Managing your business finances is crucial for every successful small business. Whether you have a dedicated accounts team or handle everything yourself, you need a solid process in place for tracking your financial health. By setting your expectations, tracking your performance and knowing your future options, you’ll have everything you need to make the right decisions for your business. Here are some top tips on how.
Map your expectations
The first step in organising your business finances is to make a plan for how they will look over the year. Put down your expected incomings and outgoings for each month, using figures from previous years as a guide. Check if any changes in tax rates or other expenses are due to come in. Once you’ve logged everything you’ll be able to see if there’s any gaps you need to address, and track your performance as you go. Plan for at least a year, or further ahead if you have longer contracts.
Check your cash flow every day
To make informed decisions you need up-to-date information, so keep tabs on exactly where your cash flow stands every day. Track all the amounts against your plan. If a contract came in over budget, find out why straightaway. Was it a one off cost that made the difference, or an ongoing change that means you need to adjust your plan? Checking everyday will help catch problems quickly, so you can adjust and avoid further difficulties later on.
Understand your finance options
If you’ve spotted a funding gap in your yearly plan, or if performance is below what you expected, extra finance could be your best option. It could be a working capital loan to give you peace of mind during the down season, or extra cash to pursue a new opportunity. Some businesses go to their existing bank for finance, but that’s not always the best option.
There’s a wide range of alternative finance providers to cater for different needs. You can use equity crowdfunding to get seed funding, or invoice financing for short term capital. Or for more established businesses, you can get affordable loans from lenders like Funding Circle in as little as one week.
Know your responsibilities
Make sure everyone is aware of their financial responsibilities. Who’s tracking expenses? Do you do them separately and combine at the end of the month, or log them as you go? Who tracks invoices, prepares the tax return, files the accounts? If you have different teams, who gets a budget and who makes sure they stick to it? For small businesses where people often cover multiple roles, knowing who is accountable for what is vital to getting organised.
Get apps to help
To begin with, most people can survive with a spreadsheet and a well organised ring binder. However, that won’t last for long. If keeping things organised is becoming a burden, it may be time to invest in some technology to help. There’s a huge range of apps that could help with accounting, bookkeeping, expenses, invoice tracking and filing your taxes. They often have scalable plans to suit different budgets, so you can find the best option for you.
Make good decisions
If you follow these steps, you’ll know where your business finances should be, where they are, and what’s available to you. You will then be able to make quick, informed decisions for your business, helping to avoid problems and maximise opportunities.
If you’re looking for finance to help your business, you can check your eligibility for a business loan in 30 seconds at fundingcircle.com.