It can be easy to forget the importance of accounting to a business. Your accounts tell you the facts of your business and help you predict and shape you future successes.
While it may seen daunting, or something that can be 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 probably have a business plan which highlights both your visions and intentions, but does it detail your budgetary milestones? It is essential for your growth and focus to set financial targets, for example achieve 5% year on year growth, which gives you something to measure success against.
2. Keep up-to-date records
Update your accounts on a weekly or even daily basis. Keep track of revenues, business costs and expenses as they occur in real time. If you know your financial positions, you can make better decisions based on current facts.
3. Budget forwards
Plot your projected income and expense up to the end of the financial year to anticipate any future cash flows. This allows you to measure actuals against your plan, enabling you to adjust your operations in order to improve future performances.
4. Manage your time effectively
Effective time management is a key skill to have at your disposal. In order to maintain success you'll need to know how to prioritise tasks, ensuring you always keep both customers and vendors happy, while also completing the most urgent tasks first. Time management also ensures the financial side of your business remains well intact, where both you and your accountant are on the same page and communicating effectively.
5. Scrutinise your costs
Keep a close eye on your costs, whether it be unbillable, essential sunk cost activities or general expenses. Also employ effective internal purchasing approval processes.
6. Secure your revenue
The following are two simple steps that can minimise the risks of going unpaid or being paid late. Firstly, have an agreed upon invoice date with your clients and ensure you stick to it. Clearly state this and any other relevant payment terms on the invoices. Secondly, have a strategy to compromise if a client is struggling or unable to pay - it's usually advisable to wait a few 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.
It can be daunting, even for experienced business owners, to go through all their financial documents at the end of the year. To make the process easier, perform a month-end. This is where you file all invoices, remittances and receipts and any other paperwork in chronological order. Doing this allows for easy retrieval and ensures that your business isn't put to a standstill with these difficult year end demands.
8. Turn to technology
Take advantage of the innovative technology available for accounting. It can help you to easily keep track of your income and expenses, set alerts and reminders, manage your workflow and keep up to date with day to day business efforts.