Keep On Top Of Your Business Finances With These Tips
Knowing just how much you are spending and how much you are earning is vital for any business. If you don't keep a close eye on your cash flow, you could end up with a significant amount of debt, which can cause problems in both your personal and your business life.
To help you to avoid getting into a messy financial situation, here are just a few ways to keep on top of your business finances.
Hire an accountant or bookkeeper
This will cost you money, which sounds counter-productive, but in the long term will also save you a lot of time and stress, and make sure your finances are in a good state and legal. A good accountant can help you file your taxes and find any legal loopholes to save you money.
If you can't afford a professional accountant or bookkeeping services, make sure that you set aside time to complete your bookkeeping. It may not be the most exciting aspect of running a business, but it is an important one.
Arrange for any outgoing payments to come out of your bank on the same date
Where possible, try to arrange all outgoing payments to go out around the same time. This makes it easier to keep track of when money is going out, and you know exactly how much money is left to get you through until your next payment date. Most suppliers will be happy to change the payment date for you if you and ask them.
Set reminders of incoming payments
It is essential that you check that your clients are paying you promptly. If people pay you monthly, check that their money is going into your account so that you can chase up late paying customers. You don't want to get into debt due to being too laid back at chasing overdue payments. If customers are paying their invoices late, you are adding late payment fees to cover any costs that you may incur.
Have a separate business and personal account
It is far too easy, especially if you are a small business, to have all your money from bother personal income and your business income going in and coming out of the same account. It might be easier, but it is also the quickest way to get finances muddled up and not spot any cash flow problems before they become a much more significant issue. By having separate accounts, and paying yourself a wage from one to another, you can keep a closer eye on things, and when it comes to doing tax returns and bookkeeping, it will make it a whole lot easier, especially if you face the auditing process at any point.
Make sure you have enough capital.
One problem that many businesses have is not having enough capital to get through the startup phase. To prevent this, make sure that you have a minimum of three months' living expenses saved, plus the amount you are expecting to need for the first three months' business expenses. Assume you will not make any significant amount of money for that period, and plan accordingly.