Business owners need to know at a glance the overall financial state of their business for the sake of direction and meeting daily goals. Not being able to tell or even to predict income for the month puts the company at risk of overspending and unexpected shortfalls. For many companies, a simple solution may be to streamline the business finances.
Separate Personal from Business Finances
With small businesses it is common to find some owners have their business finances mixed with their personal finances. While this may be convenient for a while, it does not permit you to know the state of your business at a glance. Separating the two elements into two accounts is the better way to go, making it easier to keep track and understand the cash flow of your business. Larger companies need to stay on top of their accounting to ensure up-to-date information.
Use Business Credit Cards for All Purchases and Payments
One very convenient feature of a business credit card is that you receive a monthly statement listing all payments and expenditures. It is very handy and it will reveal where the money went, as well as enabling you to discover areas where too much money is going. Another good feature is that you may be able to get a business card with a zero percent interest rate during an introductory period, and you can get rebates or discounts, enabling you to save even more money. It also works well with employees, but accountability and tight control will be necessary.
Watch the Expenses
Keeping an eye on your business expenses can help you see where the money is going. A budget should be in place to understand what the limitations are, but if no one is keeping accurate records, it will be very easy to overspend, and learn only too late that the bills or salaries cannot be paid.
Stick to Digital Payments
Using digital payments only can be another way for you to keep better track of your business finances. It will give you instant results of sales made each day, and a record of who made the payment. This lets you process the information easily, and makes it very easy for your customers, too. The fees are low if you use PayPal or a similar company for the transactions. The money is also instantly available if you need it.
Develop an Invoicing System
Customers will sometimes accidentally overlook payments due, and others may just want to pay late. Having an accurate record of invoices sent and paid will enable you to recover debts sooner, especially if you offer a discount for early payments, and charge interest for late ones.
Invoices sent through emails also make the process faster and less expensive. Online invoice templates are readily available here, and come in many styles. Clicking on the links provided in the email enables your customer to pay now – meaning you get paid much faster. Electronic records enable business owners or accountants to get a fast overview of outstanding bills and bills paid. Money due is not lost, and you have an accurate record of where the next month’s invoices need to be sent, and this can even be done automatically.
Streamlining your business finances can be achieved in many ways. One of the ways that makes the most sense, however, is to use an invoicing system that not only helps you keep better records and brings in more money each month, but also does much of the work for you automatically.