As a business owner, you know how crucial it is to stay on top of your finances. Mismanaging and improperly organizing all of your financial matters will not only make life more difficult for the business, but it could also get you into hot water during tax season and invoicing customers.
To keep cash flowing, it’s best that you, as the owner, understand and know the entire state of your financial affairs. Otherwise, if you’re business starts to lose money, by the time you notice it could already be too late. That is why you should always know what is going on with your businesses finances to ensure its future is secure.
Keeping track of finances can be a daunting task. However, by staying organized and having a schedule, it will quickly become second nature. Consider using some of the following tips from Global Resources LLC to help you manage your small business finances.
Stay On Top of Invoicing
Although it’s not a task that many enjoy doing, it is one that needs to get done. If you fall behind on invoicing customers and clients, that’s less money you’ll have sitting in your business account.
Sending out invoices right after your business provides goods or services is a good habit to get into. Make sure each invoice has a reference number that you can cross-check with the payments. Set a payment due date so clients know when they need to submit payment by.
Use Bookkeeping Software
There are so many different bookkeeping and budgeting software programs available at your fingertips that help businesses with their finances. It’s never been easier to manage your business assets. Review some of the most popular financial software on the market to see which would help make your life that much easier.
Keep a Working Budget
Everyone can benefit from a budget, especially business owners. Especially if you are just starting, having a working budget will help keep your finances on track, and give you a clear understanding of how well your business is performing.
A working budget is one that is always in progress. It’s something you check on a daily basis and make adjustments when needed. Your working budget should include all of your sales revenue, as well as any expenses your business incurs.
Be Prepared for Major Expenses
Part of your business plan should include any future developments you may want or need. That could include expanding, moving to a new facility, hiring new staff, or updating existing software and equipment. All of those future developments are likely to cost your business quite a bit of money. A good bookkeeping tip is to be prepared for those expenses, even if they are years down the road.
Developing a cash management plan is critical to the success of a business. In addition to planning for the future in the long-term, you need to manage your cash in the short-term. You should be able to track all your receivables and payables so that you can see what your cash needs will be on a rolling basis looking 12 or more weeks into the future.
Many entrepreneurs get into trouble because they don’t have a good system for predicting their cash needs in the foreseeable future and then get caught behind the payables “eight ball” when it is too late to come up with a needed solution for making payroll or keeping current with suppliers to avoid late payment penalties. Failure to effectively manage cash is one of the most common mistakes entrepreneurs make in running a business.
Have a Record of Deposits
You have your budget, bookkeeping software, and have a system for your invoices, but do you know all of the deposits that’s occurred the last year? Knowing what each deposit into your business bank account will help you come tax season. Keep a running record and make a note of every deposit and what it is for.