Running your own company is one of the most exciting experiences anyone can have and a dream come true for many. The business’ success, however, depends on your financial management skills. You not only need to adopt effective marketing strategies to get the company known and increase sales but also have to identify ways to reduce running costs without compromising on quality. When done correctly, proper business financial management could see the company growing and expanding in no time. How can I improve my business financial management skills, you may ask.
Outlined below are five tips from Fair Figure that might help.
- Invest In A Cloud-Based Accounting Software
Unless you are a trained accountant, sifting through all the business financial data can be confusing and overwhelming. The amount of data you’d have to process in a day could take lots of your time, making it hard to focus on running the business. Having cloud-based accounting software in place can, however, make processing such data easy.
Cloud accounting software automates most tasks associated with the business’s finances, including sales and tracking of expenses. In addition to this, you can access this information remotely from anywhere, giving you the flexibility required to run a business. With the accounting software doing much of the ‘heavy lifting’, you’ll be able to analyze, monitor, and even know your current financial standing.
- Keep Track Of Your Invoices
Invoices and cash flow are the driving force of any business, especially if you are in the B2B sector. That said, you want to stay on top of all invoices and ensure each is handled accordingly. The last thing you want is late and or non-payments, which could drag your business down. Thankfully, cloud-based accounting systems make tracking invoices relatively easy. You can also use the software to draft and send accurate invoices to your customers/clients on time.
While sending invoices on time is one way to get paid, you still need to outline payment terms, deadlines, and conditions with your clients as well. This will help ensure clients pay on time and protect you if you have to collect debts from unpaid invoices legally.
- Have An Inventory Management System In Place
Proper inventory management plays a significant role in determining the business’ profitability. You thus want to have an inventory management system in place to help track stock in the warehouse. This is especially important if your business deals with tangible products. Having a cloud-based inventory management system can make tracking your inventory straightforward and relatively easy. This system enables you to monitor every item in the warehouse in real-time. The system can be configured to send alerts when inventory reaches certain levels, allowing you to restock on time. You can also use the system to identify dead stock without having to set foot in the warehouse. Knowing how to use these systems is important to your repertoire of financial management skills.
- Keep Track Of Your Day-To-Day Expenses
There are times when you’ll spend more than budgeted for. While some of these overhead expenses may be unavoidable, you sure should keep an eye on them. Unless there’s an emergency fund set aside for such, failure to monitor and manage overhead expenses could put the business in a tight financial spot. Thankfully, employee management software and cloud accounting systems can help track the most common and pertinent expenses relatively well. All you need is to have all costs logged onto the system for easier tracking. You can then use the information and data to budget accordingly.
- Have an Actionable Plan
Even with all these resources in place, you still need a solid business plan for everything to work as required. The generated business financial data will, however, determine and dictate your marketing and expansion plans. The best thing about having these systems in place is that you’ll have actionable data/information showing if the business is on track or not.
With the insight provided, it will be easier to plan and establish reasonable budgets for each department. You can use the financial data generated (monthly, quarterly, or annually) to identify areas that will need a bigger budget and expenses to do away with. A good example is if your advertising campaigns aren’t bringing good returns on investments while SEO efforts are doing better.
With honed financial management skills, you can use the data provided to make informed decisions instead of doing it blindly.