You know your core business, your products and services intimately, but the money side is a headache. It’s easy to push it to one side and hope that the mountain of bills, invoices, receipts and other paperwork will magically sort itself. Newsflash: it won’t.
If you don’t have a full-time accountant it’s down to you to ensure that your business’ finances are shipshape. But it doesn’t have to be a headache. Try these 10 tips to make the job easier.
1. Schedule specific time
Every week, set at least half an hour aside to organise your finances. Don’t let anything get in the way or interrupt you. Pour yourself a drink, shut the world out, and focus on the numbers. You’ll gain much better insight into your business and be far more organised when EOFY hits.
2. Organise your receipts
Do you throw your receipts into a shoebox, in a scattered mess? Or worse, just leave them anywhere? Tiny slips of paper such as taxi receipts can add up to big bucks when it comes to tax deductions, but they’re easily lost. Get a card file index for these, and save them by date. You can also scan them and save the images to your hard drive, but make sure you hold onto the paper copies as well.
3. Get accounting software
Technology can take a lot of the pain away by generating bird’s-eye-view reports of your business’ finances. With accounting software you can instantly and easily compare how things are each week, from costs to revenue. This will also help you spot problems in advance, if money is going out faster than it’s arriving.
4. Record your deposits
Whether you do this in a ledger, a spreadsheet or with software, keep a note of all deposits made into your bank account. You need to be able to account for the origin of all your revenues, or you could end up paying tax on money that isn’t income.
5. Put money aside for tax
EOFY can be very painful if you’re not prepared for your tax bill. Set aside sufficient funds throughout the year so you aren’t caught short. You can get slugged with penalties and interest if you can’t pay your taxes on time, making things even worse for you.
6. Track your invoices
Letting invoices lapse and go unpaid is a shortcut to a cash crisis. Check what invoices have been sent out each week and record what payments have been made. For invoices that are nearing deadline, send out payment reminders. Keep note of how long individual customers take to pay, and which ones it’s been hard collecting payments from. Software can help with a lot of this by automating the invoicing process for you.
7. Check prices
Everything you pay regularly for, from utilities to supplies, run a price check on a regular basis. You may find there’s a new, more competitive vendor and/or a new product that will cost less. It’s even worth comparing your bank account and business loans with the rest of the market. It takes only a couple of clicks on a comparison site, and if you find out you’re getting a raw deal for any of your regular costs, you can switch providers.
8. Prepare a cash flow forecast
Ensure you’re in the driving seat by preparing and maintaining a cash flow forecast. Then you can see where you are each week, and whether you’re on track or falling behind. You can update it weekly, giving yourself an accurate outlook for the next few months.
9. Set targets
Having specific goals can be a great motivator as you try to beat your own targets. It also lets you see whether you’re on track to grow or not. Targets might include sales leads, new customers, and revenue amounts. You can even set rewards for yourself: a new laptop or a weekend away. With your finances in order and your business running smoothly, you’ll actually be able to enjoy it.
10. Plan for major expenses
Big costs can hit you at any time, so anticipate these and plan for them. If your computer is close to giving up the ghost or other office equipment is on the blink, figure out when you need to replace them and schedule that in.
As a final tip: don’t be shy about calling in the experts. Everyone needs a check up once in a while, so fix a regular date with a professional accountant. If you’ve been organising your finances properly they’ll be able to go through your books in a flash, costing you far less billable hours. Plus you’ll likely save the cost of their fee just from the savings they make you: from identifying cost deductions to avoiding penalties.
If you’d like more of a detailed insight into some of the manageable, cost-effective steps you can take to resolve key problems when it comes to accounting and financial management for your business, download our free ebook below.