Keep Your Finances Efficient & Streamlined
Managing your business finances is crucial to running a successful organization. Whether you do it all yourself, with the help of your own hired bookkeepers, or by outsourcing to an accountant, it’s vital in order to be able to gauge the financial health of the business. However, it can be a lot of work; though it doesn’t always need to be. There are many habits we can adopt and mistakes we can make that add more time and effort to managing our finances than necessary. Here, we’ll look at how you can streamline processes to get them back under control.
Keep Personal And Business Finances Separate
One of the most common mistakes new business owners make, especially those who don’t have any employees, is that they have all of their personal and business finances in the same place. If you want to tame your business banking, then you need dedicated business bank accounts and credit cards. These make it significantly easier to track your income and expenses and reduce the risk of accidentally using business funds for personal expenses, or vice versa. It protects both your personal assets and the funds that keep the business afloat. It also makes it much easier to get your records ready for tax season.
Use Cloud-Based Accounting Software
Accounting software will make it much easier to track your income and expenses and maintain a healthy cash flow. However, one common issue is that it’s difficult to keep them up to date when you’re out of the office. Cloud-based software can help you manage your finances in real-time, anywhere you are, often on your mobile devices. As such, you’re a lot less likely to forget entries you meant to make when you get back to the office. Cloud-based accounting software also makes it much easier to collaborate with others, such as your bookkeeper or an outsourced accountant, without the delays associated with sending files the traditional way.
Automate Your Recurring Payments
Your costs will be much easier to manage when you don’t have to manually enter them or pay them each time a bill arrives. Automating your recurring expenses, such as your rent, utilities, loan payments, or software subscriptions, can make sure that you’re always keeping up with your payables, reducing the risk of late fees as well as the administrative burden of setting aside the time to pay them manually.
While automating payments, you should also automate your record-keeping so they appear in your accounting software on the same day they are sent from the bank. Automating the busywork you can frees up your time to focus on higher-value activities in running your business.
Digitize Your Receipts Immediately
Paper receipts can be one of the more annoying parts of keeping up with your accounting, and they offer a lot of room for human error. Rather than having to keep them in your pocket or wallet until you get back to the office, you can use an expense tracking and receipt scanning app that can allow you to digitize those expenses as soon as they happen.
Some of these apps can integrate with your accounting software, so your records update as soon as you scan your receipt, provided you’re connected to the internet. There’s always some degree of human error when managing receipts, as we can easily forget about them, but the sooner you’re able to scan them, the better.
Avoid Using Paper Checks
As with paper receipts, paper checks can also create a lot of room for error and accounting problems with your business. While they were once a lot more common, modern wisdom suggests you should avoid using paper checks where possible, relying on digital payments instead. Introducing paper into digital systems slows your financial workflows and creates additional work, increasing the risk of errors if you misplace or forget checks. What’s more, checks do come with an extra degree of risk, such as being one of the payment methods with the highest risk of fraud, which can not only lose you money but also see your accounts being shut down during investigations.
Track And Manage Your Invoices
While invoices do also add a degree of extra admin to your finances, especially if you’re using them to receive payments, there are plenty of great software packages and apps you can use to manage them a lot more closely. These tools can help you send invoices and start tracking their payment status immediately, even sending automatic reminders to clients or alerting you when they’re late with their payments.
Delays and missing payments are always a risk of using an invoice-based payment system, but the right software can help reduce them drastically, while also automating the process of following up so that you don’t have to do it manually. They also provide clear visibility for the payment status of all clients, so you’re never unaware of who, exactly, owes you money.
Reconcile Your Accounts Regularly
It’s easy for your accounts to drift further from the reality of your finances over time. Small errors can compound. For that reason, it’s important to reconcile your accounts regularly, even as often as once a month for businesses that manage a lot of transactions. By comparing your bank and credit card statements with your accounting software, you can ensure transactions are correctly recorded and organized, maintaining the accuracy of your records. Regularly keeping a closer eye on your finances makes it easier to identify unusual activity that could indicate fraud or theft.
Managing your finances can be much easier when things are streamlined and organized, so you can stay on top of them. Hopefully, the tips above can help you do that.
