It can be easy to forget how important accounting is to your business. Your accounts tell you the real story of your business and are essential for helping you predict and shape your future success.
So while it might all seem a bit daunting, or something you can put off until the tax man comes knocking, it’s important that you take action today.
Here is your eight-point survival guide to help you conquer the financial side of your business.
1. Know your numbers
You’ve probably written a business plan, highlighting your vision and intentions, but does it include budgetary milestones? Setting financial targets, for example, achieving 5% year-on-year growth, is essential to help you stay focused and give you something to measure success against.
2. Keep up-to-date records
Spend time every week, or even daily, updating your accounts. Keep track of revenues, business costs and expenses as they happen. If you know where you are financially, you can make better decisions based on real, current facts.
3. Budget forwards
You should plot your projected income and expenses up to the end of the current financial year so you can anticipate future cash flows. This gives you a tool to measure what actually happens against your plan, enabling you to adjust your operations to improve future performance.
4. Manage your time effectively
Time is money, and effective time management is a key skill you must have at your disposal. You’ll have to learn how to prioritise tasks so you always keep your key customers and vendors happy, and take care of the most urgent jobs as soon as possible. Managing your time will also ensure the financial side of your business is well intact, meaning you and your accountant are always on the same page and communicating effectively.
5. Scrutinise your costs
Whether it’s unbillable, sunk cost activities that are essential to your business, or any of your other general business expenses—utilities, printing, stationery etc.—you should keep a close eye on your costs, and employ effective internal purchasing approval processes.
6. Secure your revenue
Here are two easy, sensible steps you can take to minimise the risks of not getting paid, or being paid late. Firstly, agree with your client when you will invoice them, stick to that, and clearly state your payment terms on your invoices. Secondly, be prepared to compromise if a client is struggling to pay—it’s usually better to wait a couple of months than take legal action.
7. Plan carefully for the year-end
Going through all your financial documents at the end of the year can be a daunting task for even the most experienced business owner. To make the task easier on yourself, perform a month-end, where you file away all invoices, receipts, remittances and any other accounting paperwork in chronological order. That way it will be ready for easy retrieval, and the onerous demands of your year-end accounts won’t bring your business to a standstill.
8. Turn to technology
Use all the innovative accounting technology you can to help keep track of your income and expenses more easily, set alerts and reminders, manage workflow, and stay up to date with all your day-to-day business efforts.