Managing finances may be one of the most crucial steps for leading your small business to success. Balancing your books might help you make important decisions about expenses, business expansion plans, and even employing new staff. Having a solid understanding of your business’ accounting could benefit your future when experiencing difficult decisions or significant choices that may improve your business.
To learn some tips to improve your accounting skills, read more below!
- Keep a close eye on your cash flow
For any business, keeping an eye on your finances helps minimise the chances of running into challenging issues. It also keeps you updated on what may be new or expected in the coming months.
You might want to consider making cash flow statements weekly or monthly, as they could give you an understanding of the finances moving in and out of your business. If managed properly, your company may stay organised with any upcoming due dates with any debts from banks or suppliers.
Having a healthy cash flow could reflect your business activities in terms of growth and other investment opportunities. Staying out of the red might be a priority, and keeping tabs on your cash flow could minimise the chances of losing contracts, business closure, or expensive debts.
- Log your expense receipts
A common error that many small business owners make at tax time is having no copies of their expense receipts. Similar to watching your cash flow, saving receipts may be essential to keeping your business’ finances in order.
Receipts to keep may include:
- Cheques
- Proof of payments
- Electronic funds transferred
- Credit card receipts
- Invoices and statements
A tip that may be helpful is to file your receipts as soon as the transaction is made. You’ll be thanking yourself later when you are doing your monthly reports. You may also want to scan physical documentation of invoices and statements or take photos to ensure you don’t lose them before tax time. Doing this may require a lot of work, but it may make it easier in the future.
- Forecast future expenses and income
When creating your financial goals, you might want to consider forecasting your future expenses and income based on your business’ past and present actions. Reviewing these might help you make decisions that meet your company’s objectives.
Some questions you might consider asking when forecasting:
- What might our annual sales be like in the next two years?
- Will my company break even in the next accounting period?
- Does the business have enough staff to handle projects for the next 12 months?
- How many customers are we expecting for the next five years?
- Keep your books updated
Making sure your bookkeeping is constantly updated will give you insights into any errors you may want to fix before the end of the year, prevent fraud and stay updated with any expenses.
You may make errors, so double-checking entries is essential. The goal is to catch any transactional errors instantly and fix them before it’s too late.
Fraud could happen to any business, and it may impact your company in different ways. Consistently checking your books may prevent any sort of fraud activity on your business. You may be able to catch any suspicious actions before they heavily affect your company’s finances.
Reviewing your expenses and transactions may also help to check if any outstanding debts, subscriptions or fees need to be cancelled or paid before the next financial term.
- Get Business Insurance
When running a business, you may experience hiccups that could negatively impact your company. Let’s not take the risk! With small business insurance, your small business may be able to avoid the financial fallout from damage to office computers, tax audits, cyberattacks and other risks that could lead to the closure of your company.
Depending on the type of small business you run, there are many policy options you might choose from. You may need more than one policy to help protect you from different risks. For example, you may take Professional Indemnity insurance if you provide clients with a professional service and choose a Public Liability policy if those clients frequently visit your office.
Get your business insurance sorted today with BizCover, and have your small business protected in no time. Compare multiple quotes online in just minutes with us, drama free!
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2022 BizCover Pty Limited, BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975)
