Handling your recruitment firm's financial affairs efficiently should be about far more than just ensuring its compliance with annual regulations.

Not reviewing your finances can result in thousands of pounds being lost through inefficient tax and business planning if you haven't kept in step with annual changes in tax rules.

And in such a competitive and cash-intensive industry as recruitment, that's an extravagance that most recruiters can ill-afford.

Here then, are some issues that are be worth considering:

Expenditure and other tax issues

Are you claiming tax relief on allowable business expenditure? Check what expenditure qualifies for allowances and make sure that you are claiming everything that you're entitled to.

For example, small businesses qualify for a 40% first-year allowance on the cost of most equipment. This relief increased to 50% for one year from 6 April.

Invoicing and cash flow

The importance of prompt payment in the recruitment industry cannot be overstated.

However, a new accounting practice introduced recently means that businesses performing service contracts over a period will now have to recognise income earlier in their accounts than was previously the case.

This could lead to a higher than normal tax bill this year and one way to help your cash flow could be to invoice customers earlier and more frequently.

More generally regarding cash flow, the right ethos has to be that a sale isn't completed until payment is received in the bank.

Lots of young companies focus exclusively on winning order after order, but it's important that this focus doesn't eclipse everything else.

You've got to get to grips with all aspects of your cash-flow cycle. And often the only way to do that is by asking questions and reviewing everything:

When do you expect creditor payments? When are your own payments due? When do BACS transfers occur?

Being on top of your cash flow-cycle usually means that you will find it a lot easier to raise finance. Cash-flow forecasts are particularly important to financiers - in fact, in our experience, most well-run companies produce them on a quarterly basis at the very least.

The greater your cash flow record, the more flexible these financiers in particular are likely to be.

Banks and other finance providers will always look carefully at your track record in this area and are particularly wary of firms that are slow in producing internal performance figures.

In an industry where your main costs - people - are prompt and regular, but customers can be the exact opposite in their payment times, being on the front foot here gives you a definite edge.

Contributor:David Hughes, Partner in the Professional & Consultancy Services Group of chartered accountant Saffery Champness