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Handling your business finances

Small business owners must track their business finances often if they plan to stay in business.Tracking your business finances can be time-consuming and tedious, but there are some great software programs out there to make it easy.Many companies find themselves hiring accountants to keep track their finances. Here are 2 of the most-important parts of business finance:

  • Cash Flow. Is your company spending more than it is earning? Your cash-flow is considered the life-blood of your organization and it is essential to staying in business.
  • Accounts Receivable. Is your Accounts Receivable department lacking in following up with invoicing? If you have past-due invoices, have you considered using a factoring company to collect those invoices?

If you don't have the money to hire an accountant to control your business finances, there are many software programs available now that can use to track your businesses expenses. Having proper procedures in place for financial management will pay off in the long run. Software programs like Quicken and QuickBooks work great for small businesses and they will handle everything from payroll to invoicing. All you need to do is plug in the numbers and generate reports. QuickBooks also sends you reminders when it is time to pay certain bills and other important reminders.

Every small business owner must find out where their money is going. How much do you pay on rent and utilities? Small numbers add up quickly and you need to properly monitor them as well as the larger numbers. Discuss the policies for purchasing products with your purchasing department, office manager or secretary who is in charge of this. Any business-related purchase needs careful consideration. When dealing with larger purchases, you should have a policy in place that defines how you are to go about purchasing larger products.

A simple way to control the spending is to avoid giving credit cards to your employees. When they have credit cards, they have no problem spending the company money on expensive office supplies and other things that you can find from somewhere else for cheaper.

If you don't understand how to monitor your books, hire an accountant or speak with a financial analyst. A financial analyst will look at your cash flow, profit and loss statements, and budgets. A financial analyst can tell you how well your business is doing and how you can improve certain areas to be more productive. You can even do an analysis of your business yourself, set aside a couple hours each month and focus on your businesses finances. You should have your cash flow situation at hand, profit and loss statements, balance sheets, and income statements. Once you see where your business has been and where it is going, you can make an educated decision about your business finances instead of leaving it all up to your financial controller or bookkeeper.

There are several different parts of your business finances. Far too often small business owners are looking for the break-even costs and they do not care about the here and now costs. Instead of focusing on breaking even, you need to focus on building a large account of "padding". This extra money will help your company get by when you have unexpected circumstances like a dip in the economy, broken machinery, and a decline in productive staff members.

Keeping track of your business accounts is relatively simple, especially if you don't have too many business expenses. Proper management of your finances is key to your business success. If you don't understand a lot about controlling your finances, take a course to learn more information.

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