Knowing exactly how much you are spending and how much you should be earning is essential for any business. Without keeping a very close eye on your cash flow, you could end up with huge debts, which can be disastrous for both your business life and your personal life. To help you to avoid getting into a sticky financial situation, here are just five ways to keep on top of your company’s finances.
Organise any outgoing payments to come out on the same date
If possible, you should try to arrange all outgoing payments to go out around the same time. This can make it easier to keep track of when money is going out, and you know exactly how much money is left to get you through the rest of the month/week/quarter. Most suppliers and creditors will be happy to change the payment date for you if you ring them up and ask them. You may even be able to schedule your employee’s wages to go out on the same day, making it a much more streamlined process.
Set reminders of incoming payments
It is essential to check that your clients are paying you on time. If people pay you on a monthly subscription basis, check that their money is going into your account each time so that you can chase up late paying customers. When cashing in cheques, you may also want to set a reminder in a few days’ time to check that it has not bounced. You do not want to get into debt due to being too lax at chasing up payments. Make sure that if customers are paying their invoices late, you are adding appropriate late payment fees to cover any additional costs that you may incur. You may also want to consider using direct debit software to make the payment process easier for both your clients and you.
Outsource supply chain management
If you have got a long list of suppliers, you could find that it is taking up a considerable amount of your time paying each one individually, and it also makes it very easy to miss one. Think about outsourcing a supply chain management company to collect all your bills for you and send it all to you as one invoice. You can then pay this invoice, and the supply chain management company will distribute the money amongst all your suppliers for you, saving you a massive amount of time and effort.
Make use of data analytics.
Data analytics (sometimes called ‘data science’) is a way of using computers to pull apart vast amounts of data to help find useful trends that could help you to improve the running of your company. Analytics can be used in finance as a way of helping you to cut down your expenses and increase your income by spotting trends. If you are a retailer, it could help you to order in the exact amount of each product to ensure maximum sales while spending the least amount of money. There are also programmes that you can download to help collect analytic data of your finances.
Automate bill payments and invoices
It is possible to use software to automatically generate bills and invoices rather than having to complete each one individually. This can help to save you a lot of time while reducing errors made in the billing or invoicing process. You should also automate any outgoing payments to suppliers who you have a steady contract with – this could be done through a standing order or direct debit.
Have a separate business and personal account
It is all too easy, particularly if you are a small business, to have all your business money and personal money going into and coming out of the same account. It may be easier, but it is also the fastest way to get finances muddled up and not spot any cash flow problems before they become an even bigger issue. By keeping them separate, and paying yourself a wage from there, you can keep a closer eye on things, and when it comes to doing tax returns and bookkeeping, it will make it a whole lot easier, especially if you are audited at any point.