Sound financial management is a vital part of business success and ensuring that you’re able to make the most of all the opportunities that come your way. These are our top tips for implementing positive practices within your business.
Make sure you have a clear business plan
This is a great tool because it provides perspective on where your business is now financially and where you need to be in the near future. You can get really clear on the cash that you need to attract into the business and what you need it for.
Monitor your progress
If nothing else you need to have real time data every day on the cash in the bank, stock you’re holding and daily sales. If you’ve set goals then it can also be useful to review your progress against those to make sure you’re on track.
Set up robust payment systems
One of the major issues any business faces is getting paid on time. You can help to avoid the cash flow issues that can result from this by setting up a robust structure for payment. This includes clear terms and conditions, easy to pay invoices and a system that will automatically track late payments.
Implement efficient stock control
When you’re on top of your stock levels you’ll always have the stock available that you need while also freeing up as much cash flow as possible to use in the business.
Stay up to date when it comes to your accounts
If you don’t have a good account record keeping system then you’ll lose perspective on your finances, including whether payments are being made late and ensuring suppliers are paid on time.
What’s the minimum that your business needs to function on a daily basis? This is basically the total of all your basic business costs, such as rates and wages. When you know what this minimum is then you can ensure that nothing happens to push you below it.
Pick the right funding source for your business
For example, if you’re a small business then an overdraft could be a simple financial safety net but if you’re ready to expand investment could be the best choice.
Avoid unnecessary costs
For example, make sure that you’re on top of deadlines for filing accounts and tax returns so that you don’t receive fines and penalties. Being on top of your tax not only helps to keep costs down but also ensures you’re only paying the tax that you need to.
Don’t put things off
This is especially important when it comes to any financial issues that the business is having. The longer you put off dealing with them the worse they are likely to get, so handle them quickly to minimise their impact.
Focus on greater operational efficiency and minimising the cost of overheads
Heating, air conditioning, lighting and office equipment are all key areas of spend for any business. If you can find ways to reduce these costs - and the energy required to run many of them - you can make your business more cost efficient and sustainable.
These are just some of the ways your business can improve financial management. Find out more by booking onto our Business Friendly Finance training course...