Effective and efficient financial management is crucial to the growth and success of any small company. The best way to do this is to hire a competent straight away.
If you don’t have the funds to hire a specialist, use accounting and other financial software to track your cash flow and generate reports. That way, you can keep track of your profits and act swiftly to mitigate your losses.
Here are some other tips for making it easier to handle your business’ finances.
Don’t Mix Business and Personal Finances
There are many reasons to keep your business and personal finances separate, including tax matters, personal liability, and muddled books and records, to just mention a few. When things go awry, fight the urge to protect your business finances with personal finances, because it will certainly lead to a mess that you will have to grapple with sooner or later.
Instead, it is better to have your own personal current account and a completely separate and specialised business current account.
Learn to Bargain with Vendors And Suppliers
Often, to get a good deal, you will need to dig a little. When buying from vendors or contracting with suppliers, try to negotiate a lower price. Don’t forget to review purchase terms such as penalties for late-payments and extended periods when closing a deal.
By doing this you will save yourself some money which not only benefits your company but keeping costs low, but it will also give you a bit of a buffer in case of emergency when it comes to payments.
Pay Off Your Bills Quickly
Just as you do with your personal finances, it’s critical that you consistently pay all of your business bills. Credit card and loan payment late fees can lead to high costs, but payment of small late charges on vendor and utility bills steadily adds up, too.
The same is true of taxes: paying too late will lead to significant penalties. It is also important that you pay any invoices promptly, contractors and companies your work with on time as you don’t want to get a reputation as someone who doesn’t pay their bills – this will significantly lower the number of people who want to work with you in the future.
Establish monthly reminders to ensure company bills don’t slip through the cracks.
Learn Some Accounting Basics
Owning and running a small business does not instantly make you automatically financial savvy, but regardless you’re still going to be making major money-related decisions for your business.
So even if you hire an accountant, you should still learn the fundamentals of business accounting. If you need to, take an Introduction to Accounting course online or at your local college to learn how cash flows inside and outside your small business.
Keeping on top of your business’ finances doesn’t have to be a hugely difficult task. With proper preparations and management, your businesses finances should be easy to maintain and work with.