It can be difficult to get practical advice for micro business, especially when you’re on a budget. 

In an effort to share good advice and help every business thrive despite the current restrictions the team at North Devon’s Business Action magazine has developed a “Business Activist” feature. I’m delighted to have been asked to chip in with some answers to readers’ questions regarding business finances, and so it makes sense to share that advice here too.

All of the advisers who have joined the team are happy to give general advice to businesses who contact them, so if there is a burning question that you’ve never found the right person to ask then you can call me, or email your question to

Question 1 (Autumn 2020): Can my micro business benefit from automating our accounts?
It depends what you mean by automating. Usually this means adding programs to cloud accounts software (Xero, QuickBooks, etc) to save time processing bills and invoices; what’s not to love about that? But getting value for money and for the time you spend is crucial.

I like to keep things simple; your time costs money but in a startup/ micro business you will always be directly responsible for making sure all the bills get paid. Whatever you do it is vital that you know what’s likely to happen in the bank account. What bills do you need to pay and when do you expect customers to pay you?

So accurate records are most important. You can do this on a spreadsheet, especially if you are not VAT registered. Actually a simple spreadsheet can be the best tool even when you have an accounts system as well.

What you may not realise is that now most accounts software will automate a number of tasks for you. It can link directly to your bank, offering huge time savings on copying details from a statement as well as helping you keep track of which customers have paid. In addition to this you can set up repeating invoices, send customer statements and see summaries of outstanding bills as well as much more to save you time and help you stay on top of your finances.

This is usually enough for most micro businesses; good value for both the money and time involved.

Question 2 (December 2020): Should I register my business for VAT?

If your sales come to more than £85,000 in any 12 month period you must register for VAT. But if sales are less than this the answer is very specific to what kind of business you’re in:

  • Who are your customers? Business customers can reclaim VAT on their purchases so adding VAT to your sales will not make any difference to them. Consumers on the other hand cannot reclaim VAT so it will increase your price by 20%. This is often crucial to your profitability, especially if some of your competitors may not have to charge VAT.
  • What do you sell? VAT on essential items is charged at 0%. So if you sell food or drink (not hot food or alcoholic drinks), books, newspapers, childrens’ clothes and some other products VAT will make no difference to the price.
  • What do you buy? If you already pay VAT on your purchases you may be better off if you can reclaim VAT. If your costs are mostly wages then you may not be.
  • If you think registering for VAT is right for your business then really you need an accountant’s advice. Keeping good records is essential, along with making sure you know the deadlines for reporting and paying HMRC.

    Question 3 (February 2021): Can preparing a budget revive enthusiasm in our business after being closed due to Coronavirus?”

    This is a dreadful time everyone, but especially for businesses who are reliant on customer footfall for their sales. Sometimes it feels like the pandemic might never end. But it will end, and this is a the perfect time to make plans for what you want your business to look like when it does.

    In the short term it’s vital that you keep on top of bills that are due and make sure you have enough money in the bank. A budget is a great tool for that forward planning and gives you the information you need to make proactive decisions and have up front discussions with landlords and suppliers so you stay in control.

    There’s more to it though; creating a budget and planning a vision for the future can be uplifting. It takes your attention away from current problems and focuses you on the future.

    While you’re closed you have an opportunity to think about what you really want from your business; is what you’ve got now the business that you dreamt of? Would you make changes? What would it take to make this happen?

    The future may seem a long way off right now, but this is a perfect time to plan.

    Question 4: (April 2021): A roundup of questions about giving credit to customers

    When you’re selling to another business they often expect not to have to pay straightaway. But allowing customers credit has a cost and can be a risk to your business, so what should you think about before you go ahead?

    Q: Do I have to offer customers credit? No! It’s important to understand what works for you, not just what you think is expected. A cashflow forecast is essential here, it will help you see the impact of delays in getting paid.

    Q: What about discounts? Some firms offer a small discount for prompt payment. If you include the cost of offering credit in your prices you can afford to give something away for quicker payment. It’s also worth remembering that some customers prefer a direct debit option as this reduces their admin burden while giving you more security.

    Q: I’m worried if I don’t get paid now I might not get paid at all! You need to work out how much credit you feel comfortable giving. The best plan is to start small and look to build a relationship:
    * make sure you have all the details you need for new customers: the right names and phone numbers
    * ask for references from current suppliers and make sure you follow them up
    * keep your book keeping up to date so that you know how much you are owed
    * send statements and reminders BEFORE the payment is due
    Most importantly speak to your customers regularly; check they have your invoices and know when they are due.

    Handled well, offering credit can help you grow your business. But make sure you operate good credit control: a friendly phone call doesn’t cause offence and can build valuable business connections.

    There’ll be more answers coming soon, but if you have a question of your own then you can contact me or email it to

    Find out more about how I help businesses here