Getting a handle on your business finances is one of the most empowering things that you can do as a business owner or manager. Not only do you feel more in control because you’re more aware of what is going on, but you have that “early warning system” which can alert you to where the dangers lie ahead.
It’s also crucial if your business is growing to know when you can spend cash, hire more staff, increase stock levels, and sales and marketing activity.
This list of 5 things is what we have put in place to help us stay on track financially — and not be backwards looking business, or keeping our head in the sand, hoping that everything will be alright.
- Get a bookkeeping system in place — we use a combination of ReceiptBank (for company bills payable), Expensify (for reimbursable expenses) and a cloud accounting package like Xero or QBO (or FreeAgent for smaller businesses)
- Find a bookkeeper you can trust and do the books weekly. Don’t, whatever you do, leave your bookkeeping to the end of the year, or quarter. Bookkeeping can be done weekly or twice a week to keep it up to date. Having up to date figures is a huge advantage. Not only does it cut down the time to get reports at the end of the month but it also flags any potential issues early.
Your bookkeeper can also chase up unpaid bills or invoices. This not only helps with visibility on what is still due or overdue, but also helps with cash flow and reducing the time to get paid.
- Prepare a basic forecast in Excel, Numbers or Google sheets — just roughly to give it a go.
- Add reports. Take it to the next level by using reporting systems like Float that will keep your forecast up to date by syncing with your accounting software and showing you budget vs actuals.
For larger businesses, we’ve found Fathom also works really well for building historical reports on financial and non-financial KPIs.
- Get some accountability by reporting the monthly figures to a board or advisory board. Even if this doesn’t meet monthly, it’s a great discipline to create these reports and have someone ask you for them.
If these steps look familiar, or you’ve got other things you’ve put in place that really helped — I’d love to hear from you.
It’s our mission at Float to help businesses thrive, and get confident with their numbers.
image — © Copyright Tom Jolliffe Sea of Steps Wells Cathedral