As enjoyable and exciting as it may be to run your own company, if you don’t focus on business financial management, you likely won’t be running your business for very long. Whether you identify ways to reduce costs or develop marketing strategies that will increase your sales, prioritizing the proper management of your finances is essential for the long-term health of your company.
So what can you do to improve your business financial management skills? Here are a few tips and resources that can help you keep your company in the black.
1. Use Cloud-Based Software
Managing business finances requires looking at a lot of data — and if you aren’t a trained accountant, that information can be extremely overwhelming. Making the challenge even worse, the sheer amount of data you need to process on a daily basis could easily fill your entire day — but not if you invest in cloud-based accounting software.
A cloud-based system ensures that you can access your financial data anytime, anywhere. Even more importantly, it automates many of the tasks associated with managing your company’s finances, such as tracking expenses and sales numbers. With accurate real-time information instantly available, you’ll be in a better position to understand your current financial situation so you can take the necessary steps to control it.
2. Stay on Top of Invoices
Managing invoices is one of the biggest challenges faced by retailers, especially those in the B2B sector. Late payments — or worse yet, non-payments — can completely drain your financial resources. Use your cloud-based accounting system to keep track of any invoices that have not been paid by the customer. Sending out accurate invoices in a timely manner will ensure you get paid.
To ensure that invoices are actually paid, it is strongly recommended that you make payment terms and conditions clear from the outset (including payment deadlines). This way, you will have legal resources to collect any debts owed should an invoice go unpaid.
3. Inventory Management
The items in your warehouse — and whether or not they are being sold — will have a major impact on your profitability. As such, the use of an inventory management system that automatically keeps track of stock levels is an absolute must for businesses that ship physical products.
The use of a cloud-based inventory management system will allow you to see how much of each item you have in stock, while also providing up-to-date data on sales trends. With this information in hand, you can efficiently forecast upcoming seasonal demands and take full control of your inventory levels. This way, you won’t have to worry about running out of stock for your most popular items, — nor will you make the mistake of wasting money by ordering inventory when it isn’t actually needed.
4. Identify Day-to-Day Expenses
Do you know which overhead costs are hurting your bottom line? If you don’t have the monetary resources available to cover fixed costs like employee wages, rent and utilities, or insurance (not to mention hidden costs like permits, licenses, and taxes!), you’ll soon be in a tough financial situation.
Cloud-based accounting systems and employee management software can help you keep track of your most common and pertinent expenses so that you always have a clear understanding of how your money is being allocated. This will help you stay in control of your budget.
5. Make a Plan
The best business financial management resources in the world won’t do much good if you don’t use their data and insights to form an actionable plan for your business. Your financial data should clearly dictate your plans for expansion, marketing, and more. As you track this information on monthly, quarterly, and yearly intervals, you’ll be able to identify whether or not you are on track with your company’s financial goals.
Most importantly, this level of planning and insight will help you establish meaningful budgets for each area of your business. This can ensure that you avoid overspending while identifying areas where you can reduce expenses. For example, if a print advertising campaign costs more than your SEO efforts but brings in significantly less customers, you may be financially better off if you eliminate that particular expense. Using accurate information to guide business decisions will keep you financially secure.