Is this you?
- You don’t have a system for your invoices and receipts (shoebox??)
- You are too busy working in your business to worry about the finances
- You don’t like bookkeeping
- You don’t know what your accountant needs
If you answered yes to at least one of the above, then you probably need to review your business financial management. What is good financial management in your business? I have 4 tips to healthy financial management for your business.
Tip #1 – Bank Accounts
Keep separate bank accounts for your personal and business requirements. I have come across many small business owners who do not keep their business and personal finances separate.
Another good tip is to have a business savings account for your GST and personal tax liabilities – transfer to it weekly, fortnightly or monthly.
Also, manage your cash flow carefully to ensure you can meet your business expenses.
Tip #2 – Bookkeeping Systems
If you are really intent on managing your business finances well then you need to have a good bookkeeping system that enables you to check your business finances regularly and produce profit and loss reports that will help you in making business decisions. The bookkeeping system that you choose to use must meet your business needs.
For a very small, just starting out business, then a pen and paper can work for you. You can purchase bookkeeping journals at your local stationery outlet that allow you to record all your transactions. This can become time consuming when you are managing more than 20 transactions per month. This system will require you to calculate your Business Activity Statement manually.
A good system for small businesses is in the form of a spreadsheet. There are great templates that you can download to enable you to record your transactions. Unfortunately, you cannot automate your financial report or Business Activity Statement preparation with this form.
The best system is a bookkeeping software package. These allow for the entry of all financial transactions, employee salary management, financial report development and Business Activity Statement preparation. There are costs involved for the software (often cloud based) and training for you to manage it yourself. Baseline prices (at November 2016) for the major packages are:
- QuickBooks from $10 per month
- MYOB from $35 per month
- XERO from $25 per month
- Reckon from $5+ per month
If you are at the point of needing to use a software package you might need to consider hiring a good bookkeeper. These prices are for small business packages and are the baseline cloud accounting packages.
The benefits of having bookkeeping software is:
- Ability to produce invoices that are professional
- Record all your transactions in one place
- Produce financial reports
- Accountants will appreciate the ability to review your financial transactions
Tip #3 – Develop new habits
- Spend 10 minutes at the end of each day updating your financial records with the daily transactions
- Invoice customers you have serviced that day
- Check your cash flow before paying your supplier invoices
- Record new customer information
- Invoice customers and record payments
- Contact overdue customers
- Record supplier invoices & payments
- Check on upcoming payments due
- Monitor your cash flow
- Reconcile your bank statements
- Print and review your financial reports
- Review & adjust your Business Plan and Budget
- Transfer funds to GST & Income Tax savings account
- Lodge and pay your BAS
Tip #4 – Goal setting and planning
Would you go on a holiday without planning where you were going and how much you would need? I assume the answer is no, so why would you run your business without goals and plans. To manage yur business finances effectively you need to:
- Develop an annual Business Plan
- Design your Budget
- Set Performance Measures for your goals
- Align your Business Plan and Budget
If you want a great template for financial budgeting for 2017 then sign up for my latest newsletter at http://www.moxxiebusinessservices.com/subscribe-to-our-newsletter/ and you will receive this for free!
When do you last check the health of your business. At Moxxie we can complete a Business Health Check for you. This very valuable check is used to review your business performance across a range of business elements including finances, customer management, products and services and IT to name a few. If you are interested in a Business Health Check for $165 contact Melinda at email@example.com or 0412 348 627 for more information.