Are You on Top of Your Business Finances?

If you own a small business you’ll know how many tasks you need to juggle every single day in order to keep things running smoothly. Even though you may have employees or other forms of assistance to help you, as the business owner, all the decisions ultimately come down to you to resolve.

One of these responsibilities is overseeing the income and expenses your business has. This will always be an important part of any business but when you are just getting established it is particularly crucial that you understand each and every aspect of your business finances, otherwise you may not be in business for very long.

Good habits are essential to ensure that you are always in control and you know what expenses and income your business is generating. It’s easy to think of spending money as investing in your business and this is certainly true to an extent, but it can get out of hand if you’re not careful.

The first thing you should do is to get used to keeping regular records. Regular payments and income are much easier to keep track of but it’s also good to review your business every month to see how you are doing and what your cash flow is like. What our minds take in and process can be very different from what our business accounts actually tell us in black and white, so make sure you can reconcile the two!

It’s also easy to focus on the good parts of a situation and ignore (or not even be aware of) the bad elements if you don’t have a good understanding of your business finances. For example, you may have recently taken out a series of adverts in a new publication which brought in a dozen new customers. But if those customers didn’t bring in nearly enough revenue between them to cover your advertising costs then it isn’t such a good deal after all. In this situation you may want to focus on more assured results and test that particular market again later on, when your cash flow is slightly stronger.

It’s clear that while cash flow is a single entity, you need to think about income and expenses separately as well in order to ensure you make the right decisions at the right times. For example having a clear plan for when customers will pay you can help to ensure you get the money you are owed at the right time. Conversely knowing when you need to pay for certain things will help you plan for doing so. Small business credit cards may be able to help you do this by helping spread the cost and make those early days while you find your feet in the business world a little easier.

In short, knowledge is the key to keeping on top of your cash flow and managing your business finances successfully. If you know what is happening you can plan much more effectively for the future of your business.