If you’re a small business owner, it’s essential to have organised bookkeeping skills to make money and grow. Read on to find out how to keep your small business finances on track.
Managing your business finances can be challenging, particularly if you don’t have much experience.
If you’re not ready for major expenses and just need some help keeping your finances organised, you’re in the right place.
Making small changes to your bookkeeping and taking advantage of a few handy tools can turn business accounting from a massive hassle to a walk in the park.
Are you ready to get smart about small business finance?
Let’s do this.
Keep your personal and business accounts separate to organise your business finances
If you started your business as a sole trader you might not have separated your business and personal accounts.
This might feel easier at first, but it can quickly get confusing as you try to work out what belongs to you and what belongs to your business.
Get prepared for future growth by separating your finances now. Open a dedicated account for your business, and consider opening a business credit card account, too.
Keeping all your expenses on your business credit card makes it much easier to keep track of your spending, but you’ll need to remember to pay it off on time to avoid interest.
If you’re serious about your business, do things properly by keeping your finances separate. Taking this step now will save you a huge headache further down the line. It will also help you if you need to access finance in the future and need to show a clear picture of your business expenses.
Use apps to easily log your expenses
How many hours have you spent rifling through receipts, messing around with huge spreadsheets, and cursing the fact logging expenses is wasting your precious time?
Luckily, there are many smart mobile apps which take all the hassle out of logging your expenses, no matter where you are or what you’re buying.
Moula integrates with Xero and MYOB which both have extensive mobile apps for the tracking of all your expenses.
Select and download an app, take a photo of your receipt, and the app will automatically convert it into a neatly formatted report.
It might seem like a small detail, but staying on top of your expenses ensures you can create an accurate budget which will make business tax time a breeze.
Using an app that does all the work for you saves loads of time, meaning you can focus on what’s important – growing your business.
Sign up to an online tool for invoicing
Invoicing. Don’t you wish someone could just magically do it for you? Well, online invoicing tools can do most of the work for you. Signing up to an online tool lets you create one-off and recurring invoices quickly and easily, and issue them to clients online or via snail mail. When you’re running over your business accounting to assess viability for business financing, using an invoicing tool has huge long-term advantages.
You can save client details, payment terms, payment options, and late fees, meaning many parts of the process are automated after you’ve used them once. You will also be able to manage your accounts receivable.
If you have issues with late-payments, most tools will automatically follow up with clients for you. This encourages timely payments and creates a solid paper trail which you can use to pursue payments from difficult clients.
Cash flow is the issues that causes 82% of business failures. Stay on top of invoicing and don’t let your business become part of the statistics.
There’s absolutely no reason to spend hours a day on invoicing when automated business accounting software can do it for you. Start getting paid fast without wasting hours of your time.
Create a cash flow forecast to control your business finances
You can’t expect to grow your business successfully if you don’t know how much money you have to work with.
Healthy cash flow means you’re able to invest in your business, deal with emergencies, and make plans for the future. Cash flow issues could spell the end of your business, particularly if you don’t have personal funds to fall back on.
To create a cash flow forecast, you’ll need to forecast your sales for the next year, then forecast your profit and loss, and then combine these forecasts.
You’ll need to pay close attention to when the money will be coming in and out of your accounts, to ensure you don’t run into any issues with unexpected expenses.
For example, if you have a big expense in April, but don’t expect to be paid for a large project until May, you could face a cash flow issue. Having potential problems clearly laid out allows you to create a backup plan before you’re faced with a crisis.
On a more positive note, you’ll also be able to look for growth opportunities. If you expect to see healthy cash flow, you might consider hiring a new member of staff, starting to sell a new product, or widening your operating area.
A Moula loan can help you take advantage of a growth opportunity if you’ve not got immediate access to the funds. Moula will assess your business cash flow quickly and viability for our loan options which will allow you to take advantage of potential business growth opportunities.
You should never be in the dark about your small business finance – create a cash flow forecast to shed some light on things. Learn more in What is a Cash Flow Statement? A Short Guide for Small Business.
Create a business plan
You’ve probably heard the saying ‘If you fail to plan, you plan to fail.’ This is especially true for small business. When you have limited resources and an unproven business, you need to have some type of plan that outlines what you’re doing, what your goals are and how you plan to get there. In a business plan, you describe your product or service and explain your financial management. When you are seeking finance, some lenders will want to see your business plan.
Compare types of debt and choose wisely
Debt isn’t always a bad thing when it comes to small business finances – it can actually help to kickstart your growth.
However, you need to be seriously organised and spend plenty of time doing your research if you want to choose the right type of debt for your business.
For day-to-day expenses, a business credit card makes the most sense. It means you’ll always be able to buy essential items, even during low points in your cash flow.
For long-term growth, you’ll want to consider more long-term small business finance options like small business loans or a line of credit. If you want to smooth out cash flow issues, merchant cash advances and invoice financing are both worth considering to fund your business.
Before deciding to take on debt you should fully evaluate your finances, consider your plans for the future, consult with an advisor and use a business loan calculator to estimate your repayments.
Why organise your small business finances?
If you want your business to grow, staying organised and on top of your business finances is key.
You’ll be able to avoid potential cash flow issues, save time managing invoices and expenses, and plan more effectively for your future. Here are some cash flow management tips.
Start organising your small business finance today and you’ll be on track for success.
