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5 Tips To Help You Manage Your Business Finance

 

Managing your business finance can be a daunting task, but it doesn’t have to be overwhelming. Here are a few tips to start you in the right direction.

business finance

#1 Keep Good Records

Many business decisions rely on the accuracy, timely, and accessibility of your financial records. Implementing a good accounting system early is a key element of a financially healthy business. If the buck stops with you, you need to be confident of the accuracy of your reports. Ensure you create a regular appointment to personally review your business finances and keep your finger on the pulse.

#2 Choose the Right System

Choosing the best bookkeeping software for your business can save you a great amount of time and heartache down the track. Make sure you review a number of options and how they apply to your business before deciding. Whether you stick with well-known software such as Myob or Reckon, or seek advice elsewhere first (e.g. Axcelerate, http://axcelerate.com.au/), the important thing is that you and your direct reports know how to use the chosen system comfortably.

#3 Watch the Numbers

Financial ratios are the ‘hand on the forehead’ of your business finance. Adept monitoring of these ratios can alert you to unhealthy or concerning trends, and in the early years, can even predict the success or failure of your business. There are many free resources for small business on the topic of financial ratios, however some key areas to monitor include: Gross Margin Ratio and Net Margin Ratio (to help you establish your gross and net profit margin); Leverage Ratio and Interest Coverage (risk indicators); Current Ratio, Days Debtors and Days Creditors (indicators of how your business deals with cash flow in and out).

#4 Stay Insured

Insurance for your business may seem like a very basic step, but its importance cannot be overstressed. Business interruption and income protection insurance protect your business from potentially disastrous circumstances. If you are in the position to be making key financial decisions for your business, consider how dependent you business is on your ability to work.

#5 Hire Some Help

Appropriate software is helpful, but a reliable and dedicated accountant is worth every cent. Registered accountants can help your business by preparing financial statements, alert you to potential problems, lodge your company’s tax return and assist with a number of other useful financial responsibilities.

What helps you manage your business finance?

 

Photo credits: Pong – FreeDigitalPhotos.Net

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