Summer is here and many make the most of the warmer weather by taking a well-deserved break. However, absences can leave small- and medium-sized businesses caught unawares. At this time of year, when employees are taking their holiday, it is essential that firms plan ahead to ensure their business is not disrupted. There are several simple steps SMEs should take to manage staff holidays effectively:
Plan ahead
Staff may be away, but so too are your customers. So plan ahead to avoid payment delays. A survey by the Institute of Chartered Accountants in England and Wales (ICAEW) recently suggested that most companies have been holding on to their cash rather than investing it, so getting money into your business is critical in the short term.
Staff looking forward to their holidays shouldn’t neglect a proper handover, either. It sounds simple enough, but this applies particularly to those involved in raising sales invoices or chasing customers for payment. Staff who aren’t on leave need to be properly briefed so they can stand in, especially on commitments made by customers regarding payment. Customer queries won’t relent, so make sure your staff have the ability to follow up enquiries regarding sales invoices.
Get on top of invoices
Since you’re working hard to keep cash rolling in, you should also make sure that invoices are paid on time. You don’t want to damage your credit rating, which could have a detrimental effect on your ability to seek funding to grow in the coming months and years. Of course, all this means that your small business should have more than one person who is able to authorise payments and sign cheques. The last thing you want is angry staff and customers.
Alternative points of contact
A lot of your customers are likely to have a sole point of contact for their trade with your business. So it is important that suppliers and clients are aware of any stand-ins. This will make sure any handover is smooth, and allow stand-in staff to access a list of contact details for suppliers and customers.
When finance staff are absent, it is vital that the systems that feed into the recording and forecasting of cash flow are maintained. These include the aged debtors and creditors schedules, updated bank reconciliations and sales projections. This will enable management to keep abreast of incomes and outgoings during the summer.
Payroll
Payroll is another area that requires careful management during staff absence. Apart from ensuring staff are paid on the due date, HMRC must receive the full payment submission (FPS, basically the payroll summary by employee), on or before the due date.
While it is important to brief staff when handing over for any period of absence, it is just as important to debrief people when they get back from their holidays, so that they can get back up to speed.
These steps may sound simple, and even obvious, but it is amazing that people can often forget the little things when rushing to finish up before going on leave. Taken together, proper handovers and client references will leave your business running smoothly when any member of staff is absent, including yourself. But at a time when cash is king, businesses must ensure that money continues to come in during the summer. Firms must also examine their debt-collection and bill-paying procedures. If proper safeguards aren’t in place, companies could find themselves caught short.
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