Your success in business will rest on good record keeping practices and solid cash flow.
Without good records it is simply impossible to determine the financial condition or profitability of your business. As a small business owner you should be familiar with and recognise the importance of proper record keeping requirements and cash flow planning.
Here are Accounting tips to set you on the right road to success.
- Don’t forget to get paid.
This one seems pretty obvious, but you would be shocked at how many small business owners don’t properly track invoices and customer payments. If you’re not keeping proper records that you can make sense of at a glance, it could be months before you realize you have outstanding invoices. You could be collecting payments late, or missing some altogether. Make sure you’re properly tracking all payments due and recording when each invoice is paid, how long customers generally take to pay, and which customers you’ve had difficulties collecting payments from in the past.
- Weigh the options of bookkeeper vs. DIY accounting.
Though entrepreneurs might feel ready to act as head of accounting, sales, and marketing at the same time to cut costs, it may help to hire a bookkeeper. It can help you to know someone with experience and deeper understanding is working on your books. To start, you can hire someone part time or as a freelancer, so you’re not paying a full time wage for these services.
- Don’t allow clients to get away with not paying balances.
It’s a good idea for business owners to keep records of everyday expenses they incur in the company. Keeping an eye on the invoices that are due to you is vital. Be firm yet fair with your customers and request what is owed to you when it falls due. While a large level of sales is a good sign for a business, it is more important that you receive the money for those sales as the liquidity of your small business depends on it.
- Detail daily expenses so you can budget for the coming weeks.
It’s a good idea for business owners to keep records of everyday expenses they incur in the company. Instead of calculating expenses every two weeks for payroll purposes, focus on every day or every week. This can help you have a better idea of where finances are each week and how much money you’ll need to budget for in the upcoming weeks.
- Keep your Personal Account and your Business Account Separate
When your business is small and starting off, you may think it is easier to operate your personal finances and your business finances from the one bank account – you’re wrong! It is very important that you keep your personal and business finances separate, as it will only cause confusion when it comes to getting your accounts in order. From the start, it’s best that you treat your business as a separate unit.
You can help to ensure the success of your small business with these simple yet effective accounting tips. Get it right from the start and you won’t ever have to look back!