Whether you’re creating a start-up or run an SME, effectively managing the finances is arguably the most important role. The main aim of every company is to make money and ensure more is flowing in than going out. Simply focusing on getting as many sales as possible won’t achieve this, but these five useful tips should provide best practice advice for any kind of business to efficiently manage its finances.
1. Set Targets
In order to define whether your business is on top of its finances or not, you need to have some clear targets in place. Create and maintain a cashflow forecast that is updated weekly, to provide a good sense of where your company is at in regard to hitting targets. This can help ensure financial management is given the attention it requires and highlight any potential problems that may be coming up, so they can be addressed early on. If there are issues meeting targets, then cutting costs or rearranging cashflow should be considered.
2. Cloud-based Accounting Software
Any form of accounting software is a necessity to effectively manage business finances. Cloud-based software is ideal as it provides the convenience to access it from anywhere at any time. Plus, all the data will be backed up when it is stored in the cloud and you can get real time insights as it should be constantly updated.
3. Use Invoice Finance
When you do have cashflow problems, if clients aren’t paying on time or are tied into contracts where they don’t need to pay for 30, 60 or more days, then invoice finance can offer a solution. With invoice finance you are provided with the funds owed up front. Then when the invoice is due the lender receives payment from your client with a prearranged fee.
4. Offer Flexible Payment Options
The easier payments are for clients and customers, the more likely they will pay on time. Offering flexible and varied payment offers can achieve this, though it may depend on the type of business you run. Mobile payments, PayPal and contactless are three options which can do this.
5. Cut Costs
If your business spending or expenses are getting out of control, then think about cutting costs. Do an internal audit to see what’s being spent where and decide where savings can be made. This should free up more money for your business to reinvest and create a better cashflow situation.
These five tips can help any business, just starting out or already established, to get a good grasp on its financial management.