Several small and medium sized businesses struggle with their finances. Cash flow is always a problem. Do you know why? It’s because lack of good financial practices are keeping your business from achieving its full potential.
Imagine spending your money on all the wrong things and landing with a cash flow issue before your invoices are due. Don’t stay stuck with bad situations like this. Learn how to make business finance easier with these simple tips.
Do you still do shoebox accounting? Go may have hundreds of receipts and invoices on paper. While they may not be completely done away with, you can choose to go digital. Scan these paper bills and invoices and load them onto an accounting software.
While Excel is a good way to maintain the budgets of your home, it doesn’t really offer a robust business finance solution. Make sure that you are spending some money in buying or subscribing to an accounting software. Finding problems in your accounts is easier with such software. This isn’t all. You could make budgets, manage your payroll better and even calculate taxes more efficiently.
Dedicate one day a month to finance
It may sound like a no-brainer, but considering the number of small business that don’t do it, it is a valuable advice. The first or last day or the month or any other day you choose in between could be selected for checking your finances. This day, let other business activities take a backseat.
Review your finances for the previous month and plan them for the next month. You will be surprised at how this one step could change the way your business operates forever. You may learn how to make better financial decisions and envision expenses in advance.
Maintain petty cash
Do you ever pay attention to the ‘petty cash’ available in your business? Most business owners willfully ignore this small but important part of business finance. There should always be some petty cash available with your business, ideally enough to fund a day’s expenses.
When you do this, you make it easier for your business to run with ease. In fact, you can eradicate the cash flow problem completely from the business. You don’t need to maintain thousands of millions of dollars, but the larger the petty cash, the better time you will have with expenses.
Never fail to record
Your business finance is all about recording the expenses at the right time. Ideally, don’t wait for a single day to record all your transactions. In any case, do not depend on your memory. Some business owners believe that they could dedicate one day a week to record all their transactions, based on memory or a paper trail. This hurts your business finance. Paper bills can easily get lost and memory is not the most reliable asset when it comes to recording expenses. Make sure that you update your records as soon as you make an expense or an income.
Business finance doesn’t have to be difficult. All you have to do is understand the importance of proactive bookkeeping and steady cash flow.