3 Tips on Effective Management of Business Finances
Starting a new business can be a daunting proposition. In addition to the huge amount of paperwork and tax issues that need to be sorted out, you also need to ensure the financial health of your business. Managing the finances of your business is probably the single most effective tool that you can use to ensure that your business keeps on growing in a profitable and sustainable manner.
Improper financial management is the number 1 reason why businesses fail worldwide. Therefore, it definitely pays to ensure that your finances are in order as early as possible. With an effective system to manage the finances of your business, you are freed up to focus your attention and your resources on avenues that will help your business to grow and turn a profit as soon as possible. Effective financial management is all the more important in the MSME (micro, small, and medium enterprises) market where starting capital is low and the business venture is not yet immune to small financial missteps; even the smallest of mistakes can spell the death knell for your company if you are not careful.
Here are 3 tips that should see you well on your way to an effective management strategy for your company finances.
ENSURE YOUR BOOKS ARE IN ORDER
Your company’s records and financial books form an essential component of your business. Without them, you cannot legally operate a business. Other than the legal and tax liabilities, proper recordkeeping also helps you run a more efficient business and identifying which areas of your business need more investment, which areas are lagging behind, and which areas need to be terminated. The Australian Taxation Office mandates that you maintain at all times a record of your finances spanning at least 5 years. These records include profit and loss statements, balance sheets, business account statements, company credit card statements, receipts of payments to employees and subcontractors, PAYG taxation paperwork, invoices for goods and services bought and sold, and lists of assets owned by the company.
CONSIDER A PROFESSIONAL BOOKKEEPER OR ACCOUNTANT
Because your financial paperwork is such an essential component of your business, it might be worth the expense to hire a bookkeeper or chartered accountant to take care of your books and provide you with succinct information that will help you make business decisions in the future. Bookkeepers will also ensure that you always stay legal in the eyes of the government; a crime out of ignorance is still a crime, especially when it comes to financial crimes like fraud.
IMPLEMENT A MOBILE PAYMENT SYSTEM
Stay with the times by implementing new systems that make both your as well your customers’ lives easier. Using mobile payment systems to both accept and remit payments for goods and services is something most traditional business owners are afraid of. However, these systems are extremely robust, reliable, and convenient. The ability to make and receive mobile payment frees you from bank schedules and other holidays on which banking services remain unavailable.