The lack of financial skills is one of the main causes of financial problems for entrepreneurs. Around 38% of self-employed people in the Netherlands do the accounting themselves, 29% transfer it to an accountant and 21% have the accountancy done by an accountant. In itself it is good to have the bookkeeping done by a professional, but for the entrepreneurs it often means that they do not develop knowledge of the interpretation of figures and cannot read their own annual accounts. It is therefore important that you let the accountant explain what the numbers in your accounting mean and how you should interpret them. Figures are important guidance material for where your company stands and how you can do better in the future.
In our daily practice we see many entrepreneurs with a lack of financial skills. For example, there are entrepreneurs who are not aware of the difference between turnover and profit, therefore misunderstand their finances. Another common problem is underestimating the amount of working hours it actually takes to complete an assignment. If you agree a fixed price with your client and you are working on this assignment for longer than expected, your hourly wages can drop considerably and you may end up with too little at the end of the assignment.
A third problem is customers who pay their bills too late and only respond to an account when they receive a reminder or reminder. Entrepreneurs are often afraid to alert their customers to unpaid bills, because they fear that the customers will then go to another client. This fear is often unnecessary. If you have delivered a product or service, you are also entitled to your money. On the contrary, it decorates you to call the customer in a friendly way and remind him or her to pay the bill. If you actually have a customer who still does not pay, it is important to keep all communication regarding the payment in a file, in case you have to transfer your claim to a collection agency or bailiff.
The fourth major problem is dependence on one major client. Entrepreneurs who focus on a single client quickly end up in financial difficulties or even bankruptcy if that client disappears or goes bankrupt. That is why it is important to always have a plan B for scenario.