Businesses can be enormously complicated to run, especially when it’s just you that is working, or you have very few employees. There are so many different areas to think about – objectives, recruitment, sales, marketing, PR and, of course, your finances. Your finances are what make or break your business. If you don’t know how much you are spending, then you will be taken by surprise when your creditors come knocking. Here are some tips on how to keep track of your small business’s finances.
Make an accurate cash flow statement
A cash flow statement is to record and indicate exactly what funds are coming into your business and what funds are going out. Make sure that absolutely everything is recorded. Your expenses could include office rent, employee salaries, production costs, utility bills, transport costs and much more. There are a number of other things that should be included in a cash flow statement. It needs to be updated every time anything changes so that it remains useful as a financial document. Once you have an accurate cash flow document, you can then evaluate your outgoings to see if any of them can be reduced. Perhaps you can find a cheaper supplier of office supplies or maybe you need to cut down on business lunches.
Make sure you use a business account
For small businesses that only have one employee, it can be difficult to make that transition from freelancer to small business owner. Having a separate business account will make that easier. You should always avoid mixing your personal and business finance because one could adversely affect the other and it makes it more difficult to keep track of your personal and business money.
Keep track of business expenses
If you go out for a lunch meeting with a client, make sure that you keep the receipts for whatever was bought. It can be tricky keeping hold of small pieces of paper, but technology can help you out with that one. You can get an app for your smartphone that scans receipts and then automatically records the cost so that you don’t have to take the paper receipt with you.
Overhaul your invoicing and follow up
Make sure that your invoicing system is effective and quick so that customers pay you as soon as possible. Automated invoice systems are available and as long as you set them up correctly they will save you time spent on preparing each one. You should also make sure that you follow up on any unpaid invoices. When your business provides a good or service for someone or another organisation you deserve to be paid promptly. If necessary, make sure that you remind customers, gently at first and then more assertively later, that they still haven’t paid you for the work you have done.
Look out for any ways to add to your income
A great way of staying on top of your business’s finances is to add to your incomings and there are many ways of doing that. See if there are any government grants that you could apply for. Additionally, you could be eligible for some sort of compensation such as for being mis-sold PPI. Often, people setting up businesses require a loan to do so and in the 1990s and 2000s many banks sold PPI along with those loans. They were later ruled to have been acting illegally. A great way to get a small cash injection for your business is to see if you can get compensation for being mis-sold PPI – see if you can make a Lloyds PPI Claim and you could be awarded thousands of pounds in compensation.
Get an accountant or purchase software
The best way of staying on top of your business finances is to use an accountant. You do not need to employ one and pay a salary – many accountancy firms offer services to small businesses at an affordable rate. An accountant will keep track of all of your finances and make sure that you are paying your taxes at the right time.
However, if you don’t want to use an accountant, then there is software available that does a similar job. There are plenty of options which offer a wide array of features and prices. Choose the one that best meets the needs of your business.