Situations
My business is growing fast
Growth can change what you need from your finance support. Here is what to check, in order.
The short answer
1. Check for new legal duties, such as VAT registration or payroll. 2. Get your records up to date. 3. Get figures during the year, not only at year end. 4. Build a cash flow forecast. 5. Put simple financial controls in place. 6. Talk to your accountant about whether they can support this, or whether you need more help.
Some of what follows is a legal requirement. Most of it is good practice or our judgement, and we say which. What fits depends on your business, not only on how fast it is growing.
1. Check for new legal duties
These are legal requirements that growth can trigger:
- VAT registration if your taxable turnover goes over the threshold. See I'm close to the VAT threshold.
- Payroll and a workplace pension when you take on staff. See Taking on my first employee.
- Extra filing if you set up another company. See I run more than one company.
2. Get your records up to date
Good practice. Every figure you or a lender relies on comes from your records. If bookkeeping is weeks or months behind, the first step may be a bookkeeper. See Accountant or bookkeeper?
3. Get figures during the year
Good practice. Year-end accounts tell you how the business did months after the year ends. Management accounts, each month or quarter, can show whether growth is profitable while you can still act on it. See Management accounts: what good looks like.
4. Build a cash flow forecast
Our judgement. Growth can use up cash: you may pay for stock, staff and equipment before customers pay you. A forecast shows when money comes in and goes out over the coming months, so a shortfall shows up before it happens. See Making a profit but short of cash.
5. Put simple financial controls in place
Our judgement. As more people spend money or send invoices, it helps to agree who can approve payments, how invoices are chased, and how the bank account is checked against the records. These are financial controls and approvals. They do not need to be complicated.
6. Talk to your accountant
- Can you provide management accounts each month or quarter? How soon after the period ends?
- Can you build a cash flow forecast with me and update it?
- Can we meet during the year to talk about decisions such as hiring or borrowing?
- What would this cost on top of what I pay now?
Some accountants offer this kind of support. If yours does not, you could add someone alongside them, such as a bookkeeper or a management accountant. A part-time finance director is one option for larger needs, but better reporting may be enough. See Have I outgrown my accountant?