Like many entrepreneurs, you’ve probably taken numerous steps to secure your business’s financial success and keep it as profitable as possible. But are you 100 percent certain that you’re doing everything to keep your business’s finances in good condition? Take a close look at your operations and processes and find out if you’re making any of these financial blunders:
Not keeping your accounts updated
Businesses are required by law to maintain their accounts and track each and every financial transaction. However, maintaining accurate accounts isn’t about complying with regulations; it’s also useful in tracking your spending, finding ways to lower your costs, and improving your budget, as well as detecting and preventing fraud. You can also refer to your records when planning your business growth and use your financial information to make smart and informed decisions. If your accounts are maintained and organised, you can also inspire confidence in investors and lenders and find it easier to access the funds you need to grow your business.
Allowing outstanding invoices to pile up
If most of your cash is tied up in unpaid invoices, your business won’t have enough working capital to continue its operations, and you might eventually have to close your doors due to not having enough funds to keep things running. To prevent this scenario, encourage your clients to pay their invoices ASAP. Provide discounts to clients who submit their payments before the deadline, and penalise late payments and charge hefty fees for them. Don’t be afraid to fire chronic late payers who bring nothing but stress to your business.
Mixing your personal money with your business’s finances
Many startups commit this mistake in a bid to get their business off the ground ASAP. However, combining personal and business finances isn’t advisable since it makes accounting and bookkeeping processes much more challenging and turns tax time into a huge nightmare. You’ll also prevent your company from building its own credit, which means that securing business financing will be more difficult in the future. In case of financial issues, you might even be on the hook for your business’s debts and liabilities, which can further push you into money troubles. Keep things simple and stay away from problems by separating your own finances from your business’s.
Not taking advantage of financial software
Numerous programmes are designed to help businesses with properly managing their finances. The only thing you must do is to choose the programmes that are ideal for your business and implement them in your operations. Start by investing in expense management software so your employees can easily file their expense claims and you can quickly approve and distribute reimbursements. This programme also allows you to set policy settings and ensure they’re always implemented, and you can even set alerts for breached policy parameters to make sure that your budget is always on track.
These financial blunders can prevent your business from growing and even lead to its downfall. Steer clear of them to safeguard your business’s finances and bring it closer to success!
