Smart financial planning is something that sets successful growing businesses apart from others. Whether a business is new or growing in size, these 5 tips can be used by business owners to smarten up their business finances and prepare themselves for a successful future.
Leave Paper in 2022
Not only is moving away from paper greener, but it also saves businesses money and hassle when it comes to handling their financials, business processes, and more. And, with the wide range of cloud-based business software, it has become easier for businesses to seamlessly make the switch.
Making a transition over to cloud-based software and using less paper and manual processes give business owners and management teams much better access to accurate data and make searching for information easier and more efficient.
Update and Stick to a Budget
Having a plan and sticking to the plan is one-way businesses will succeed. However, sometimes there are unique situations where that plan must be modified in order to continue. This is where flexible budgets come into play. Going into a new year, a business should create a new annual budget, but how that budget is tracked and updated is just as important as the initial creation.
Budgeting can then branch out into forecasting, which will review any variances in the projected and actual budget figures as the year goes on. From here, changes can be made and the budget can be adjusted to reflect the rest of the year.
Automate Areas of the Business
With all of the business software solutions available today, it is important that businesses begin automating as many tasks as they can across the business. This will span from accounting to inventory, and more. Automating a major task like Accounts Payables will result in never missing a payment to a vendor and incurring late fees. Automating Accounts Receivables will ensure your invoices are being paid by customers and clients as soon as possible to support a healthy cash flow for the business.
Using a full ERP system like NetSuite, which can cover all areas of a business, will allow business owners to expand to automating inventory management, order processing, financial dashboards, reporting, and more. The opportunities are endless when strong automation software is behind a business.
Analyze Cash Flow
A lack of cash flow is a primary reason that a business will fail. If a business owner is not aware of its cash flow levels at any given time, it leaves room for things to get out of hand. A cash flow statement will help business owners with tracking the cash inflows and outflows throughout various pre-determined periods - at least monthly.
A cash flow statement can be done manually by drawing data from the business's balance sheet and income statement, however, this data can be compiled much quicker with an accounting software system in place. Positive cash flow is generally a sign of a healthy company, but there are situations where a business will experience times of negative cash flow, such as after spending a large amount of money on equipment or property. Generating regular cash flow statements will highlight if negative cash flow is a regular thing for a business. This will alert business owners that it may be time to dig deeper to see what adjustments must be made to create a positive cash flow.
Invest in Technology and Services
Technology is what is going to make running a business easier for owners and management teams. As mentioned above, there are a host of solutions out there for businesses to rely on in making tasks easier across their departments. However, investing in a software solution that can tie together all areas of a business will take it to the next level.
In addition to having a strong tech stack, considering an outsourced service provider for a task like bookkeeping and accounting could remove a large burden from business owners. Not every business owner has the skill to be a bookkeeper or the ability to hire a full staff to handle the bookkeeping and accounting for the company.
Turning to a professional bookkeeping service provider like AccountingDepartment.com allows business owners to have the peace of mind that the financials are being handled accurately and efficiently, and the technology that comes along with it is unmatched!