The finances are the lifeblood of any business. Keep a good hold on them and factor them into all your plans and you should never find yourself dealing with the nasty surprise of being unable to afford what you need. Lose track of them and find yourself hitting that brick wall more than you would like. There’s no business that can survive without a very keen eye on how they handle their money. So, it’s time to untangle the mess of your finances and make sure you always have what you need when you need it.
Track all your spending, not just some
This is the first tip and one that a hurdle that a lot of small businesses fail at. If you’re not tracking where every penny of the business is going, you will find it a lot hard to make cash flow projections that can serve as the information you need in your future plans. You need a bookkeeping system that tracks and records transactions and categorizes them. You also need to make sure you’re not missing the opportunity to track any of the little additional costs. Any travel, meals, gifts, office supplies and the like need to all be accounted for. They might be small expenses taken one at a time, but sloppy accounting can make them a huge margin of error when they’re all added up.
Get what’s yours
Rather than what you spend, too many businesses have trouble getting the money that’s theirs when they need it. You might have accounted for it, but when it’s time to action a plan that needs some money, it isn’t there. If you used credit and debit card machines, then a merchant cash advance can offer loans based on the money that’s supposed to be coming in. You can do the same for your invoices, but it’s always a good idea to make sure you’ve accounted for the fact you have to wait for cash. With invoices, you should shorten that wait by agreeing on payment dates with any clients beforehand.
Pay what you should and no more
When you look at the money that’s going out of the business, you need to ask yourself if you need to be handing out so much. For instance, looking at your tax with a chartered accountant or lawyer could help you find the tax laws that allow you to keep a lot of the money that you’re legally obliged to not have to pay. You should also look at the services that you use regularly. Could you negotiate a deal with suppliers that works better in your favour, promising loyalty to make up for the hit they take in prices? If you’re outsourcing, could it be more cost-effective to look at bringing those services in-house with your own team instead?
Of course, the strength of the finances is all about making decisions on how you handle them, too. You need to prioritise your investments and learn to cut costs when possible. Otherwise, the tips above won’t do much good.