Running a small business means staying focused on your finances. Without proper management of accounts receivable, marketing expenses, and even debt, you could end up sinking the small business before it starts to grow. Fortunately, there is always something you can do to ensure that such risks are avoided. You can create and implement simple accounting strategies to save your business and help it grow to its full potential.
1. Weigh your options
Is it better to hire a bookkeeper or can you handle the accounting yourself? This is the question you should start by asking yourself before anything else. Cutting costs is definitely what you’re prioritizing as a small business, but it helps to manage what you can and let the experts do what they do best. You can hire bookkeeping services to help you get your finances in order without spending too much on services. There are numerous accounting firms today and most offer all types of accounting services at affordable prices so you can easily get what you need as a small business.
2. Accounts receivable separate from borrowed funds
Financial backing or loans are beneficial for small businesses to help with marketing campaigns and even capital, among other things, that the business needs in the early stages. Get organized and keep loans separate so they don’t show up in your accounts receivable because then you can easily get confused as to what’s yours and what’s yours to pay. There is some very good and easy to use software that you can use for this task to keep everything organized and clear for you.
3. Watch your scales
Large amounts in your accounts receivable column can be a good sign that your business is doing well, but it’s a different case when the money doesn’t end up reflecting in your business account. Customers can be misleading and can avoid payments, and when this happens on a regular basis, your business is still at risk. Set strict policies or terms so you can receive payments due at the right time. You may be desperate for clients, but you can’t do it at the expense of your growing business; whether to refuse to provide further services or materials until pending payments are made.
4. Keep track of your daily expenses
Daily expense records are very important for all types of businesses, but even more so for small businesses. Keeping track of your daily spending not only helps you clearly know where your money is, it also puts you in a better position to budget for the weeks ahead.
5. Know your minimum monthly profit
Even the smallest businesses require strategies in execution and when you have an accurate system in place, you will be able to keep things on track. Calculate your regular expenses and obligations so that you know the minimum income needed each month. Have a goal in terms of how much you should earn each month, so the numbers don’t get too confusing.