Posted by Cedric Joshua Martinez
Nov 18, 2015
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Money is indisputably one of the strongest driving forces of a business. This rings true regardless of the size of the company, the industry it belongs to and even the country it operates in.
This is why most business owners prioritise money management initiatives. When you have a healthy and reliable cash flow, you have better chances of keeping your business on solid ground for a longer period, ensuring financial stability in the long run.
Unfortunately, not all business owners in the UK know exactly how to manage their cashflow. As a result, business exit rates have gone up in recent years.
Tips to Manage Business Finances
To ensure the financial success of your business, it is essential to implement effective cash flow management strategies. Here are some key strategies that you can use to manage your business finances effectively:
1. Be strict with monitoring tasks.
Some business owners tend to forget monitoring functions because they prioritise business operations more. While it is indeed necessary to keep a close eye on how your business operates daily, this is never a license to forego business financial monitoring functions. This is especially the case when your business is not yet at a stable phase.
2. Do projections regularly.
Financial projections are very useful for businesses because they help owners to understand trends in cash inflows and outflows. This thorough understanding empowers entrepreneurs to manage their money more effectively by simply having a close estimate of their revenues and expenditures. This further prepares them for a sudden economic downturn.
Read: Understanding the Basics of Revenue Projection in the UK
3. Make frequent assessments.
Be aware of the current problems that your business is facing so that you can propose a viable solution early on. Creating a budget plan and anticipating problems before they happen is also a good strategy. To make these things happen, you need to make time for thorough assessments of your financial health at least every quarter.
4. Learn about accounting.
The world of business financial accounting is vast and complicated - this may keep you from wanting to explore what it’s all about. Bear in mind, though, that the success of your business finances reliesy heavily on how you handle your capital - and that involves crunching your critical business numbers every so often using effective accounting software.
5. Ensure timely customer payments
It feels great when customers manage their money well and pay you on time, doesn’t it? To keep the cash flowing smoothly, set clear payment terms, send friendly reminders, and make the payment process a breeze. This way, you avoid the awkward cash crunches that can mess up with your operations.
6. Maintain Accounting Records
Imagine trying to solve a puzzle with missing pieces. That's how it feels to make decisions with outdated financial records. Hence, make sure to stay on top of your books so you always have the full picture or accurate financial information at your disposal, making smarter decisions a lot easier.
7. Don't Miss Tax Time
Taxes are like that one guest at parties who's impossible to ignore. So, stay on their good side by being prepared and punctual with your documentation. This way, you avoid penalties and maintain your business’s good standing with tax authorities.
Read Next: 7 Reasons Why Outsourcing Your Tax Preparation Is a Smart Decision
8. Watch Those Overheads
Make sure to always keep an eye on your overhead costs to ensure they're not eating into your profits more than they should. Regular checks can help you manage these expenses to ensure they remain justified and do not erode your company's profitability.
9. Make use of modern tools.
As mentioned in the previous item, accounting could be quite complicated. The good news is, there are a lot of modern tools available nowadays to help you crunch your numbers more accurately. Do your research and find out which cloud accounting tool works best for a business like yours.
10. When in Doubt, Ask a Professional
If you’re feeling overwhelmed or just want to make sure you're on the right track, don't hesitate to reach out or consult a financial professional. They can offer guidance, provide peace of mind, and help keep your finances in tip-top shape, whether it’s for personal financial management, creating a budget, or securing a business loan to foster growth.
Need help in Managing your Finances?
Consider D&V Philippines. With our trained professionals, we can help you take the next step in managing your finances and plan for the success and longevity of your company. Contact us today and we’ll help you find the right solution for your needs.
You can also download our whitepaper Outsourcing: How to Make it Work to learn how we can make outsourcing engagement work for your growing business.
This article was first published on 18 November 2015 and updated on 01 July 2024. Edited by: Angelica Garcia
