Having a healthy cash flow is essential for every business. Whether you are a buy-to-let landlord with a handful of properties or you manage a large portfolio, landlord software with an accounting engine can not only help with survival but also business growth.
What is Cash Flow?
Cash flow is the amount of money coming in and going out of a business’s account, to ensure that you remain in a position to trade you need more money coming in to your account than the amount going out otherwise you will find yourself filing for bankruptcy very soon.
Why is it important?
Managing properties is a business, even if you only have a few. You must treat it like you would any business, not a hobby or a pastime as you have a responsibility to your tenants. If you don’t monitor and manage your finances then the properties you purchased as a future investment, a key asset could be lost and it could become and expensive hobby you wished you’d never picked up.
You need to have money coming in (fees and rent) to cover your outgoings (wages, fees, bills, marketing etc…), if you can’t make your payments you won’t last long. Not only will that hold you back from simply running your business but you won’t have money to invest either and without the opportunities to grow the future won’t be bright.
Managing money isn’t easy but using tools that come with accountancy software can be a lot more manageable.
5 Tips to keep your cash flow healthy
- Use Direct Debit to Collect Payments: Do you have tenants in arrears? I’m sure you’ve heard every excuse going not to pay their rent on time but it isn’t fair is it. Why should you suffer from their misfortunes, even if they are telling the truth. If all of your tenants couldn’t pay their rent on the due date how could you pay your bills and wages? The knock on affects can be huge. By offering Direct Debit payments both you and your tenants benefit, you know the date money is coming in to your account and how much whilst your tenants don’t need to remember to make the payment as it leaves their account on the date agreed.
- Deal With Problems Before They Escalate: A small and inexpensive problem can easily become out of control. If a tenant informs you of a damp wall and you don’t fix the problem straight away not only will you have unhappy tenants but the problem can worsen quickly. Late payments are becoming a common issue too and need to be sorted out before they get out of hand. If a tenant misses one payment they can easily catch up, if they miss several then it is unlikely that they will be able to pay and you will miss out as it becomes bad debt.
- Move Your Mortgage Dates: You probably have mortgage repayments to make on your properties which can add up to be a considerable amount if your portfolio is large. For convenience you might have set payments to go out on the same day. It is highly likely that you request your tenants pay their rent on the same day. If your mortgage payments go out before your rent comes in then you could be living on the edge if you aren’t careful. By simply calling your mortgage providers to change the date you make the payments to be after rent is due you can live a lot more comfortably.
- Work More Efficiently: Save on wages, prioritise your time and not only will you get more done but you can concentrate on the areas that bring more revenue either for now or the long-term. Offering a better service will please your tenants who could remain in your properties longer, saving money on marketing and time to find new tenants whilst maximising the income of your portfolio.
- Budget Budget Budget: If you spend more money than you earn then you won’t be around for long. It sounds simple but many businesses fail to do this and they consequences are hard. It requires planning, research and you will get better at it with experience.
Can you remember life before computers? When everything was written down and the calculator was the greatest tool for those working with financials. Excel spreadsheets made life a lot easier, not only as it was capable of updating records but formulas simplified those complicated processes.
As computers and technology improved accountancy software made it even easier to manage business accounts and they have continued to improve their features and functions to save time and help with accuracy. Sage have been the UK’s leading providers since the eighties but the market has become crowded as technology is now easier to develop and more accessible to sell, especially with the ‘cloud’.
With the choice growing there is a package for every budget, size and requirements.
Decorus and Sage
Visionbase are the only property management software to develop and provide solutions which integrate seamlessly with Sage. There are many software packages available for landlords and letting agents for managing properties, many of these include an accounting engine within the system, some are linked with other accountancy software such as Xero or Quickbooks, there are a couple which do link with Sage but Decorus and Landlord Manager are the only ones to integrate seamlessly with a 2-way link to the number one software solution for accountants in the UK.
What does this mean?
Financial data entered into Decorus feeds through to Sage in real-time, and vice-versa. This means that reports such as profit and loss against each property can be generated instantly, show up-to-date financial information.
Sage have been around for quite some time, they’ve been developing software solutions for businesses since 1981 and they have built up a loyal customer base. As accountancy is a traditional industry many accountants stick to what they know and Sage have continued to evolve over the years, picking up new users on the way and over 90% of accountants are familiar with Sage format.
How does that benefit you?
Accountants don’t come cheap, use their time wisely. You don’t want them to spend it reformatting or trying to understand your records that come in an unfamiliar language. The other option is to input the data into Sage yourself which not only takes up your time but data entry is one of the main ways to damage productivity. You don’t want to be wasting anybody’s time as that is like throwing money away which won’t help maintain a positive cash flow.
The additional credit control module available for Decorus allows users to chase late paying tenants without any manual work required, minimising the likelihood of bad debt arising.
Do you want to find out more?
Complete the contact form to request a demonstration of our landlord software and see how it can benefit your portfolio for now and beyond.