Posted by Tim Aldred on Tuesday, November 3, 2015 - 10:30
Ack! Have you ever felt too buried to keep your small business finances in order? Effective financial management is the lifeblood of any business, large or small. But many small businesses don’t have a team dedicated to finance and accounting, and that can present unique challenges to your organization.
If only you had some small business tips to help you put you on top of your company’s accounting functions and gain peace of mind, a healthy bank balance — even a fallback plan for emergencies.
Be sure to check out our Small and Mid-Sized Business Resource Center, which is flush with tools and strategies. And to get you started, here are four small business tips for mastering common accounting tasks and keeping your finances in excellent shape for your small business:
- Stay on top of cash flow.
Make sure your small business has more funds coming in than going out. This is easier said than done, of course, especially if you offer credit — or work on an invoice-based system — as is common in the B2B (business-to-business) arena. All invoices should be complete, regarding the product or service they refer to, with relevant payment terms, deadlines and other details, including contact information. Don’t add to your collections efforts by issuing invoices with mistakes on them. Above all, invoices should be issued on time. Then, if customers miss payment deadlines, follow up should also be timely. Take your deadlines seriously, or your customers won’t! Consider encouraging customers to pay on time by implementing early payment discounts.
- Build a ‘rainy day’ fund.
Strive to keep adequate cash reserves. Establish a fund to cope with emergencies, and contribute to it regularly. Be sure to save for your next tax bill, because those deadlines are very costly to miss. Every business faces disasters, the loss of major customers and unexpected bills at some point. Setting funds aside for unknown eventualities provides a sense of assurance during the good times — and means one less reason to panic during challenging periods.
- Invest in tools and software.
A variety of tools are available to help you understand your organization’s finances. For example, off-the-shelf business accounting software packages collect data on income and expenses so you can monitor funds, forecast for the future and budget accordingly. With a clearer picture of your small business finances, you can make better informed decisions and avoid unpleasant surprises.
- Bring in specialists.
As a business owner, these tips can help your organization remain afloat, but it’s wise to do this by more than just treading water. Consider the wisdom of hiring a dedicated staff member to handle your accounting needs. Investing in the talents of a skilled accountant can help you avoid time- and resource-consuming accounting mistakes, as well as identify opportunities for growth or budget modifications. The size and complexity of your organization will determine your accounting needs. There are a range of finance pros you can rely on, from bookkeepers who can help out with year-end deadlines to payroll professionals to accountants and analysts who tackle more complex tasks such as financial reporting and data analysis.
Every aspect of your small business competes for attention and resources, but finances are its foundation. Keeping your accounting in order will take time and effort, but it’s the best way to prevent disasters and ensure your organization’s longevity.
See how your accounting and finance function compares by downloading our Benchmarking the Accounting and Finance Function report.