Handling a company’s finances for some people can be more daunting than first seems. As a small business owner, you have to attend to numerous components of your company—from customer service to dealing with personnel to ordering inventory, you name it. Perhaps though, among your most important jobs is managing the company’s finances. Ensuring what you have coming in, overseeing the money going out and budgeting accordingly, are necessary for sustaining any organization. If you are not on top of your financial picture, you could be facing numerous obstacles ahead. While some small business owners will work with an accountant on issues such as taxes and overall bookkeeping, on a day to day basis, you still need to make sure that you are keeping tabs on the more practical financial issues. In this article, we offer tips and advice for small businesses in regard to their basic finances.
Stay in Line with Your Budget
Every year (and perhaps more often as well) businesses will generally sit down and come up with their annual budget. And this is certainly a good thing! However, that budget is only as good as how well you utilize it. In other words, if you create your budget and then just put it away for the year without regularly referring to it, it really isn’t doing you any good. Think of your budget as your guide. This guide should effectively help you manage your finances throughout the business year. As you move through the budget period, see where things aren’t quite matching up. You can discern where cuts need to be made, where money could potentially be saved. Your budget is an integral tool.
Automate and Go Paper-Free
Gone are the days when you needed multiple file cabinets and stacks upon stacks of paper. This slows things down and as far as your finances go, can just make the situation that much more confusing. There are a multitude of sites, platforms, apps and software that are designed for small business owners to help them keep track of everything from expenses to payroll, and in this way, they enable you to streamline your financial activities. You only need to take a few minutes to search, and you will come across a plethora of available accounting and invoicing tools for example.
Along these same lines, you want to try and automate as much as you possibly can when it comes to your business’s finances. Remembering when everything is due can seem mind boggling at times, and consequently, if you are late in paying a bill or sending an invoice this can hurt your overall finances. Plus, your energy as the boss is better spent elsewhere—on running your actual company.
As far as automating goes, there are tools that allow you to automate credit card payments, utility payments, invoicing, and all aspects of your company’s banking, among other solutions out there. These help you finetune your financial processes while ensuring that you are never late when it comes to paying your bills on time.
Choosing the Right Investors
For those small businesses that find they do need to bring investors on board, the key is going to be identifying which are the right investors. In other words, working with investors who don’t have your best interests at heart and consequently know very little about what it is that you do, can be disastrous. The investors you partner with should make their intentions clear from the start regarding both their level of understanding about your industry as well as their intended level of involvement with the company.
Keep that Credit Score Up
When it comes to getting loans and other such financing, credit score is going to be pretty important. And at some point, all small businesses generally look for outside financing—for whatever the reason, from expansion to weathering tougher times. To be prepared should you need financing, you want to make sure that your credit score is where it needs to be. Paying bills on time is the primary way you have of ensuring a decent credit score. If your credit score is not ideal, there are steps you can take to help improve it.
Monitor Against Fraud
Unfortunately, we live in an era when cyber hacks and breaches are all too commonplace. Hackers target vulnerable small businesses all the time. Is your cyber security where it needs to be? What happens if someone with malicious intent breaches your system—they can steal sensitive data and thus you could be looking at rampant fraud. You want to be sure your information as well as that of your clients is protected at all times.
Practice Financial Forecasting
It is not enough to know what is going on in your market right now—making predictions and financial forecasts is imperative for the overall financial health of the business. It is about staying one step ahead and having a plan in place for both the present and the future.
Manage Debts
Being saddled with debt is never good for business. Some debt is likely; however, too much debt and your company may not be sustainable in the long run. Focus on paying off the high interest debts first. Even if you can only make smaller payments, paying down any debt that you have is a good thing for the financial well being of the firm.
Don’t Forget to Save
Just as an individual does, a company also needs to have money in a savings account of some form or another. What happens when the unexpected arises? What happens when issues arise and you don’t have the money to take care of these problems? The business could quickly go downhill. A small business needs backup cash reserves. Being able to pull from this kind of reserve fund is going to save you a great deal of trouble and headache should the need for quick cash come up.
First Union works with small businesses getting them the cash they need when they need it. Call today and let’s get started!