It would be amazing if your finances could be managed in one click. However, finances don’t work that way, especially if it’s your company’s finances. Being realistic, you can keep your finances in check as long as you manage them properly. Here is a simple guide and some key ways to manage your finances while in business:
1. Keep your personal finances and business finances separate
The first rule in business is never to mix your personal finances with your business finances. No matter how careful you are, it is inevitable to become confused and mix up your finances. It will also be very difficult on your part to keep track of spending.
You can keep both separate by opening a different bank account and credit card for your business, and another for personal use. This will also help in terms of tax when you factor in expenses and income. Transactions will be sorted out more efficiently and quickly if you keep your personal finances separate from business finances.
2. Hire a good and trusted accountant or financial planner
Accounting for your business and personal purposes are two different things. How you approach or treat personal finances is way different from how you should manage business finances. If you are not an accountant, it is best to hire an expert. Most business owners have a tendency to try and handle everything by themselves, which is a very bad mistake. Hiring an accountant will take a large weight off your shoulders and is worth considering.
Another expert that you can hire is a financial planner. The financial planner can keep your finances in order while you are busy running your business. However, make sure that the financial planner has a license, too. In Australia, this is a common practice for businesses to employ financial planners, and a financial planning license in Australia is a good indicator of a competent financial planner.
3. Purchase an accounting software
There are different accounting software solutions that are available within your reach. However, the best one for you depends on what kind of business you run. You can run this by your financial planner as they should know what kind of accounting software is best for your business.
But, before anything, you must move your financial data from your desktop to a cloud. Most accounting software work on cloud-based tools, which will allow you to have real-time information and insights that can be accessed anytime and anywhere. This will give flexibility for you as the owner, for your accountant, and financial planner as well. It will be easier and more convenient for everyone to crunch numbers and see where the company is at. With more efficient ways to analyze the business, you can have better finances as well.
4. Strategize and plan ahead
To keep your finances in check, you must have strategies and plans in place. This is where your finances will stream from. If you keep your plans organized, you can project your finances better and make better decisions for your business. Without plans and strategies in place, your finances won’t be able to stay organized as well.
By having long-term plans and strategies, you will also be able to mitigate risks and surprises, especially in your finances. Any unexpected expenses can quickly cause problems for your financial status.
5. Stay within budget
After you have your business plans, another part of financial planning is creating a budget for each kind of department, event, plan, expense, and revenue. Budgets are frameworks that will help you focus your decisions on creating results while keeping costs low. This will serve as a guide when you make decisions on marketing or products that your business will have. This will also limit and help you avoid unnecessary adjustments to your business.
6. Build a financial dashboard
A financial dashboard is a simple chart indicating your financial health at one glance. This should help you keep track of finances and where you should be focusing. Once it is in place, you can see the problematic areas quickly and make changes or solutions as needed. Having a financial dashboard would benefit you greatly when it comes to managing your finances. Here are some indicators that a financial dashboard should include:
Average days collection
Average days payable outstanding
If there’s one thing every businessman can agree on, it’s that every penny matters. As much as the business grows, your financial management must also evolve. In reality, many business owners fail to keep track of their finances when their business grows. Don’t be one of them and follows this guide to keep your finances in check.