Finance management is an essential part of running a successful business and this applies to businesses of all sizes. Aside from the marketing, sales and management, almost half the challenge of effectively growing your small business is managing your both short-term and long-term finances. Fortunately, you don’t need to be a financial expert to get your business finances organized. All it takes is knowledge and a little assistance from the finance experts.
To help you streamline your finance management, here we have document the top six tips to manage your business finances:
- Separate Your Personal and Business Finances
One of the major mistake that most of the small business owners make is mixing their personal and businesses finances. In other words, using the same bank account for business and personal use. As soon as you setup a small business, you need to open up a bank account under that business name.
By doing so, you can track your business expenses, measure profitability, avoid pointless tax adversities and unexplained losses. Ask a financial expert to decide what type of account works best in your business interests. Don’t feel obliged to commit to your current bank, you need to shop around and get your documentation organized.
- Keep Record of Outstanding Debts
Every business has some form of debt whether it is a credit card balance or business loan. Evaluate any outstanding debts to make sure that payments are made on time, to stay away from pointless late payment penalties. It is recommended to consolidate debts into business loan, to streamline your finances and optimize your borrowing process.
- Manage Finances Properly
There are many small businesses that are turning to cloud-based accounting programs, these programs are known for their cost-effectiveness while others favor to outsource this to a bookkeeper or accountant. Whichever way you take, it’s important to manage your income and expenses and make certain that all is in order with your business taxes. Continue with accounting all year-round, a good way to keep away from the last-minute tax problems.
- Keep on Top of Invoicing
Probably you have lots of new customers who’re buying your products/services. But if the work doesn’t turn into real money, then all is lost. Make certain that you keep on top of your invoices from the beginning. In case you have an automated invoicing system in place, this will be done automatically.
- Send out invoices quickly after completing the work
- Set 7-day payment term
- Follow up on unpaid invoices
- Use cross-reference approach to monitor payments
- Spend Wisely and Carefully
It’s essential to crosscheck your expenses while developing your business, especially on the subject of your variable costs. For instance, you can reduce the costs of your account process by using cloud-based accounting program rather than using expensive software. Spend your amount in productive matters that can help you grow your business. For instance, if you think that a new equipment will improve your productiveness, then invest in new equipment.
- Get a Business Loan
Cash-flow is the backbone of every business. Get a business loan to make sure which you have sufficient amount of liquidity in your business.
Managing your business finances effectively will help you reduce the costs, increase profits and in the long run help you develop your business. Get some financial assistance when needed to make certain that you’re doing all you can to create a financially successful business.