Every business, small or big, should take financial management seriously. Financial management, however, is much more than just bookkeeping and balancing the checking account of your business, contrary to what most business owners think. Entrepreneurs like you should consider their finances for many different purposes; from preparation to survive in bad times to climbing up to the next level during the good times.
The difference between a new business that climbs the success ladder continuously and one that falls hard at the first hurdle can be defined by good and effective financial management. In this post, you’ll learn some proven, must-follow financial tips for new businesses to grow, keep growing, and enhance success.
1. Stay On Top Of Deadlines
Your cash on hand might not be enough if you don’t have an idea when the bills, such as credit card payments, business loan payments, and accounts payable, are due. Not to mention how failing to know when your bills are due can actually set you back with added interest or late fees, sour vendor and lender relationships, and lower your business credit.
Stay on top of deadlines to avoid missing bill payments. Record and set reminders when payments are due so you don’t end up falling behind. You can get on one consistent payment schedule if you pencil in all due dates on a computer calendar, phone, or even a piece of paper. Another thing that’s worth considering is debt factoring, which can help you in turning unpaid invoices into opportunities. That means you can have cash-advances that you can use to take care of your bills.
2. Consider Your Budget Very Carefully
If you want to effectively manage your new business finances all year round, keep in mind that one important step that you shouldn’t miss taking for your new business is to develop an annual budget. A budget not only acts as a guide that allows entrepreneurs to make business decisions ahead of time, but also helps in laying out plans for expansion.
Re-examining your income and expenditures for the purpose of revisiting your spending habits is also a good idea.
3. Keep Track Of Accounts Receivable
Some customers pay on or earlier than the invoice’s due date, but others tend to not consider due dates seriously and pay only after a week or month has already passed. The problem is that forgetting about accounts receivable can be easy in these cases. Not being able to keep track of accounts receivable and failing to pursue payments would only hurt your finances.
Record accounts receivable in your books to help you remember them. To track receivable totals, create a summary for accounts receivable. The summary will show you the specific customers who owe your business money, which customers are already past their due dates, the amount due, and your total receivables.
4. Keep Your New Business Paper-Free
In the modern business world, still going through heaps of balance sheets and papers means you’re getting left behind. The good news is that going paperless is now easy with the proliferation of cloud-based business tools. On these digital platforms, you can organize everything and can even back up your important business documents and data.
Streamlining business processes, such as bill payments and invoicing, is also possible with cloud-based tools. That means you can automate keeping track of accounts receivable and paying bills, among others. You can be on top of most, if not all, important matters or aspects in your business, while keeping accurate and efficient records at the same time.
5. Select The Right Investors
One of the great assets manages your new business finances are investors. They allow your business to accrue more money that you can use to fund business processes than you could possibly get through loans. During rough times, investors can also help keep your business going or scale. The success of a business, therefore, can be significantly influenced by the investors you choose to work with.
What you can do is to research the most recent ventures of your potential investors. It’s also important to accurately measure how involved potential investors would want to be after investing in your business before making a decision.
6. Make Financial Forecasting A Habit
Making it a habit to forecast to manage your new business financial plan and financial position for the year accordingly by studying the market trends is another great step you can take when it comes to managing business finances. Doing so will give you a clearer picture of where your business will be. Business forecasting will also enable amendments and forging of a better strategy to ensure continued growth of your new business.
There’s no doubt that finances are necessary when it comes to running a business, especially for startups. Most business owners, however, don’t have financial management as one of their strong points. Don’t hesitate to get professional help if managing finances, bookkeeping, and accounting aren’t your cup of tea.