Tips for managing your small business finances

One of the most integral tasks that you will have in growing your small business is managing its finances. If you fail to keep a close eye on the finances of your small business then chances are that you will soon be closing the your doors. Part of the management of your small business finances is the bookkeeping that you will do. Having effective bookkeeping will in large part determine how successful your small business is. Bookkeeping is defined as the management of all incoming and outgoing cash transactions which includes all purchases and sales. There are many different aspects when it comes to small business bookkeeping. Here are some tips managing your small business finances-

- Take advantage of technology-Gone are the days of the manual ledger. Today, you need to have software that allows you track all of the aspects of your business finances. Whether or not you use a professional bookkeeper you need to make sure that you have the right business finance software to meet your small business needs. These business finance software programs can help you with tracking sales, sending invoices, managing payroll, and any other business finance tasks. However, it is important to choose a business finance software that is easy to use and simple to understand. You also want to make sure that the software program can generate reports that will be beneficial to use within your business. There is lot of online advice if you are unsure as to what kind of business finance program to purchase.
- Size does matter-When you are choosing business finance software it is important to keep the size of your small business in mind. You want to make sure that you are choosing a program that offers the features that you need now but it can be added to as your business grows. Buying a business finance software program that is designed for a company that is much larger then yours is simply a waste of money and time. In addition, small business owners need to be aware of what they can and cannot handle when it comes to business finances. This means that once your company grows it may be time to either hire a finance employee (or two), or begin outsourcing the business finance functions.
- Inventory control and business finance go hand in hand-Many small business owners overlook the role that inventory control plays in managing the finances of their business. Keep in mind that your inventory represents a large cash investment. You need to be watching your inventory and other assets to make sure that your small business does not stall out their cash reserve because their inventory is not moving or other assets are costing too much. Your business finance software should be equipped with an inventory management function that will help you to keep a close eye on what your inventory is doing. This will help you to know when to sell inventory, reduce the price, or even reorder your stock.
- Regularly reconcile-It is important that your bank statements are reconciled on a regular basis. If you hire out your business finance functions to someone else you will expect that this is happening. However, if you are taking care of the finances for your small business you will need to make sure that this is priority that you are doing. You don't want to overlook this task for several months only to find that you have financial problems that have snowballed because of your negligence. By regularly reconciling your bank statements you can find small problems and resolve them before they become larger and more damaging to your small business.