As a business owner, you know that keeping track of your company’s finances is tough. You need to keep the money flowing and make sure you’re staying profitable at all times. Unfortunately, many business owners end up making mistakes that can cost their companies money in the long run. Here are a few proven ways to manage your business’s finances effectively so you can keep your cash flow growing year-round.
Stay on Top of Your Company’s Accounting Efforts
No matter what industry your business is in, you need to keep track of all of your expenses, profits, losses and purchases at all times. This means staying on top of your accounting efforts every day. If you’re not sure where to start, look for help. Find someone that has experience with accounting for small business operations. Work with an accountant that’s familiar with your industry or learn to do the tasks on your own. It doesn’t matter what method you choose as long as you’re being proactive and taking the steps needed to keep track of your company’s finances.
Always Separate Business and Personal Finances
If you’re new to running a business, there’s a temptation to keep your personal and business finances combined. Though it seems convenient, it’s one of the worst mistakes you can make. Instead, separate your business and personal finances as soon as you can. Open a dedicated business bank account and use it for all business-related purchases and deposits. This will make it easier to claim certain deductions come tax season and helps you better understand how your company is performing at all times.
Set a Budget and Stick To It
The most successful business owners know that the easiest way to manage your business’s money is to create a firm budget. Think about how much you bring in each month and look at your estimated monthly expenses. Ideally, you should be bringing in more than you’re spending. Do what you can to control your expenses and set aside money for each expense that you have. Anything leftover at the end of the month is money that you can invest back into your business. Keep in mind that you’ll want to review your budget every quarter. As your business grows and your cash flow improves, you’ll be able to expand your budget accordingly.
Be Willing To Negotiate
Believe it or not, you may not have to pay the exact amount that vendors quote you when you start searching for products and services. In fact, you may be able to negotiate a lower rate. You just have to be willing to ask. If you already have vendors that you work with, see if you can get a discount on future orders. If not, shop around and get quotes from other suppliers. If you find a lower price, you can switch vendors or use that quote to negotiate a better price with your current supplier.
Put Your Bills on Autopay
No matter what industry you’re in, you’ll always have bills you need to pay each month. Instead of waiting to receive those bills in the mail, set them up on autopay. This will help you avoid making late payments and reduces your risk of falling behind over the course of the year. Remember, paying your bills on time, every time, is the best way to keep your business’s credit growing in the right direction. If you fall behind or consistently make late payments, you’ll end up hurting your credit score which can impact your ability to get financing in the future.
Just because your business is turning a profit doesn’t mean you have to spend that extra money. Instead, get in the habit of being as frugal as you can be. Find new ways to save when you can and set money aside each month to cover unexpected costs when they pop up.
Try these easy ways to manage your company’s finances now. The sooner you do, the better off your business will be.