Entrepreneurs are always on the lookout for great ideas to improve the allocation of their capital, and what better way to keep your finances in the black than by deploying strategic financial planning for the business.
Importance of financial planning for business
At this time when recovery is slow-moving, maintaining your business’ financial resilience is your safety net. The black swan scenario of 2020 is a good example of how a strong financial structure can soften the blow of the pandemic, and stretch its benefits more than the situation and even after the crisis.
But to make sure you achieve this long-term goal, it’s best to assess your internal practices. The stability of your cash flow will determine how far you can go in saving up for what’s to come.
How to make a financial plan for business
How has your business performed the past year? Good for you if you did well. Do not fret if your annual revenues show otherwise. You can still keep your business on track! How about starting on that strategic business financial planning moving forward? Here are some financial planning tips to guide you in creating yours:
Build a cash reserve
The rule of thumb is to always keep your business capital up. Running a business does not come cheap. Therefore, you must always have some available cash to spend for inevitable emergencies that go beyond your regular budget. The immediate purchase of raw materials and additional payment for tax liabilities and business maintenance overhead costs are just some of the expenses you need to watch out for.
Manage existing debts
Paying off your debt is necessary when you are running your business—this is an understatement. When you operate your enterprise, existing debts are not just an added strain to your budget; it can also keep you from getting that approved business loan. However, if debts are inevitable, at least make sure that you are managing them well by paying on time.
Spend resources wisely
It’s easy to get lured into buying new things for your business, especially when you feel that you need a lot of new stuff to keep your business going. Keep in mind, though, that overspending is a major culprit in mismanaged business finances. Our advice: think twice before spending those hard-earned dollars.
Keep personal and business finances apart
Many business owners have the notion that putting personal and business finances together is a good idea. The truth is, this practice actually complicates your finances. To manage your expenses and tax payments better (and to keep your assets more secured), the primary rule is to separate your personal finances from your business funds.
Seek professional advice
Contrary to how it seems, you can't save money by planning your finances on your own and ignoring the need to consult an accountant or tax adviser. In fact, you can put your finances to better use if you manage what you own more strategically and pay taxes correctly with the help of an adviser.
Financial planning tools for business
To augment and maximize your financial plan, check out these tools and software designed for the easier management of your funds.
Cloud accounting software
Cloud-based accounting software is a prevalent option for most organizations today as it offers both accessibility and flexibility they need in their jobs.
Aside from the automation it provides, they also have various integrations with third-party applications, making it easier for your accounting team to process your numbers on a regular basis.
Budgeting is a discipline you need to master if you want the financial plan to work. Through budgeting tools, you can come up with an ideal budget that doesn’t break the bank. A keen allocation of capital on different areas of the business keeps you aware of where your cash inflows and outflows are coming from.
Pro tip: Create a budget, and stick to it as much as you can.
One of the most taxing tasks to be done is payroll management. One mistake in this facet, it can cost you so much already. That’s why it’s smart to invest in payroll solutions.
When you invest in these payroll tools, you can streamline your process and mitigate any costly inefficiencies. Some of them even offer easier integration with your accounting software and provide scalability as your business grows.
These financial planning hacks for businesses can help put your finances right on track and build the internal strength of your enterprise through any unexpected circumstance.
For more recommendations on how you can keep your business capital up, you can contact our D&V Philippines advisers. You can also grab your copy of our whitepaper Investing for the Future: Adopting Cloud Accounting for Your Small Business to know more about how we harness top-of-the-line software in our F&A service delivery.