Running your own business is no walk in the park. No matter what stage you are at – whether it may be starting up or sustaining and growing your business or on your way to success, there is always a long list of things to do, and you’ll just find yourself trying to juggle day-to-day tasks from time to time.
Among those tasks, a very important aspect of your business you should always pay attention to is your business finance.
Properly managing and organizing your business finance is a crucial aspect of the success of your business.
This is why it’s important to make sure you have a system that can make it easier for you to organize your business – and the best way to do this is to hire a professional consultant to make a personally customized system just for your business.
Hiring a professional to help you get started on your system is good in the long run. They can help you create a sustainable system that is catered specifically to your business’s needs, whether it may be organizing your expenses, finances, invoices, orders, and income.
A good finance consultant you could try is Freelance Finance Controller, this business provides professional consulting services – from accounting setups to invoicing, FTA VAT preparation and filing as well as strategic planning to innovative solutions – Freelance Finance Controller can help you organize your accounting, bookkeeping, and financial processes and setups that are needed specifically for your business.
When it comes to managing your business’s finances, there are a few important things you need to consider. Here are 6 simple tips you should look out for when organizing your business finance.
1. Planning
Always list down everything you might need for your business beforehand. It’s always best to do an annual review to take a look at where your money has been spent or earned within the year. What are the usual expenses of your business? Will you be needing the same set of expenses the following year? Where/What is your biggest source of income? How much of your expenses can your income handle? Can you afford to cut back on any expenses? This review can give you a general idea of your normal needed expenditures and your income to see if your current business financial situation can sustain itself. This way, you can cut expenses when needed or add more if there is still enough budget.
2. Be on top of your debts
Surprises are a no-no. Don’t reach a point where you’ll find out that you have a payable that’s due within 3 days. Sometimes, for big bulk orders, some discounts come along with them if you pay early which can save you extra cash.
Being on top of your debts can also help you put your plan in place. If you keep on accumulating debts or payables, your asset may not be able to keep up. It may even become a loss in your income statement.
3. Categorize your expenditures and revenues
Note down and categorize all of your expenses and income throughout the year no matter how big or small, especially where they come from. This includes all your withdrawals if needed. If you’re a start-up, keep tabs on your cash ins and outs and know where your money is going or coming from. The more detailed your financials are, the more accurate your data is. You could keep an eye out on your sales and see, as time goes by, the trend forming over the period, when you had more income coming in or whether you have any dips in your revenue. And using the trend, you can pinpoint where or what’s causing those dips with the information provided with the data.
Categorizing your expenses and revenues can also help you list them from the most important ones to the ones that are not always needed. You can start with the most important categories first. Once your necessary expenses are taken care of, you can fill in the rest of the categories by your budget.
4. Prevent the loss caused by surprises
Being prepared is never a bad idea. There are times when something unexpected would occur. It could be from a court case or a sudden machinery breakdown. In this case, especially if it’s immediately payable or due, if you don’t have enough assets or cash, you would have to resort to creating debts. Instead of adding more debts, create an allowance for your business. Put a small amount of money aside for unexpected expenses throughout the month – you could even label this as your miscellaneous category in your budget.
5. Budgeting is the key
What are your goals for this period and how much can you afford to spend for those goals? With every revenue comes an expense made to earn it. This is why it’s always important to budget to make sure you have everything you need to be covered within the limit of your business resources. If you aren’t meeting your yearly or periodic goals, then it’s time to adjust your budget to increase your revenue and decrease your expenses.
6. Understand your Finances
It’s important to check your progress from time to time. And to check your progress, you need to understand your finances. This means understanding and always update yourself with your business’s financial health inside-out as well as the target market you are catering to. If you aren’t informed and updated or if you’re lacking an understanding of your business’s cash flow and potential debts, it could lead to mismanagement, poor budgeting, and future roadblocks. Accurate data and current information are extremely important when it comes to business.
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