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Four Tips for Improving Your Decision Making Process

Pauline Healey — Thu, 18 Apr 2024 10:44:35 +0000

Making the best choice for your business can often prove challenging. Luckily, there are ways to make your decision making skills better.

People who can make the right decision at a moment’s notice are always well-respected among their peers.

It might seem like this ability comes naturally. But in reality, it’s a skill you can learn and develop.

Here are four tips about decision-making that will help you do just that.

Tip #1. Learn From Experience

Experience from previous situations comparable to the present can inform your decisions and serve as a useful guide and point of reference. That’s why in many cases, keeping a record of past crucial decisions can prove invaluable.

But you don’t have to rely only on your own experiences.

When faced with a decision, especially if it’s a crucial one, don’t shy away from consulting other people. Those working in the same field as you could have useful insights and knowledge that you can leverage in your decision-making process.

Tip #2. Break Down the Questions

Complicated decisions can often be broken down into smaller components that are less challenging to understand and resolve. If you can see the large picture as a set of simple, interconnected factors, you’ll have an easier time reaching a decision.

Starting from the current state of matters, define the outcome of your choice as the endpoint.

Look at creating a journey, from your current position to your desired outcome. Ask yourself what’s the most optimal path leading from one to the other and weigh the costs and benefits of each step.

The gained insight from breaking down the questions can make your decision-making much more straightforward. You could even find a more effective way to resolve the issue at hand.

Tip #3. Compare Costs and Benefits

You can apply cost-benefit analysis to most choices. It comes down to weighing the pros and cons, considering what resources to use, and understanding the outcome of your decision.

Think about the available options and imagine what it would take to act on each of them relative to what you’d achieve through those actions. It would be very helpful to remain realistic when considering both positive and negative aspects.

Once you’ve measured the costs and benefits of your decision, the solution might become obvious even if it’s not the one you initially expected.

Remember not to only measure the gains, but also some potential loss of revenue whilst you transition.

Tip #4. Prioritise

If you’re facing one complex decision or a series of smaller ones that require your immediate attention, the situation can become overwhelming. However, you won’t always have the luxury of taking a step back and carefully examining each question.

This is when prioritisation can be of vital importance.

The essential decision you should make is which matter requires your attention the most. When you realise which issues are pressing and which can be put on hold, the situation will become more transparent and you’ll be able to direct your actions more efficiently.

Prioritising is equally useful when it comes to a single big decision. In this case, however, you should concentrate on which outcome is the most important rather than which question needs answering first.

Weighing short-term and long-term profit is a good example of prioritizing. Faced with a choice between the two, a company will decide on the course of action based on which type of profit it prioritises.

Improve Your Decision Making

Making well-informed, reasonable decisions is at the core of every successful venture. Luckily, you can improve your decision-making process using the described methods and start making choices that lead to the most beneficial outcomes.

Logical BI provide business consultancy and mentoring which can support your decision making by reviewing your choices, current position and providing expertise on how to achieve your desired outcomes. Providing consultancy options from a one-off two hour consultancy call with direct booking link so you can schedule a convenient time for your call The Business Booster Consultancy Call – Logical BI, to short term projects Business Planning Packages – Logical BI or retainers CFO Retainer Services – Logical BI

Check out or other blogs which could support you or your business Articles – Logical BI

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Cash Flow 101: 6 Key Terms You Need to Know

Pauline Healey — Mon, 18 Mar 2024 10:07:55 +0000

Cash flow is the lifeblood of your business. It’s what allows you to pay employees, suppliers, and other creditors on time so that you can continue doing business. However, many small-business owners don’t really appreciate how cash flow works or how to improve their cash flow situation. Here’s a basic introduction to cash flow and the key terms you need to know.
What is Cash Flow?
Cash flow is the movement of cash in and out of your business. It’s calculated by taking your total revenue and subtracting your total expenses for a given period. This gives you your net income or loss for that period.

You can also think of it as the “lifeblood” of your business because it allows you to pay your bills and keep your business running.
Timing is Everything
One of the most important things to understand about cash flow is that timing is key. In other words, revenue received in one period may not be available to pay expenses until a later period.

For example, if you bill customers for services on the first of the month but don’t receive payment until the thirtieth, that revenue won’t be available to pay your expenses until the end of the month. And if you have bills due on the fifteenth, you may find yourself in a cash crunch.

That’s why it’s important to track your cash flow regularly so you can identify potential problems before they become too serious.

1 – The Components of Cash Flow

There are three basic components of cash flow:

Operating cash flow is the cash you generate from your day-to-day operations, such as sales revenue and collections, less your day-to-day expenses. This includes things like payroll, inventory purchases, rent, and utilities.
Investing cash flow refers to the purchase or sale of capital assets such as real estate, equipment, or business vehicles. This also includes purchasing marketable securities (stocks) from your available cash reserves.
Financing cash flow is generated when you borrow money or repay existing loans with available funds. It can also be generated from the sale of your business, a stock offering, or raising money through an investor.

2 – Accounts Receivable

Your accounts receivable (A/R or creditors) is one of the most important factors affecting your cash flow. It’s the total amount you’re owed by customers for products or services that have been delivered or performed.

The longer it takes to collect those receivables, the more impact it will have on your cash flow. That’s why it’s important to keep your A/R as low as possible by invoicing customers promptly, setting realistic payment terms, and following up on late payments and delinquent accounts.

3 -Inventory

Another key factor in cash flow is your inventory. You need to have enough inventory on hand to meet customer demand, but you don’t want to carry too much excess stock that will tie up your cash. Inventory planning is critical alongside cash management.

4 – Accounts Payable

Your accounts payable (A/P or debtors) is the total amount you owe to suppliers for products or services that have been delivered. The sooner you pay your A/P, the less interest you’ll pay on those bills. However, it’s also important to spread payment dates out if possible so that you can keep cash in your account for as long as possible.

That’s why it’s important to maintain a good working relationship with your suppliers and negotiate favourable payment terms whenever possible.

5 – Current vs Non-Current

Your assets and liabilities are classified as either “current” or “non-current” depending on how long they’re expected to be outstanding.

Current assets are things like cash, accounts receivable, and inventory that you expect to convert into cash within one year. Current liabilities are bills that are due within one year, such as accounts payable and short-term loans.

Non-current assets are things like real estate and equipment that you expect to use for more than one year. Non-current liabilities are debts that will be paid over a period longer than one year, such as mortgages and long-term loans.

6 – Cash Flow Statement

A cash flow statement is simply a report showing your operating, investing, and financing activities during an accounting period. You can think of it like a cheque book register (from times gone by), where your cash inflows from sales and other sources are recorded on the left side of the statement, while outflows for expenses are recorded on the right.

For example, let’s say you took in £50,000 of revenue during April but had business expenses totalling £40,000 that same month. That would leave a net cash flow of £10,000 for the month.

You can create a cash flow statement in any number of ways, but the easiest way is to use accounting software like Xero or Freeagent.
Summary
As a small business owner, it’s essential to have a clear handle on your cash flow. If you need more cash, it’s easier to stay afloat.

One of the best ways to improve your cash flow is by reducing accounts receivable and minimising inventory levels. You should set realistic payment terms with customers so they pay their bills more quickly while managing your suppliers for better payment terms as well. A strong working relationship with your partners can go a long way.

As previously stated, cash is the lifeblood of all businesses, so don’t neglect it. If in doubt, it’s always best to seek a professional to help you maximise your available funds and create a strategy to ensure your long-term success.

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Do I Need a Finance Director? A Guide to Making Informed Business Decisions

James Healey — Thu, 30 Nov 2023 10:51:37 +0000

Introduction:
As a business owner, you may already have a finance team or an outsourced accountant/bookkeeper to handle your financial matters. However, there comes a point in your business journey where you may feel the need for additional clarity and guidance in managing your finances. This is where a finance director can play a vital role. In this blog post, we will explore the reasons why hiring a finance director, whether on a part-time or ad-hoc basis, can be beneficial for your business.

Business is Growing:
As your business expands, it becomes increasingly important to have a strategic partner who can provide valuable insights and expertise. A finance director can act as this partner, offering financial guidance and helping you make informed decisions. With their experience and knowledge, they can help you maximize cash flow and profits, identify growth opportunities, and ensure that your financial strategies align with your overall business goals. Having a finance director by your side can provide you with the clarity and confidence needed to navigate the complexities of a growing business.

Looking for Investment:
If you’re seeking investment to fuel further growth or expand your operations, having a finance director can greatly enhance your chances of success. They can assist you in making the right decisions by conducting thorough financial analysis and preparing accurate management reporting and forecasts. This not only helps potential investors understand the financial health of your business but also demonstrates your commitment to transparency and accountability. A finance director can effectively communicate your financial story, increasing the likelihood of attracting the right investment partners.

Thinking about Exit, Selling, or Retiring:
At some point, many business owners consider options such as selling their business, retiring, or transitioning to new leadership. When contemplating these significant changes, it’s crucial to conduct an overall business health check to evaluate your financial position. A finance director can assess your business’s financial stability and identify areas that may require improvement to maximize its value. Additionally, they can develop strategies to ensure the continuity and success of your business without your direct involvement. By having a finance director guide you through this transition period, you can confidently navigate the complexities and make informed decisions for your future.

Conclusion:
While you may already have a finance team or outsourced professionals, a finance director can bring a higher level of expertise and strategic guidance to your business. Whether you’re experiencing growth, seeking investment, or considering an exit strategy, a finance director can provide the clarity, confidence, and support you need. Remember, outsourcing for part-time or ad-hoc resource can be a cost-effective way to access these invaluable financial skills. Investing in a finance director can be a game-changer for your business, enabling you to make informed financial decisions and position your company for long-term success.

To find out about our range of tailored range of finance director services click here (CFO Retainer Services – Logical BI) , we have packages to suit all budgets and requirements, covering local and national businesses. Always ensure that your financial support is qualified, regulated and insured, as we are at Logical BI Limited. Anyone can call themselves an accountant, find out more about accounting qualifications by clicking here.

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Do I need an accountant?

James Healey — Fri, 22 Sep 2023 08:43:17 +0000

Introduction

When it comes to running a business, managing finances can be a complex and time-consuming task. From ensuring compliance with regulations with HMRC and Companies House, to maximising tax benefits, handling finances effectively is crucial for long-term success. One question that often arises is whether hiring an accountant is necessary. In this post, we will explore the various reasons why having an accountant can prove invaluable for businesses of all sizes.

Ensuring Compliance and Financial Reporting

Staying compliant with financial regulations is vital for any business. Failure to meet statutory requirements can result in penalties, legal issues, and reputational damage. Accountants are well-versed in financial laws and regulations, ensuring that your business remains compliant. They can assist in preparing and submitting accurate financial reports, tax returns, and other necessary documentation, saving you time, headaches and mitigating the risk of errors and restoring sleepless nights!

Maximising Tax Allowances and Reducing Tax Liability

Navigating the complexity of tax regulations can be a daunting task. Accountants possess expert knowledge of tax rules and can help you identify and maximise available tax allowances and deductions. By utilising their expertise, gained from many years of experience and qualifications, you can potentially reduce your tax liability, freeing up resources that can be reinvested into your business’s growth.

General Support and Guidance on Business Decisions

Running a business involves making many numerous financial decisions, ranging from pricing strategies to investment opportunities and some of these decisions are required very quickly. Accountants can provide valuable insights and guidance based on their understanding of your financial situation. By analysing financial data, they can assist you in making informed decisions that align with your business goals and maximise profitability and cash whilst potentially reducing your workload – an extra win!

Providing Clarity on Finances

Understanding your business’s financial health is crucial for making strategic decisions. Accountants can help you gain clarity on your financial reports, cash flow statements and implement performance indicators. By interpreting and explaining these financial reports, accountants provide you with a comprehensive view of your business’s financial performance. This knowledge enables you to identify areas of strength, address weaknesses, and make adjustments as needed.

Helping You Understand Finance

Not everyone possesses an in-depth understanding of finance and accounting principles, an nor should we all need to, we all have our own areas of skill and expertise. Accountants can bridge this knowledge gap by explaining financial concepts and terms in a way that is easy to comprehend. This enables you to make informed decisions based on a solid understanding of financial data. Moreover, accountants can educate you on budgeting, forecasting, and other financial management techniques, equipping you with the tools to better control and grow your business.

Conclusion

While it is possible to manage your business’s finances independently, the benefits of hiring an accountant are undeniable. From ensuring compliance and submitting accurate financial reports to maximising tax benefits, and providing general financial guidance, accountants play a crucial role in the success of any business. By entrusting your financial matters to a qualified professional, you can focus on other aspects of your business with peace of mind, knowing that your finances are in capable hands. In today’s competitive business landscape, having an accountant is not just a luxury but a necessity for sustainable growth and prosperity.

To find out about our range of tailored range of accounting packages click here, we have packages to suit all budgets and requirements, covering local and national businesses. Always ensured that your accountant is qualified, regulated and insured to support your business, as we are at Logical BI Limited. Anyone can call themselves an accountant, find out more about accounting qualifications by clicking here.

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The importance of bookkeeping for all businesses

Pauline Healey — Mon, 05 Dec 2022 08:43:33 +0000

Whilst it’s an unusual topic for an outsourced finance director to talk about, the importance of accurate bookkeeping for all business should not be underestimated. Bookkeeping is the fundamental foundation of all financial reporting. The saying goes, ‘Garbage in, garbage out’ and that’s never truer than when you are talking about business accounts.

Without accurate and timely bookkeeping, it’s easy for business owners to make the wrong decisions which could have potentially costly consequences.

The importance of bookkeeping that is accurate and timely

When incorrect information is added to your business accounts or data is incomplete, you may not know:

The true profits of the organisation
What to reserve for tax throughout the year
Your directors loan balance which could give rise to penalties if it goes into debit
If you can withdraw dividends (must be from available retained profits otherwise it will be ‘ultra vires’ or illegal)
If you are operating with optimum tax-efficiency
If you have the correct balances for HMRC return
Whether debts are being collected on time
If you are incurring fines or interest on late payments

Accurate and timely bookkeeping is the underlying process that keeps the cash cycle moving in your business. If you have delays in invoicing your suppliers, this leads to significant lag in collecting revenues which in turn puts your business on a riskier footing than it needs to be. Bookkeeping recognises such issues.

Ensure correct tax payments

You are also ensuring correct tax payment, no one wants to overpay tax! With timely checks of sales and purchases you can ensure you are not duplicating sales or missing VAT purchases which could push up your tax payments.

It’s also vital to check and reconcile your bank statements to your accounting software balances quarterly as a minimum. These checks can quickly pick up missing or inaccurate data which, if left uncorrected, could lead to you paying more tax than necessary.

Historic costs provide for robust forecasts and timely decision making. Your business relies so heavily on correct data that without it, you’ll be unable to make even the simplest decisions without wondering if you are doing the right thing. In addition, if your books are always in disarray, this can have a detrimental impact on your physical and mental wellbeing because you are constantly worried about whether you can make the payroll this month or you are going to hit your sales targets.

Business KPIs are meaningless without good bookkeeping

When it comes to more sophisticated management reporting, many companies create a set of key performance indicators (KPIs) which are used to report on the health of the business and the progress towards stated targets. These KPIs might be high level numbers such as Net Profit or Capital Employed or they may be more complex such as Avoided Cost or Inventory Turnover which helps the business to see exactly where changes might be needed. Bookkeeping data feeds into every financial report you create, and decisions made on invalid numbers can have wide-reaching implications.

Business Decision Mistakes

Incorrect or incomplete numbers could lead to decision-making mistakes. When invoices and receipts are incorrectly coded or missing from data, you might make invalid decisions such as removing a product from your catalogue due to inadequate sales performance when the sales have been incorrectly attributed. You might decide to declare a dividend that’s too high if expenses are missing from your books and haven’t been properly accrued. So, the importance of bookkeeping cannot be overstated.

Although Logical BI focus is outsourced finance director support, our team also support Limited Companies with bespoke annual accounting packages at competitive prices, which can include all your bookkeeping support. If you need help with your data entry bookkeeping or want a review of your current processes, why not book a business booster consultancy hour.

Support from basic bookkeeping to sophisticated reporting

Your business can benefit from outsourced FD support to provide deeper insight into what’s driving productivity and profitability, what’s causing the biggest issues and how to resolve them, but this can only happen if your bookkeeping is accurate and up to date. Logical BI can provide outsourced management reporting support and facilitate a robust bookkeeping service to help you create the best decision-making foundation for your company. Call 07739 429495 or email hello@logicalbi.com to talk about the importance of bookkeeping for your business.

Why not connect with Logical BI on LinkedIn

Impactful reporting: A management reporting framework for success

Pauline Healey — Sun, 30 Oct 2022 21:41:37 +0000

Many business owners are familiar with the need for a profit and loss account and balance sheet reporting. However, fewer may understand the value of creating a management reporting framework that encompasses wider key performance indicators. Management reporting is vital for monitoring the health of the business, understanding variances to plan and making key strategic decisions. Without accurate and timely management reporting, a business owner is operating on assumptions and guesswork, leading to poor conclusions and potentially expense mistakes.

Creating an effective management reporting framework

The value of effective management reporting is often diminished by inaccurate information. It can be difficult to provide timely information if it is held in disparate source systems that require significant effort to collate. Reporting must address the real information needs of management to be impactful.

Beyond the profit and loss account and balance sheet, there is a wealth of invaluable information for business owners and managers. An effective management reporting framework could include KPI reporting, cash flow, sales and inventory reporting to name a few.

The aim of management reporting is to:

Regularly monitor specific performance metrics and KPIs
Understand the status and progress of a business objective
Determine next steps on the journey to achieving goals
Ensure better communication between stakeholders, colleagues, and managers

Different types of management reporting

Whilst many reports have a financial angle, some of them might include multifunctional KPIs from a range of business areas such as marketing, customer experience, logistics, quality control, output and so on.

Financial reports could include cash flow for at least the next three months, P&L, balance sheet.
Sales/customer reports – these must be sufficiently detailed to show which service or product lines, geographies and other relevant demographics are driving sales and where more effort is required to reach targets. Reports should identify gaps in the pipeline, conversion rates, bestsellers, most effective sales teams, pricing strategies and so on.
Inventory reports – businesses need to know how much money is tied up in raw materials, work-in-progress and finished goods to ensure efficient use of company resources. This reporting could also identify issues with stock availability, sourcing concerns, warehousing costs and risks in the end-to-end supply chain.
Project reports – project reporting might include charts tracking activity level progress against the project plan, resourcing options, constraints and project costs against budget.
HR and personnel reports – this could include headcount tracking against resourcing plans, absence management, staff recruitment and retention and productivity.
Compliance reports – this could include regulatory and manufacturing compliance, health & safety and HR.
Variance analysis – detailed variance analysis reports enable you to identify which service or product lines are profitable, where defects or errors occur and where productivity can be improved. Reporting of actuals against budgets and forecasts can highlight potential risks as well as opportunities.
Forecast reports – financial forecasts are necessary to identify potential issues. All areas of the business should be involved in the forecasting process.
Board reports and executive summaries – highlighting key company objectives, tracking against the planned timeline and focusing on the most important success measures. This could be achieve using 3 to 5 key traffic light measures
Process/systems reporting – a detailed review of your business processes and systems can identify inefficiencies and highlight opportunities to eliminate waste using automation and continuous improvement.
Internal audit reports – internal checks enable businesses to identify and fix problems early before they become larger issues.

A clearly defined management reporting framework can enhance your decision making, improve company performance and maximise profitability. Using a suite of tailored reporting, specifically designed for your company gives you all the information you need to make the right decisions at the right time.

Logical BI offers a bespoke set of management reporting for small and medium sized companies and has many years’ experience working with coaches, trainers, agencies, distributors, manufacturers, engineers and solicitors.

Your business, whether product or service, can benefit from a deeper understanding of your activities, to help you mitigate risks, spot opportunities early and deliver on your targets. Logical BI can provide outsourced management reporting support or can work with your finance teams in a consultative capacity to help you create the optimal management reporting framework for your company. Call 07739 429495 or email hello@logicalbi.com to find out how we can help your business achieve more.

Why not connect with Logical BI on LinkedIn

Strategic Financial Management for your Manufacturing Business

Pauline Healey — Thu, 13 Oct 2022 07:56:50 +0000

Running a manufacturing business is complex and keeping control of the finances is no exception. Although most manufacturing business owners understand the need for compliance and financial accounting, the benefits of strategic financial management may be less obvious.

Manufacturing is a cash-intensive business and cash could be tied up in working capital for weeks or months making it vital to have accurate record keeping and in-depth analysis to enable managers to make informed business decisions. It’s not always possible to turn around a decision quickly, so careful planning enables you to avoid costly errors.

Let’s look at some of the business areas where you can run into trouble if you don’t have a good handle on your numbers:

End-to-end supply chain requirements

End-to-end involves the entire supply chain process, from product design and procurement of raw materials, manufacturing and delivery of the final product as well as post sales customer service. End-to-end supply chain best practice involves building collaborative relationships with your suppliers where you are all working towards the same goals. You may be importing and exporting goods, so that can come with additional legal and financial complications which means it’s vital to understand, record and accurately track your figures.

Tooling and NRE costs

NRE (or Non-Recurring Engineering) and tooling are unavoidable costs of manufacturing new products or enhancements to existing products. NRE, which includes tooling is the one-time cost to research, design, develop and test a new product. The NRE cost needs to be included when looking at the overall profitability of a product as these costs can be prohibitively high. Without a clear understanding of your non-recurring engineering costs, you could make a costly decision to continue production of a product that is loss-making. It’s not uncommon for new manufacturing businesses to underestimate the NRE costs for bringing their product to market.

Compliance and quality control

Manufacturing compliance includes the technical, legal, and corporate requirements, regulations and practices manufacturers must satisfy as they produce and market products. When businesses are struggling to remain compliant with key legislation such as GMP within the food, cosmetics and pharmaceutical industries or ISO standardisation regulations in other industries such as engineering or IT technology, they run the risk of expensive fines as well as missed sales opportunities. Remaining compliant with standards for manufacturing and quality enables you to compete in international markets, growing your business globally rather than just domestically.

Raw materials, work in progress and finished goods

One of the biggest costs for manufacturing companies is the materials cost to make products. Thousands of pounds can be tied up in inventory, whether in raw materials, work-in-progress or finished products. Keeping a close eye on inventory levels enables you to keep your working capital as low as possible. Choosing the right inventory valuation method is important as it has a direct impact on the business’ reported profitability. Whether you opt for LIFO, FIFO or WAC, you’ll need to be consistent so that costs can be compared across accounting periods. An outsourced Finance Director can help you to assess which method is most appropriate for your company.

Cost of goods sold and direct/ indirect costs

Cost of goods sold includes direct raw materials as well as direct labour that can be attributed to each product. Having a clear understanding of project accounting can help your finance team to implement cost allocations that improve your ability to calculate which products are most profitable. In times of escalating costs, this can be vital for making quick decisions about whether to drop a product line or increase output.

Production line: Batch production, continuous manufacturing, test runs, shifts and down time

Manufacturing accounting focuses on the fine detail of what’s really happening on the production line. It looks at how to reduce wastage, how to cut your defect rate, how to manage staff shifts, whether to run batch or continuous production and many other aspects of running a factory. Strategic financial management that isn’t afraid to get down into the minutiae of how things really work is a huge asset to your business.

Continuous improvement and customer care.

Creating a thriving business is not just about having a good quality product. These days consumers are savvy and the internet makes it simple to shop around, not only for the best price, but also the best customer experience. A programme of continuous improvement and a culture of customer care will put your company top of mind when customers are looking for your product – price may not be the right differentiator, particularly in times of high inflation.

Reporting beyond just sales, P&L and Balance Sheet.

There is so much to understand to ensure your financial strategy, plans and reports are accurate> That’s why you need a finance partner with over 20 years of manufacturing experience who understands your issues on the shop floor and within the supply chain. Performance metrics, cash flow forecasts, funding options and working capital management are all vitally important and may not fall under the remit of your Financial Controller.

The benefits of strategic financial management for manufacturing businesses

An outsourced Finance Director with a background in manufacturing accounting can provide a whole new insight into the financial health of your business by providing reporting such as detailed variance analysis, cashflow forecasting and tracking, working capital management reporting and appropriate funding options. In addition, strategic financial management can help identify any specific tax breaks, incentives and grants available for your manufacturing business.

Many manufacturing businesses are also at the mercy of the global supply chain and can be impacted by the fast-changing global economy. When you are importing and exporting, a previously successful business can rapidly become a loss-making organisation if insufficient attention is paid to what’s happening with exchange, inflation and interest rates around the world. Using an outsourced Finance Director with many years’ experience, both in the UK and overseas manufacturing environment, allows you to anticipate and mitigate issues quickly.

Your business, whatever its size, can benefit from closer analysis of what’s happening operationally, so you can improve your strategic decision making and plan well for the future. Logical BI can provide strategic financial management support at FD level or can work alongside your finance teams in a consultative capacity to help you achieve your long-term goals. Call 07739 429495 or email hello@logicalbi.com to find out how we can help your business achieve more.

Why not connect with Logical BI on LinkedIn

You may also be interested in:
How does an accountant help with business decisions?
How can I reduce business costs?

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How can I reduce business costs?

Pauline Healey — Mon, 03 Jan 2022 09:16:17 +0000

As business owners, how much profit we make is key to whether our business is viable or not. There are several ways to determine if your business is successful but ultimately, if you are not making a profit, most of us will struggle to maintain a business at a loss.

Knowing how much money is coming into the business is important. Reducing our business costs can make a difference to our profit margin.

Here are a few ways you can minimise your business costs:

Business Record keeping.

One of the key things when looking at minimising our business costs is knowing what we are paying out. Having an accurate record of everything we are paying out for is very important. Not only can you see how much you are spending but it could also save you money on tax.

Reflect and review.
Take time to think about what you could cut out. What has worked and what hasn’t. For example, if you have been using multiple ways to market your business and only a couple of them have worked, do you need to be paying out for all of them? Are there other ways to market your business that is free e.g., through social media.

Shop around for the best prices and quality.
Trying to find the best price for things can make a real difference. Although, the best price doesn’t necessarily mean the best service. You need to weigh things up and prioritise what it’s worth cutting back on. For example, if you shop around for business insurance and find several companies offering what you are looking for, look at their reviews as well as at their price. Some companies charge more than double for the exact same insurance. Also, consider if you actually need such comprehensive cover and that you are not over insuring yourself for no reason.

Review business debt.
Taking on a business loan or credit card will add to your business costs. Not only do you have the pressure of paying the monthly back but the added interest really adds up. Think carefully whether you truly need to take out business debt and if you do, shop around. Paying 5% APR interest rate on a business loan could save you hundreds in comparison to paying 20% APR on the same loan or a credit card.

Productivity.
Are you using your time wisely? Are you making the most effective use of your time? If not, then this could be costing you money!

Hire an accountant to save you money.
Having a good accountant could save you a lot of money, we know how to reduce business costs and utilise your allowable expenses, we work to maximise your cash and profits.
If you are considering hiring an accountant for the first time or switching from your current support, why not book a free discovery call today; https://calendly.com/pauline-healey/discovery-call

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How does an accountant help with business decisions?

Pauline Healey — Thu, 18 Nov 2021 11:19:00 +0000

When starting a business or in fact at any stage of a business, finances have a huge impact on our decisions. Some business owners start with very little or even no money at all and have to think very carefully about what they spend on in the early days of their business.

If you don’t know or understand where your business money comes from or goes to, how can you work out what makes you money and what doesn’t?

An experienced accountant can help advise you on any decisions you already intend to make. They can fully understand reports and look at your business as a whole. They also don’t have any emotional attachment to the business and therefore can be brutal with what needs to go and what needs to stay.

Having a process of keeping financial accounts is vital with any size business. Even if you deem yourself as a very small business, you need to know what is going on with your money, if not how will it be a viable business? What if you decided to expand and started to look for investors, they would want to see how healthy the business finances were, they expect up to date, robust monthly finance reports. Even if you were struggling and going into administration, having full up to date accounting information will help the creditors.

How do accountants help with goal setting?

Do you feel that accountancy will help with your business decisions? If not, how will you set business financial goals alongside performance metrics if you don’t know what income you make from one year to the next?

How will you know if you can afford to employ a member of staff or purchase new stock if you don’t have any record of your finances? If you wanted to buy a state of the art printer that should print 4 x quicker than your current printer but the ink costs more than your current one, how will you determine whether it is truly going to make you more money than your current one? You would need to know how much each printout is costing you and how many you do each day etc. At the end of the day, you will need to determine whether it will increase your capacity and therefore bring in more income. This is a cost-benefit analysis.

How can hiring an accountant help reduce my business costs?

The accounts of your business can feel overwhelming but it is something that can make or break your business. There are several easy to use software packages, such as Xero, that can help you or if you invest in an accountant or an on-demand Finance Director/CFO it can make a real difference to your business and it can reduce your outgoings, increase income and therefore increase your profit margins.

An accountant’s service is much more than reporting historical, year-end compliance requirements, an accountant can be your business partner guiding your business alongside you, driving for success.

Do you need an accountant that works with you beyond just yearend compliance? Why not book a free, no-obligation discovery call today to discover how Logical BI can support your business;

The post How does an accountant help with business decisions? first appeared on Logical BI.

What qualifications should an accountant have? (UK Accountants)

Pauline Healey — Wed, 10 Nov 2021 08:56:00 +0000

Accountants support businesses with their money and maximise profits, as well as offering financial advice.

A good accountant can be an integral part of a business. There are so many things to consider when looking at taking on an accountant. You want them to make a positive impact on your business.

Does an accountant need a degree?

It may surprise you to read that in the UK you do not need a degree to become an accountant and technically, anyone can call themselves an accountant!

There are lots of qualifications that reputable accountants do have. Considering an accountant will be working on your business accounts, I would highly recommend when choosing an accountant that you check to see if they are a member of certain bodies and what qualifications they have and that they are insured to act as your accountant.

What qualifications should an accountant have?

Many accountants have the Association of Accounting Technicians qualification, which is also known as AAT. The AAT is a UK qualification and lots of people start with this qualification when starting in the accounting industry – these qualifications do not award a person as a chartered accountant which is a higher level of qualification but do provide the skills to support your book-keeping, year-end returns and often assist Chartered Accountants.

Chartered accountants have a greater range of training and examination, if their passion is for commercial finance and business strategy, many train to complete the Chartered Institute of Management Accountants (CIMA). In England, a majority of accountants in practice have The Associate Chartered Accountant (ACA) qualification, which is the professional qualification from the Institute of Chartered Accountants in England & Wales (ICAEW).

Here is a list of chartered accountancy bodies and qualifications to look out for in the UK

Certified Public Accountants Association.
Chartered Institute of Public Finance & Accountancy.
Chartered Institute of Management Accountants.
Association of Chartered Certified Accountants.
Chartered Institute of Taxation.
Institute of Chartered Accountants of Scotland.

If your accountant is certified and under governing bodies, it means better security for you. If anything goes wrong, you can contact the relevant body, who can then look into it. Look at it like OFSTED for schools.

You want your accountant to know what they are doing, as, after all, that is why you have hired them.

Accounting Qualifications at Logical BI

At Logical BI Limited, our director Pauline Healey is a chartered management accountant with CIMA and has completed the thorough Members in Practice (MIPs) certification, that allows her to practice on a freelance basis. Make sure if you hire a CIMA accountant that they have the additional MIPs classification that can be found with the following link https://www.cimaglobal.com/About-us/Find-a-CIMA-Accountant/Logical-BI-Limited-14502/

Thinking of switching accountants for proactive support? Logical BI make it easy, taking the strain, why not book a no-obligation, free discovery call today;

The post What qualifications should an accountant have? (UK Accountants) first appeared on Logical BI.