you to focus on other essential aspects of your business.

2. Knowledge about your funds

Small businesses must consider saving every penny of their business. It is only possible when you have updated your books on time and recorded all transactions. You will get the idea of 

  • Whether you have enough funds to scale your business
  • Receiving your payments on time
  • Status of your in-hand cash balance in case you want to spend some. 

But it’s not always possible for you to spend time updating your books regularly. However, professionals who manage your accounts will update your books on time. You will quickly get real-time details of your funds (money coming in and going out of business). You can also easily compare your sales and expenses, prepare budgets, forecast your future growth, and make critical decisions with the help of financial reports. Thus, you can quickly scale your business under professionals’ expert advice and guidance and by minimising risks.

Based on the survey conducted by YouGov, nearly 30% of UK companies believe that they have achieved better results by letting professional accounting services handle their books.

3. Pocket Friendly

Many small businesses presume hiring professional accounting services is expensive. But the fact is that hiring professional accounting services leads to savings for your business. 

  • No need to hire an in-house accountant.
  • No need to purchase any accounting software or manually maintain books. 
  • Easy and correct payroll processing.
  • All your compliances will be filed on time, saving you from penalties.
  • Correct Valuation of all your business assets and properties.
  • You will have a proper tab on your funds.
  • You can easily follow up with your creditors for payments.

Thus, spending a small amount of money and hiring professional accounting services can help you streamline your process and save money to invest in the growth of your business.

4. Easy Accounting

Errors can be expensive for any business! If you are maintaining your accounts manually, there are high chances of making errors. Also, if you have accounting software but need adequate knowledge, there are chances of mistakes. So, the intelligent way to avoid errors is automating your financials and collaborating with professional accounting services who have sufficient knowledge of accounting as well as accounting software and maintaining error-free books. 

5. Data Security

Data Security is a crucial aspect of any business. Maintaining security of your client data, financial records, and other sensitive information relating to your business is essential. By implementing the appropriate cyber-security systems, your professional accounting service providers will ensure that all the necessary data protection standards are adhered to and that your data is protected from any cyber threat.

6. Tax Ready 

Taxes always induce anxiety no matter what line of business you are in. Using professional experts’ help is a good idea to get peace of mind and remain stress-free. Your professional accounting service providers can also help you file all your tax returns on time and accurately. They will also guide you in maximizing your deductions for tax purposes. They will also ensure all the taxes are paid correctly and on time by sending you timely reminders. This way, you will avoid penalties and remain compliant with all the tax laws.

7. Payroll

Payroll is yet another time-consuming task for businesses and involves several components. With constant changes in payroll legislation, managing and keeping up with these legislations becomes difficult. Professional accounting service providers can also help by taking complete responsibility for your payrolls. They will ensure the payroll process is completed on time and accurately. They will also ensure that all the RTI filing and tax payments are done before the deadlines.

Final Thoughts

Deciding whether to seek help from professional accounting services can help you save time and money, relieve stress, and provide several other benefits. Although PA Consulting Group conducted a survey wherein 71% of UK businesses say cost reduction is the main reason for outsourcing. 50%, on the other hand, quote the reason outsourcing leads to business transformation. In contrast, for half of the companies surveyed, the quality of the service provided is the key driver for outsourcing professionals.

E2E Accounting is a professional accounting firm in Coventry, UK. We offer a wide range of services, which includes Monthly Bookkeeping, Tax advisory, and Management Accounting. We aim to provide you with a complete understanding of your company’s financial performance, which can help you make crucial business decisions. It will help us to review your company’s financial records; they get detailed information about your business. 

We will also provide detailed updates about your business trends, opportunities, threats, projections, and forecasting. We can also prepare business reports on behalf of your company for compliance purposes and to coordinate with government agencies and concerned authorities.

Accounting, being a complicated process, must be in safe hands. For any expert advice, you can contact our team of expert advisors to see how our accounting services can help you.

Forecasting For Small Business

Tips for Forecasting Your Small or Medium Business’s Financial Future

How far is your range of vision for your business? Simply grabbing green economy opportunities? Investment in new capital expenditure? Dominate the world through expansion at various locations?

Either way, gathering accurate financial insights and projections for your small and medium-sized business is necessary. It will help you adequately plan your future. Financial Forecasting (Projections) will also help you understand every step leading to the growth of your business and hit those desired numbers you wish.

Financial forecasting will provide the glimpses essential for your business’s survival and growth. Based on these insights, you can make predictions for the future of your business, which you can hold. So, it is necessary to have forecasting at the top of your mind, whether your business is a startup or SME.

What is Financial Forecasting?

None of the business owners can predict the future of their business. But there are steps that you can take to prepare your small and medium-sized business for this unforeseen business landscape. For a precise overview of your financial affairs, one of the reliable options is to create projections/ forecasts.

Forecasting will help you look into your business’s historical and present performance as well as current market trends. With the help of this data and examining it effectively, you can predict the future performance of your finances. You can also gauge the revenue you can earn during a particular period and manage your expenses efficiently.

Forecasting involves a small number of assumptions and guesswork since unforeseen factors can influence your business performance. But through strategic planning, budgeting, and predictions, you can maintain your mindset focused on the future of your business.

I do prepare budgets; is it different from forecasting?

Though budgeting and forecasting go hand in hand, they are two different aspects. Preparing budgets means keeping aside some money for certain costs, considering your income and expenses. Your budgets are based on the information derived from your financial forecasts.

Forecasting is predicting the future, and budgeting is planning for the future. When you prepare your financial forecast, you get insight into which direction your business will head based on your historical performance and several other factors. At the same time, budgeting will help you to spend effectively on how and what you expect your financial position to look like in the future.

For example, suppose you forecast to earn additional revenue of £1,00,000 in the next year. In that case, you will prepare a budget for how much you will spend to earn that revenue. Say you will keep aside £10,000 for advertising, £20,000 for stock, etc.

Accurate forecasting can help you make stable business plans, acquire potential investors and external funding sources such as loans and lines of credit, make informed business decisions, and prevent surprise tax bills, as per the Authors Kaplan, Steven N., and Richard S. Ruback, in their journal article on “The valuation of cash flow forecasts: An empirical analysis.” But to achieve this, you must prepare “Pro forma financial statements.” Financial predictions are concrete only through Pro forma financial statements.

What are the methods used for forecasting?

You can use two standard methods to forecast your business finance: Qualitative and Quantitative. But which way is more viable for you depends on how long you have been in business. Besides these two methods, it is also necessary to prepare pro forma statements.

  • Qualitative forecasting: Qualitative forecasting, also known as Research-based forecasting, is the method wherein you make business predictions without analyzing your historical data. Generally, this method of forecasting is advisable for new businesses wherein they need more historical data (sales and expenses), and such companies highly rely on the judgments of accountants or financiers who prepare the forecast for them.
  • Quantitative forecasting: Quantitative forecasting, also known as historical forecasting, is the method wherein you make business predictions only after analyzing your historical data. Thus, with the help of measurable data, you can gauge the growth of your business. This method is more commonly recommended for short-term forecasting. Yet this method will also include a little bit of research to create a realistic and valuable forecast.

What are Pro forma financial statements?

Pro forma financial statements are similar to your financial statements, only that you use every month to analyze the performance of your business. The only difference between both statements is that pro forma statements are prepared for the future months and years, and the financial statements are for the current period.

Pro forma statements are of three types, which you are already familiar with

  • Income statement
  • Cash flow statement
  • Balance sheet

The period covered in the pro forma statements depends on your goals and how long you plan to forecast. If you want to forecast the next six months for a particular project, you will create a pro forma statement covering six months to a year in the future.

But if you are planning to meet a potential investor for financial aid, you must prepare your pro forma statements covering the next three to three years.

How do you create pro forma statements?

Before starting to create pro forma statements, you must set your projected goals clearly towards the period you are looking at.

Pro forma income statement

So, if you are preparing a pro forma income statement, you must be clear about the sales you are targeting to achieve. For example, if your current year’s sales are £50,000, and you want to make sales of £1,00,000. Therefore, your total increase in sales will be £50,000.

Thus, you need to set your production schedule in such a way that it will help you reach your target and map it over the period in which you are aiming to cover. Since this sales target is 12 months, you will map out a £50,000 increase over the 12 statements. It could be done either by increasing it based on the fixed amount or increasing it gradually every month, based on your instincts and experience.

Accordingly, you will also calculate your COGS (Cost of goods sold) for all the months and reduce it from your sales. Similarly, you will also deduct other operating expenses. Remember to take each and every expense into account for making accurate projections, be it quarterly or half-yearly.

Once all the income and expenses are done, you will arrive at your profit or loss, and your pro forma statement will give you an insight into your expected earnings and spending for the desired period.

Example of Pro Forma Income Statement

Tony’s Logistics

Pro forma Cash flow statement

Creating a pro forma Cash Flow Statement is similar to making a regular cash flow statement only. So, you consider all the details from your income statements and use them in the cash flow statement to determine where and how much your money is going.

Thus, the cash flow you have projected will give you insights into a few things, such as negative cash flow, which means you do not have enough cash to run your business based on your current trajectory. So, it would be best to borrow the money and pay off your expenses. At the same time, positive cash flow means that you have surplus cash in hand for paying off your loans and savings for investments.

Example of Pro Forma Cash Flow Statement

New Wales Care Home Centre

Pro forma Balance Sheet

The info derived from the income statement and cash flow statement; you can easily prepare a pro forma balance sheet. But the critical aspect here is that you also need to consider your previous balance sheets through which you can use all your balances. The pro forma balance sheet will project all the changes in your accounts over the period, and you can plan from where you have the money and when you have to move the money.

Example of Pro Forma Balance Sheet

Kate Florist

Revisiting the Forecasts

More than creating the pro forma statements and preparing forecasts is required. You can’t sit back and relax. The most important is the second stage of financial forecasting. You now have to revisit and record your actuals with your forecasts and compare each month to the period you have done forecasting.

We at E2E Accounting believe that only when you revisit your forecast details will you learn whether your forecast is way off or not.

For example.

  • In some months, if the sales were lower than expected, you can take notes on the reasons for low sales. Whether the inventory forecast was inappropriate, or there were changes in the demand, or any miscommunication with the suppliers, etc.
  • If the revenue was higher than forecasted, you can note what boosted the income, whether it was seasonal or any other reason.

Thus, revisiting and taking notes will help you provide valuable insights into your business to improve your forecasting each time than the last one.

Below are the few strategies that we recommend:

  • Timings of the forecast: Timings are one of the essential aspects of forecasting. How far you must look depends on your business and its characteristics. You must break down your forecasts over the period, say a year, three years, or five years.
  • Regular updating: You must also regularly revisit and update the forecasts prepared. It will help you get the complete picture of your business.
  • Keeping track every month: Keep track of your revenues and expenses every month to forecast your revenues, how much sales are taking place, what your expenses are, and whether any contractual obligations are involved. Which item will lead to higher expenditure, and whether any future obligations will take place?

Conclusion

Businesses experience ups and downs; what truly matters is your ability to consider all potential scenarios for your business. It’s impossible to predict everything, so it’s always best to forecast for all possible scenarios: regular, moderate, and worst.

According to E2E Accountant, forecasting is as much as preparing the household budget. Just like you prepare a budget for your household expenses and savings, every SME must also forecast similarly. You must know which forecasting method best suits your small and medium-sized business.

Ultimately, the stronger your forecast, the more effectively you can strategize for your business’s future, adapt to changing circumstances, and impress your investors and lenders.

We at E2E Accounting can help you create financial forecasts for your business using software that can help you make effective decisions that can lead you to growth and stay ahead of your competitors. By outsourcing your Management Accounting needs to E2E Accounting, you can be assured that all your financial reports, budgets, and forecasting are accurate while freeing time for other essential tasks!

10 Ways to develop a business plan that works for your small

10 Ways to develop a business plan that works for your small or medium size business

Starting your own business requires thorough planning, while efficiently scaling your small and medium-sized enterprise can be gradual. Driving it to success requires a strategic approach by developing a proper business plan and whole-hearted commitment from everyone working with you in your company.

There isn’t a one-size-fits-all, straightforward strategy that applies universally to small or medium-sized business owners seeking growth. Nevertheless, one of the most crucial elements in advancing your business is consistently keeping tabs on and assessing your financial well-being. By maintaining robust financial health, you open the door to the rapid implementation of various other growth strategies. To ensure the ongoing monitoring of your financial health, it’s imperative to update your financial records regularly.

With up-to-date financial records at your disposal, you gain access to real-time insights into your financial reporting and cash flows, allowing you to determine the profitability of your business. Well-maintained cash flows enable you to make informed decisions about scaling your business through thorough research and market understanding, allowing you to identify the best growth opportunities. E2E Accounting can help you maintain your books of accounts accurately so that you can have all the real-time insights of your financial reporting.

In addition to monitoring your financial health, E2E Accounting also suggests several essential tactics you can employ to maximize your business’s potential for growth.

10 Smart business plan approach to help you scale your business.

1. Thorough Research

Driving your business to growth requires thorough market research. It is necessary to understand not only existing customers but also your potential customers. Having enough insights about your target market and gaining knowledge about their desires and needs is essential. This way, you can check whether you can change to meet those customers’ needs and grow your business.

For example, research your target markets by analyzing customer demographics, conducting surveys, and studying historical sales data about companies performing well. It will help you to understand their position in the market.

Another essential aspect you must remember is researching your competitors. It is necessary to know the strengths and weaknesses of your competitors, which will help you make appropriate decisions.

Case Study on Business plan developed by Canon to generate a 700% ROI.

Canon, one of the biggest electronics companies globally, tasked AWA Digital to gauge and increase its product’s demand in various geographies. AWA conducted thorough customer research through a market survey of their target markets, and they discovered the below attributes of their customer’s behavior and reservations towards purchasing their products.

  • In a few regions, customers were reluctant to spend their money on Canon cameras as they were unsure whether Canon is an authoritative brand.
  • Whereas, in other regions, the brand authority needed to be more critical for the customers.

With the help of these insights, AWA developed a business plan to optimize their advertising campaigns based on the locations through which they can include what the consumers considered essential factors for purchasing.

This feedback from customers helped Canon generate an overall ROI of 700% using personalized campaign methods for its target audience.

2. Sales Funnel

A sales funnel can be presumed to be a customer’s journey. It helps you take your business to the next level. Customers visiting your website are at the top of your funnel, and when they purchase something from your website or sign up for your services, they are the ones successfully passing through your sales funnel. Hence, you must develop innovative ideas through discounts or vouchers, which can push your customers through this funnel and make sales.

For example, Twilio offers its developers Communication APIs services through which they can quickly implement embedded voice calling or texting in a software application or their products. Twilio understands the importance of this communication to its audience, and they are experts at it.

Twilio uses the sales funnel strategy for its growth. With the help of this strategy, Twilio’s potential customers can easily consider them as their potential vendors through the keyword search “Communication APIs,” as Twilio ranks high in search.

Its prospective clients can also quickly locate them on social media channels through self-paced games prepared by Twilio for learning or their blogs. The prospective clients can create free accounts or talk to sales representatives through help guides.

The website visitor becomes the sales lead for the company through the information collected via an opt-in form.

Finally, these leads are converted to sales through the solutions provided by Twilio upon satisfactorily addressing all the concerns and questions.

3. Customer Retention

Growing your business is possible only if you can retain your customers. Customer retention only increases when you can build and maintain customer loyalty. Acquiring new customers is five times more than holding on to existing customers; this can be done only,

  • When you treat your customers right, address their concerns, and provide a high customer experience.
  • Create loyalty programs for them in the form of rewards. It will also help you in attracting new customers.
  • Using a CRM (Customer Relationships Management) system will help you manage and maintain relationships with existing and potential customers by identifying sales opportunities.
  • Engaging customers through email campaigns and social media platforms by gathering customer feedback and understanding their pain points or complaints. It is achieved only when you are in constant contact with your customers.

Case Study – Business Plan of Spotify to Retain Its Customers.

Spotify retains its customers through the beginning of its customer relationship. They provide the lists of their new customers with several reasons to stick around with them. Though Spotify offers free apps, its Premium subscription provides more functionality to its users, such as ad-free music listening, selecting, skipping, and downloading music and playlists. However, it is not necessary that providing these features will encourage their users to upgrade to Premium plans. Spotify developed a business plan where:

  • Spotify prioritizes high-quality services to its customers.
  • They ensure that their customers’ experiences are as personal as possible.
  • They encourage their customers to share their experiences.

4. Networking

Making your brand visible is also one of the best ways to grow your business. It helps in attracting new customers. One of the explicit ways to showcase your brand is by participating in various events. It will increase your networking and gathering information on the preferences of local customers.

Examples of networking:

  • You can put your booth in various malls or exhibitions.
  • Meet business owners
  • Speak to industry experts.

5. CSR (Corporate Social Responsibility)

Corporate social responsibilities help you recognize your business’s impact on the community. Generally, many customers prefer doing business with companies that align with their values. See if your product can go green and does not impact the environment.

Examples in which you can Go Green:

  • Reduce carbon footprints
  • Get Certified for LEED (Leadership in Energy and Environmental Design).
  • Produce sustainable and environmentally friendly products.
  • Invest in activities that showcase your business is involved in serious CSR. You can encourage your staff to work with such communities voluntarily.

6. Strategic Partnerships

Partnering with another business opens the chances of broadening your network with new customers and aligning growth strategies. However, these partnerships must be exercised strategically and only with the ones where your business goals align. You can also consider partnering with vendors to expand your business. But, no matter how and with whom you partner, maintaining a healthy relationship with your partners is essential.

The best example of a strategic partnership is Starbucks. Starbucks strategized to partner with national stores such as Target and Barnes & Noble and reached nationwide, thereby increasing its revenue.

7. Franchise

Franchising is one of the best strategies for growing small and medium-sized businesses. You sell your business rights to an independent owner, and they operate their franchise for your business. However, it is essential to understand whether your business is franchisable before you sell your rights. Franchise often works best for fast-food chains, gyms, restaurants, electronic and automobile products.

McDonald’s, Starbucks, and Marriott hotels adopted the business plan of opening their franchises which helped them increase their numbers at several locations to grow their business and generate revenues.

8. Diversifying

Once you are successful with your main product or service, you must consider planning to introduce new products or services. The introduction of new products can help you acquire new customers.

  • Identify new opportunities to introduce new products or services.
  • Conduct thorough market research to see what new products or services you can offer.
  • Identify the different means of offering your existing products to the customers; for example, introduce subscription methods or packages.

One of the best examples of diversification is Coca-Cola. The company diversified its offerings with several bottled water brands, energy drinks, juices, sports drinks, teas, and vitamin water. This diversification allows the company to survive and flourish even if the demand in one central area slows down.

9. Entering New Markets

No doubt, franchising can help you extend and increase your customer base. But if you need more than franchising, then to expand your business, you must consider exporting your products or services through e-commerce. Find the right opportunity for online sales and the best means to rdaniel.fernandes@corientbs.co.ukeach national and global platforms. It will help you to increase your market share on global platforms.

10. Measuring and Refining

You can apply various strategies to grow your business. But it is equally important to understand and measure which approach works for you and which does not. For example, whether the loyalty program will improve your customer base and help you retain your customers. If this strategy is not working, you need to apply another approach. In such cases, the CRM strategy might work for engaging your customers, or email campaigns and social media platforms can be a better option. Thus, timely measurements and refinements are essential for the growth of business.

Conclusion

Taking calculative risks to grow your small and medium-sized business would be best. You must scrutinize your business plan and create realistic and precise projections regarding how specific strategies could impact your enterprise. Constantly tracking and monitoring your progress and implementing amendments are necessary for a successful business. 

We at E2E Accounting can guide you in building strategies to help you grow your business through effective financial decisions & understanding your company’s financial health. By outsourcing your accounting needs to E2E Accounting, you can be assured that all your financial reports are accurate while freeing time for other essential tasks!