5 Finance fundamentals for HR Consultants
Friday 6th June 2025
Practical tips to help you stay compliant, reduce stress and take control of your business finances
Running your own HR consultancy can be rewarding, but it also means you're wearing every hat in the business, including the finance one. Whether you're freelancing or running a limited company, getting to grips with the financial basics helps you stay compliant, reduce stress, and, most importantly, allows you to spend more time doing what you love: supporting your clients.
Nick Lankester, Director at Jackdaw Four Finance recently ran a short session for hireful partners, where he broke down the five finance fundamentals that every consultant or SME should understand. Below, we share the highlights from the webinar.
1. Create a compliance calendar
Deadlines aren’t just for client projects - they’re also critical for staying in HMRC’s good books. “The reality is, it’s quite easy to comply if you’re organised,” said Nick. “Put the deadlines into your calendar or to-do list with recurring reminders.”
Nick recommends Microsoft To Do or Google Tasks to build out your own compliance calendar. Even better, software like FreeAgent (more on that below) does this for you with a tax timeline that shows what’s due and when.
Bonus tip: Set up variable direct debits with HMRC for VAT and PAYE to avoid missed payments. As Nick said during the webinar, “You don’t want to be scrambling for your card reader on the beach”.
2. Use accounting software
Still using spreadsheets? Now’s the time to switch. “Accounting software doesn’t have to be expensive. Some options are free, and the time they save you is huge,” said Nick.
Our recommendations:
- FreeAgent: Ideal for freelancers and micro-businesses. Included free with a Mettle, NatWest or RBS business bank account.
- Xero: Powerful reporting features, great for scaling businesses, but the add-ons can add up quickly.
FreeAgent includes payroll, self-assessment, and integrates with Mettle to create automatic tax-saving pots. “The Tax Timeline is my favourite feature,” said Nick. “It shows exactly what’s due and when—and pulls it into your forecast.”
3. Keep your bookkeeping up to date
Bookkeeping might not feel like the best use of your time, but it’s key to making informed decisions. Nick suggests reconciling your bank transactions weekly, and your customer payments daily if possible.
Three reasons to keep it accurate:
- Accurate filing – so your VAT returns are right.
- Better decisions – based on real numbers.
- Cash collection – so you’re not chasing payments already made.
A word of warning: VAT can be complex. “There are still new scenarios I come across that I need to look up,” admitted Nick. His advice? Don’t assume - check. And if in doubt, ask your accountant.
4. Understand your management accounts
Management accounts help you review how your business is performing, and ideally go beyond the profit and loss (P&L). They include:
- P&L – shows if you’re profitable - is the value you're taking in sales exceeding all the costs it's taking to deliver them, AND paying you an appropriate salary.
- Balance sheet – helps you check your liabilities, and retained earnings from which you can pay dividends.
- Cash flow statement – shows how much cash you actually have, and reconciles the difference between the profit you've made and change in your bank balance.
“Profit doesn’t mean cash,” said Nick. “Many profitable businesses go bust because they grow too fast and run out of cash. You need enough cash to pay your liabilities as and when they fall due, especially your tax bills.”
Understanding these statements helps you make smarter decisions - like when to invest, when to save, and when you can afford to take time out.
5. Start forecasting
If management accounts look backwards, forecasting helps you look forwards.
You can model different scenarios, such as what happens if you lose a client? Or land a big new project? Can you afford to take August off?
“Forecasting isn’t all about growth,” said Nick. “It’s about control and peace of mind. It helps you sleep at night.”
FreeAgent and Xero offer built-in tools for short-term cash forecasts. For longer-term planning, tools like Fathom or custom spreadsheets may be better suited.
Final tip: Invoice with confidence
One of Nick’s standout tips? Review when and how you invoice.
“Invoice before or at the start of the service period,” he said. “Set 15-day payment terms and use a tool like GoCardless to collect by direct debit.”
Changing from end-of-month invoicing to start-of-month can reduce your cashflow gap by up to 45 days. “It’s a confidence thing,” Nick added. “But your clients value your work and you deserve to get paid for it - on time.”
Need help?
If you’d like support setting up your compliance calendar and meeting your filing requirements, switching to Xero or FreeAgent, reviewing management accounts, or building a forecast, Nick and the team at Jackdaw Four are here to help.
As Nick puts it: “I started Jackdaw Four for people like you - good people, running great businesses, just trying to do the right thing.”
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