The only way to keep your business financially healthy is to have appropriate financial planning. Because financial planning not only helps in creating short or long-term business goals, it also helps in meeting those goals.
But poor business financial management can lead to overspending. You must be thinking, how? Let me explain it to you with an example.
If you are in a business, you have various expenditures such as payment for raw materials, purchasing new equipment, etc. But in case you continue to spend money on the factory equipment that is not generating revenues or of no use, you are just disorganizing your business finance.
So, for all SMEs, Enterprises, or Startups, they must have proper financial plannings. Also, managing financial activities is an absolute need for any company.
So, if you are struggling with business finances or searching for the tips to make it better, this blog is meant for you. Today, I will discuss every aspect of business financial management.
What is Business Finance, and Why it is important?
Business Finance is a term that involves all the activities related to purchases, expenses, income, investment, and saving of funds in an organisation. In short, it deals with the management of finance by any organisation.
Now, why do businesses need to manage their finances?
Before giving my views on the importance of financial management in business, I would like to ask a few questions.
If you are the finance manager, how are you making optimum cash utilization to make the business profitable? How are you dealing with daily financial decisions?
I know this would be tough for you when your boss asks similar questions. But let me tell you if you have proper financial planning to show, you win! And, to get this, you need expert guidance like business consultants.
Well! we are known for the term ‘Business Finance,’ now let us learn its importance.
Money is a fundamental necessity for the foundation of any business. Simultaneously, if you don’t manage it properly, it can setback a harmful impact on your business.
Some of the consequences businesses have to face because of poor business financial management are:
- Legal Consequences
- Social Consequences
So, if you want to avoid such consequences, focus on developing good financial management for your company.
Now the importance of Finance Management in Business.
- It helps in controlling the company’s expenditure as you have the record of the data where you have spent and from where you will receive funds.
- It helps in deciding whether you have enough funds for expansion or need to borrow from outside.
- It helps in finding the true source of funds at the lowest cost.
From the established business to startup, everyone needs open arm tips on how to manage business finances. And particularly in this COVID 19 outbreak, the importance of financial management can be felt.
According to a U.S. Bank study, almost 82% of businesses have failed to set themself just because of cash flow problems. From the above facts and figures, you can easily understand why it is vital to manage our business’s financial status.
If you still have any doubt, then take a look at the graph shown below.
Let us now dive into how to manage finances for small businesses. Or Financial management tips. I will give you significant financial advice tips that will knock business growth doors in the coming years.
5 Tips For Managing Business Finances
1. Purchase a Good Accounting Software
Purchasing a quality accounting software is the most important thing you can do for shaping business growth. Yes, bookkeeping software like Quickbooks, Freshbooks, etc. can give you various accounting solutions.
Such accounting software can be used to track payable and receivable amounts. By this you can calculate profit, loss and stay prepared for the upcoming taxation season.
By using an accounting software, a small business gets its hands-on customization in their entire accounting process. So, when a small business grows, the accounting process becomes complex. Therefore, opting for a scalable accounting and online invoicing software is a right choice.
2. Keep and manage your personal finances separate from the company.
What if you have mixed your personal and business finance? These may put you in confusion because tracking the transactions made for personal use or professional use is challenging.
Ultimately this will create more unnecessary complications. So, opening a separate bank account can prove to be a right choice for businesses. This way, you can easily measure your financial ins-and-outs.
Simultaneously, it is beneficial for tax purposes because you can quickly sort your transactions quarterly or yearly. A separate account helps in easy monitoring of cash flow, profits, loss, revenues, expenses, etc.
3. Improve billing strategy
Every entrepreneur has that one customer that significantly delays the payment process. It is important for an enterprise/small business to keep a close eye on the cash flow of the business every day to keep it on the right track.
Billing is an integral part of the business. This is a reason why business owners should grab an effective way for the invoicing system. Sit for a while and prepare a strategic plan where both you and your client agree with the payment term and conditions. Also, automate your billing system for faster payments.
4.Hire a Finance Professional
It is a common behavior for business owners to try and attempt a lot just by themselves. Be that as they are perfect, do everything. But, it is always advisable to hire skilled professionals for accounts management.
Even though it’s anything but difficult to imitate like an accountant, working with a professional accountant can help you set aside cash as time goes on. By this, you’ll be able to invest more in productive activities of business to keep moving ahead.
5. Monitor and assess your financial position
Start checking your numbers consistently. At the point when steady, this positive and proactive practice is a consolation that you have more cash coming into your business than leaving it — or if this isn’t the situation, that you know why this is.
Focus on it to realize what amount is in your business account, the number of deals you’ve made that day, and, if proper, how much stock you hold.
These are all important for proficient bookkeeping rehearses named ‘income’ and ought to be embraced at an early stage in your business, making them natural as your business develops.
Right management of income is important for both business’ sustainability and growth. What’s more, to be successful, these costs’ circumstances need to offset your pay.
Keeping steady over late installments is additionally vital. Guarantee you have clear credit terms and conditions set up and that you issue clear and precise solicitations as fast as could reasonably be expected.
Let’s Wrap it Now!
All these are the potential benefits and the reasons that will take our business to the next level. It is important for you, as an organization, to have realistic and optimistic ideas for growth. It would be better if you start concentrating on the business consulting company. They will guide you and show you the right way.
Share Your Accounting Load with Invoicera!
Invoicera is one of the leading online invoice software in the market. The cloud based invoicing and billing software has catered to more than 3.5 million users around the globe since the past 16+ years. The software can be customized according to individual business need and works for Enterprises, Small Businesses and Freelancers.
The invoicing software offers many unique features customized to specific business needs of freelancers, small businesses and enterprises. It helps you to automate and simplify your business processes and communication with online invoicing and payments, expense management, recurring/subscription billing, client/vendor panels, time tracking, invoice approval process, multi lingual & multi currency support, staff permissioning, financial reporting & analysis, purchase order management.
- Invoice approval process/ customized approval process
- Two-factor authentication
- Multiple business access
- 30+payment gateways
- 3 layers account security
- Staff management
- A/R&A/P Management
- Multi-lingual compatible Invoices
- Online invoice software
- Subscription billing management
- Project management
- Time tracking software
- Custom workflow management
- Expense management
- Enterprise Customize Invoicing solution
- Multi- Business Management
- Third Party Integration
- How do I manage my business financially?
Ans- this is the best approach towards right financial management for your business:
- Invest in quality bookkeeping software.
- Owe a good billing strategy.
- Separate explanation tax payments.
- Monitor your ins-n-outs in the business.
- Concentrate on investments, but also ROI.
- Plan ahead with healthy financial habits.
- What should small businesses do to organize their finances?
Ans- Here are few tips to can carry out to organize your small business finances:
- It’s important to have analysis or have a report of investments(where you spend or from where you receive payments).
- Hold a separate Bank Account for your official works.
- Shield your business with security tools to protect your confidential data.
- Distribute hard copies and digitize them.
- Plan regular meetings with clients.
- What should you do to manage your business growth?
Ans- You can carry out few things to keep your business fast-growing
- Employ the right crew.
- Monitor your financial activity regularly.
- Use the capital in the right place.
- Focus on your strengths.
- Satisfy your clients’ needs.