If there is one thing that keeps a business turning, it’s money. You need cash for just about everything. From getting set up to paying employees, your business finances should be the one thing you pay most attention to. Knowing the state of your financial affairs inside out will ensure the cash keeps flowing and nothing runs off track.
Staying on top of your small business finances means you can avoid unforeseen debt and have enough cash in the bank to grow your company. If you’re tasked with managing finances yourself, you may not have much knowledge and expertise in the field. Thankfully, here are some brilliant tips that will help you regain control.
Manage Your Accounting Properly
This tip needs to be said over and over again. In order to keep on top of your business finances, you must manage your accounting properly. If you don’t believe you’ve got the skills and expertise to do it, you can hire a good bookkeeper or look into purchasing DIY accounting software. It’s critical that you keep an accurate track of all costs, income, and expenses.
You must be in control of your expense management too. Companies like Payhawk can help you with this. It has a direct integration with Oracle NetSuite. You can find out more about this at https://payhawk.com/blog/payhawk-has-a-direct-erp-integration-with-oracle-netsuite. Many businesses use their accounting software to keep on top of day-to-day costs and spend.
Review Costs
It’s essential that you monitor all your small business expenses. Whatever kind of industry you’re in, there are all sorts of costs that you need to know about. Before you know it, expenses can rack up quickly, and you may find you haven’t got the funds in place to fix problems. The last thing you want is to find yourself in debt, so reviewing your costs is key.
Types of small business expenses include advertising, business vehicles, payroll, and employee benefits. It’s vital you review costs regularly too, rather than leaving everything until the end of the tax year. When you’re in charge and know exactly what’s going on, there won’t be any surprises to worry about.
Make Financial Projections
Financial projections are all about using existing or estimated financial data to forecast your company’s future expenses and income. Doing this gives you a full overview of how your company will perform in the new future. Financial projections are important to both business owners and potential investors. This is because it predicts whether the company will grow and be profitable.
Having financial projections in place will help you address and sort out possible future obstacles. What’s more, doing this will give you something to work towards and achieve. You may prefer to hire a professional to make financial projections, rather than doing it alone.
Use Apps for Expenses
Business and technology go hand in hand. Unlike in the past when you’d have to use pen and paper to track expenses, there are lots of ways to cut corners in 2022. Simply using your smartphone and downloading a specialist app can help you track and keep a record of expenses.
Mobile apps are great for keeping you in the know of what’s going on with your business finances. What’s more, it requires little effort on your behalf. Make sure you use an app that’s easy to navigate and understand, otherwise, it may be more trouble than it’s worth!
Don’t Slack on Invoicing
Invoices are a key component of a business. In a nutshell, companies need to create invoices to make sure they get paid by clients. Invoices serve as legally enforceable agreements between companies and clients. They provide documentation of services rendered and expenses owed. Invoices also help companies monitor their sales and manage their finances.
You should never slack when it comes to invoicing. There are some tips that can help you get on track with this aspect. For example, sending out invoices as quickly as possible once you’ve provided goods or services is advised. You should set payment terms of 7 days too. This will ensure payments aren’t forgotten or got lost in the process. Make sure to follow up on sent invoices too. This can be made easier by creating a set template for SMS or email follow-ups.
Have a Separate Business Bank Account
If there is one clear recipe for disaster, it’s mixing business money with your personal cash. This can cause all kinds of tax headaches and unexplained losses. What’s more, you’ll be spending precious time sifting through your bank statement to establish what’s spent on the business and what’s spent on yourself.
The best thing you can do is keep your business money separate. The way to do this is by opening up a business bank account. Once you do this, you’ll find it much easier to keep track of your expenses. It’s wise to compare a range of business bank accounts before going any further. You’ll find each bank has different rules and incentives, so it’s worth researching first.
Stay Frugal
As the business owner, you will pay yourself. Unfortunately, some business heads can get a little too excited with this and end up sucking up all the profits. While a little splurge here and there won’t do too much harm, if you’re giving yourself a huge slice of the pie, this can have a big impact on your business finances.
When you start making a profit, try and remain frugal. It’s wise to set your salary as low as possible. Remember, what you save now will provide you with more flexibility in future months. You may have periods where money is tight, so knowing you’ve got cash to keep yourself afloat will reduce stress levels and keep you on track.
Be Careful When Expanding
If you find you’re in a position within the business where you can expand, first of all -congratulations! This should be an exciting time full of possibility and opportunity. However, when you grow your company, it can be easy to start spending money like it’s water!
Make sure the expansion is done wisely and steadily. If you push large amounts of cash into expansions that are too quick, all sorts of problems can arise. You need to remain sensible during this period.
Check Your Business Credit Score
When it comes to your own personal spending, you’ll likely monitor your credit score to ensure you are spending wisely. The same rules should apply to your business. If you have a low business credit score, you may have issues trying to get top credit deals. Therefore, it’s worth checking it out regularly and looking at ways to improve it.
Some of the best methods for improving your business credit score include paying bills on time, establishing credit accounts with suppliers, and disputing any errors and inquiries.
Regardless of the size of your company or how long you’ve been in the business game, keeping on top of your day-to-day finances is imperative for the success and growth of your operation. If you haven’t got a finance team in place taking care of the money side of things, it will be left up to you to step into their shoes and monitor what’s coming in and what’s going out.
Following the suggestions listed can help you get to grips with your finances and ensure you do everything in your power to keep things moving along smoothly.
