With sound financial health, your business has a bright future. Without it, the chances are that your company will fail.
That is a stark warning, admittedly, but it's true to say that without effective financial management – be it recording data, analyzing the numbers, reporting, or forecasting – it is going to be very difficult for your business to enjoy long-term success.
In small companies, where there simply aren't the resources to deploy an accounting team (or, in some cases, to even have a dedicated member of staff to manage the finances), the onus is likely to fall on you to take accountability for the numbers – that's just one more thing for a small business owner to worry about.
It's a daunting task and one that might feel insurmountable if you don't have any prior experience or skills in this department. But by following some basic tips you can at least ensure that your business is compliant and financially sound – and is providing you with the necessary information to make key decisions now and in the future.
Learn the ropes
So, you've never been responsible for a company's finances before ….
Not to worry – if you think about it, every business owner has been in this position at some point in their careers. And we strongly recommend that you invest the time required to get your financial management up to scratch.
There are several Masters in Business Administration courses and the like that you can take to sharpen up your skills, and some can even be taken in your spare time – allowing you to run your company while learning the financial management and accounting principles that will help to ensure your business is a success.
Have a process
One of the best ways to ensure your finances are completed accurately and in a timely fashion is to implement a series of processes to ensure you get into a mindset of repetition.
Paying suppliers and creditors, sending out invoices, completing cash flow statements, monitoring tax requirements – each of these weighty topics can be managed more effectively when you have a documented process in place.
The cash flow statement is crucial to understanding the money flowing in and out of your business, so keeping on top of this as regularly as possible is a must.
Pay creditors on time
Guess what – when a supplier or a third party sells you products/services/materials, they don't like it very much when they don't get paid.
You should ensure that a) creditors get paid on time and b) so do your staff if you are to have a successful company. Prioritize this in your financial management, and you will be rewarded – not prioritizing timely payments is a disaster waiting to happen.
Have one eye on the future
You know that there are payments that will need to be paid in the future, and the taxman isn't suddenly going to give you a year off for good behavior.
The truth is that if you are not looking into the future with your finances – be it six months, a year, or even five years – you will simply react to problems that emerge, rather than proactively warding them off. And that's not good.