Financial Matters with Fairhurst Accountants: always ask where the money went
This week Fairhurst Accountants look at how to keep track of your money.
If you’ve ever reached the end of a busy month wondering where your profits have gone, you’re not alone.
For many small business owners, cash can seem to disappear faster than it arrives, even when sales remain healthy.
Sales are important, but cash flow – the money coming in and going out – keeps your business running day to day.
Asking “Where did the money go?” is therefore an important first step towards regaining control.
Effective cash management starts with visibility.
Without a clear understanding of where your money is going, it is difficult to:
- Spot wasteful or unnecessary costs
- Plan for tax payments or seasonal dips
- Invest with confidence in equipment or opportunities to grow
- Avoid last-minute scrambles to cover payroll or bills
In short, if you can’t track it, you can’t manage it.
Business owners are often surprised by the cumulative cost of subscriptions, software licences, supplies, travel and energy. These expenses can pass unnoticed but steadily drain cash.
Inconsistent pricing, overdue invoices and excess stock can also quietly erode margins.
What you can do
Review your spending monthly: set aside time each month to examine bank statements and P&L reports. Look for recurring costs, unexpected charges and spending trends, then identify where sensible savings can be made without affecting service.
Use cash flow tools: accounting software or a simple spreadsheet can help you forecast receipts and payments, monitor your position and respond before a shortfall becomes urgent.
Separate personal and business finances: mixing the two creates confusion and risk. Keeping them separate makes your cash situation easier to monitor.
Set spending limits: set realistic monthly limits for key areas and review them regularly. Clear boundaries encourage discipline while allowing essential expenditure.
Revisit your pricing: if costs have risen but prices have not, margins may be shrinking. Review your pricing periodically to ensure income keeps pace with expenses and still reflects the value you provide.
Asking “where did the money go?” is not a sign of failure. It shows that you are taking control.
Better visibility over cash helps you plan for tax, protect working capital, make confident decisions and invest in growth.
If the figures remain unclear, speak to your accountant early rather than waiting for pressure to build.