When it comes to reviewing your costs it helps to be consistent in categorising your costs as there are sometimes many different ways to categorise certain items. For example Computer software subscriptions could be placed in at least two different categories, and others may be more complex. Ensuring they are all dealt consistently is key. Even if HMRC doesn't strictly define what should go where, be consistent, it can be very helpful from your end to keep track of how much you're spending on various aspects of your business. This can help you highlight specific areas to cut costs, or increase budgets in problem areas.
Customers are the lifeblood of your business, but some are much more beneficial than others. We all know the ideal customer: they pay on time, they love your product or service and they tell all their friends and family about how great your business is. But there are also the unhelpful customers: they want to haggle over price, they're slow to pay, or they simply take up too much of your time on trivial matters. Once your business is established, you can afford to be choosy - so save yourself the headache, and only work with the customers you want to.
While we all want happy customers and happy suppliers, there are times when circumstance gets in the way. If you've had to cancel an invoice for a customer or a customer simply isn't going to pay, then write the invoice off as a bad debt so that the outstanding item is closed. Keeping updated profit and loss accounts makes everything run more smoothly and helps you pinpoint areas that may need more attention.
It's not just your customers you need to keep an eye on - you should regularly review your suppliers to see if there are any better options. You may be able to negotiate with some suppliers for discounts based on volume or consistent purchases, or you may be able to find a cheaper supplier to work with. Just remember not to compromise on quality where it counts!
There is an old saying that goes, 'Businesses live and die by their cash flow' and also ‘Cash is King’, the 2008 global financial crisis really drove the point home. But even in more relaxed times, it's important to keep an eye on cashflow. Look through your bank statements and identify the points where your cash flow was at a low ebb, and then determine what the cause was. See if you can remedy this for next year by shifting payment windows or speeding up customer payment processing to alleviate the cash flow pressures.