All small business owners can benefit from improving the way they manage their finances. Proper financial management is crucial to the smooth running and survival of your business. Keeping up with all your costs, payments coming in, outgoing payments and chasing payments can be a timely process - especially if everything is unorganised. Here are 10 ways you can improve the way you manage your finances, which will benefit you and your business.
Separate personal and business finances
One of the key elements of small business finances is a business bank account, so it's important to keep your personal and business expenses separate in different bank accounts. Not only will this make it easier to see which expenses are related to your business, it means you won't miss any important deductions you're entitled to.
Regularly monitor your finances
It's important to stay up to date with your business finances. This involves monitoring how much money you have in your bank, your sales, stock levels, outgoing payments and outstanding invoices. Online software will allow you to view this information in real-time, which you can also link to your accountant, bookkeeper or adviser. If you need advice or assistance with this, please let us know.
Keep up-to-date accounting records
If your records are not kept up to date, you could risk losing money by failing to keep up with late customer payments or not realising when you need to pay your suppliers. Using a good account keeping system will help you to track expenses, debtors and creditors, apply for additional funding and save time and accountancy costs. If you're not currently keeping computerised records, you may not be complying with the new rules of Making Tax Digital. Get in touch if you think this applies to you.
Meet tax deadlines
Failing to meet deadlines for filing tax returns and payments can incur fines and interest. These are unnecessary costs that can be avoided by keeping accurate records, knowing your payments in advance and ensuring that these payments are made.
Review your current invoicing procedure
There can be major problems if your customers are failing to pay you on time and this could also add extra costs if you are having to spend time constantly chasing people. Review your current procedure to ensure your payment terms are clear and look into increasing payment options and how your invoices are sent and recorded.
Know your day-to-day costs
It's crucial to ensure there is enough cash to cover day-today costs such as rent and wages. You should be aware of the minimum your business needs to survive and ensure you do not go below this. If you're not sure on this, an accountant or adviser will be able to help you.
Get the right funding
It is essential that you choose the right type of finance for your business - each type of finance is designed to meet different needs. Smaller businesses usually rely more on business overdrafts and personal funding, but this might not be the best kind of funding for your company.
Remember to pay yourself
Especially in the early days of business, your desire to be successful can see you putting every penny back into your business. You need to ensure that your personal finances are taken care of as well as keeping your business in good shape. Remember if the business doesn't work out you don't want to risk never paying yourself.
It's important in business and finances that you are constantly planning ahead for the future. This can improve your business efficiency and allow you to spot key trends and opportunities to grow.
Having the right help from an accountant and business adviser could be a huge benefit to your business. Not only can they review your current systems in place today, they will be able to advise you on how you can make improvements to benefit your business for the future.
If you would like to discuss any of the topics in this article or need additional business help, get in touch with us today. We provide a range of accountancy and advisory services specific to small businesses. Call 01268 770099 to speak to one of our experts.