Whilst running your own company is often fun and exciting, if you fail to keep ahead of your finances due to bad financial management, it is likely that you won’t be running it for a very long time. The proper financial management of your company is essential for long-term growth and development.
So, what exactly can you do if you know that your financial management skills are lacking? If you are aware that there is a problem and you want to know what to do next, keep on reading. We have curated a short list of simple tips that you can use and take inspiration from to get your company’s finances on the right track.
Financial Management Tips for Your Business
Getting on top of your company’s finances doesn’t need to be difficult.
1. Use the right software and tools
As a start-up entrepreneur, you have a lot that you need to manage and whilst this includes your finances, by using the right tools and software solutions you can massively reduce the workload. There are plenty of accounting, invoicing, and financial management tools out there that can be used to keep an eye on things for you, automatically issue invoices, and notify you when something requires your attention, amongst other things.
2. Keep an eye on your invoices
Managing your invoices is one of the biggest challenges when it comes to financial management, especially if you are operating a B2B business. Late and non-payments can drain your finances and lead to more work for you to manage. You should have a system in place to manage your invoicing and ensure that you get paid on time. To make sure you get paid on time, incorporate late payment fees to your standard contract and enforce them.
3. Appropriately manage your inventory
Your stock and whether or not it’s being sold has a major impact on your finances and overall profitability. Inventory management is another thing on the long list of obligations that need your constant attention and, again, there are lots of tools out there that can help you with your inventory management. Bad inventory management can lead to a whole host of problems including costs related to lost or spoiled stock, customer disputes, and selling items that you no longer have in stock.
4. Know your day-to-day expenses
Do you know which of your overheads are harming your company’s bottom-line on a day-to-day basis? If you don’t have the means to cover these fixed costs—common ones include rent and utilities—then you could easily find yourself in a tough financial rut that is hard to get out of. You should always have a clear understanding of where your money is going and how this is impacting your business. In the long-term, this helps you make and keep in control of your budget.
5. Have an up-to-date plan
Whilst it’s always a good idea to use cloud-based software tools to help manage your company’s finances, they aren’t going to be any good if you don’t have an actionable plan in place for your business. Your financial information should clearly outline your expansion, marketing, and product design plans, amongst other things, and it should be consistently kept up-to-date as new events and developments shape your business. When you track this information and keep an eye on the data and how it changes over months, quarters, and years, you will be able to see whether you are on track with your company’s finances.
Good Financial Management Starts with You
Even the best tools and software solutions can’t help you if you aren’t willing to make a change. Good financial management is key to running a business successfully, and a failure to properly look after what’s most important to your business—money—will mean that your tenure as a business operator won’t last for a very long time.
It is easy to ignore your finances as a start-up entrepreneur, especially in the early days of running your company, but it is important that you are constantly keeping track of everything related to your money. Don’t let yourself get distracted by all the fun aspects of running your start-up.