Efficient Ways to Manage Your Business’ Finances
The primary objective of any business is to earn a profit to be deemed successful. With gaining profit, a company may then move on to achieve other objectives such as the growth of a company and other driving intentions, such as responses to new market trends and changes in the environments. However, to gain a profit, a business must meet its financial goals and manage their business finances.
As an entrepreneur, it is vital to track the finances so that you will be ready for any outcome that your business will have. You can monitor the bookkeeping aspect so that you can see if you are already at the break-even point, losing money, or you were earning so much more already. It can also help you if you want to expand your business or even have a forecast based on the trends that you are experiencing while tracking your business.
Track your business finances so you can keep a closer eye on your goals and manage your profitability. Here are some efficient methods of doing it:
Have a Separate Business Account
It is imperative to have a separate business account. Some small and starting businesses try to utilize their personal bank accounts for their startup. However, doing so will just result in difficulties in monitoring your accounts. It will further render nuisance during the taxation period.
For your business transactions, you can opt to have a checking account, savings account, or a credit card. It is highly recommended to use cash transactions sparingly since it is easy to spend yet tricky to track, especially if you lose one official receipt. Digital purchases and bank statements are favored, particularly for your tax audits.
Bookkeeping & Accounting Software
You may choose to do bookkeeping manually and in the traditional way or invest in quality bookkeeping software. Bookkeeping is a process that entails the recording of financial transactions. These records are vital as it is the basis for key business decisions for operation, investing, and financing.
Another useful tool is cloud accounting software which makes it very convenient for entrepreneurs to access their records of business transactions. This type of software can manage records such as photos of official receipts or even the debit and credit of each business transaction. Since cloud technology is used, you can monitor your business finances even when traveling, waiting for their client, or while attending a conference or seminar. You can also sync your bank account and credit card so you can achieve an automatic update of your business expenses.
With regards to receipts, paper receipts must be kept securely and should be organized by date of transaction. This way, you can easily employ expense tracking and monitor the outflow of cash. It is essential to have a business expense tracking to understand the spending habits of your business. Tracking expenses will provide a viewpoint on your spending practice and change it if needed. For keeping the hard copy of receipts, you can have a filing cabinet, file folders or binders and commit to file your receipts at least once a week. Although a better alternative is the use of a receipt scanner to digitize your receipts. Either way, make sure that the copies of receipts are organized and secured.
With the diversity of payment systems available, your business must be ready to accept payment in different forms. And of course, be prepared to monitor such payments. The types of payments that customers utilize nowadays are cash, check, credit and debit cards and most importantly, online payments.
On the other hand, you may want to consider mobile payment solutions for your business payment. Financial transactions can be performed and managed via a mobile device, providing you 24/7 access and control of your operations. Furthermore, there are mobile payment solutions that can be customized for your receipts and integration with your accounting software.
Business Calendar and Financial Dashboards
Another method of efficiently monitoring your transactions is the use of a business calendar. With a business calendar, you will be reminded of important client meetings as well as keeping a record of your dealings and transactions. Financial dashboards are another management tool, but are geared more on tracking your finance KPIs. It is utilized for the management of cash and for tracking sales, expenses, and profit.
Let’s face it, there are some aspects involved in administering a business that one may not have enough knowledge and experience. With regards to payment and deposit terms, you may hire a professional to help outline payment terms that would benefit your company. These professionals would also help in the proper creation and filing of paperwork. These also extend to your taxes. Before starting your business, ask tax experts on the most appropriate scheme for your company and then go ahead and ask for tax reduction strategies you may apply.
Managing business finances may be daunting, but thanks to modern tools and strategies, it might be easier than expected. Just remember that your business accounts must be separate from your personal records. To monitor cash flow and transactions, be ready to use accounting software, business calendars, and financial dashboard and tools. It is also essential to learn about various payment schemes and employ it for your transactions. Finally, plan your taxes and invest in professionals to enlighten you with more complex financial matters. With these pointers, your business will be on its way to achieving profit and growth.