Five Ways to Keep Track of Your Business Finances

Managing business finance can be pretty overwhelming without the right systems in place. As a new business owner especially, you may feel that finances are impossible to keep on top of. 

Whether you’re a freelancer, a small business owner, or you’re running a larger operation, you need to be on top of your body if you want to maintain cash flow, plan for growth and avoid costly mistakes. Financial tracking involves so much more than just penny pinching, so let’s take a look at some effective ways to stay in control of your business finances.

1. Use invoicing software to automate billing. Sending invoices manually can quickly become a time consuming task where mistakes can be made. Invoicing software

helps to automate that process by generating and sending invoices at the right time while tracking due dates and following up on late payment. Most modern platforms out there will also integrate with accounting software and allow for digital payments, which improves cash flow and reduces the chances of human error. Having an organised system for invoicing also ensures that you get paid on time and have an accurate record of your income.

2. Keep your personal and business finance separate. It’s a common mistake that small business owners will often make, and that’s mixing personal and business expenses. It often looks like a convenient option, but it does create major headaches during tax season, and it can skew your financial reports. Have a separate business bank account open and use a dedicated credit card for business expenses. This way you can clearly track your cash flow and keep accurate records, which is critical for budgeting, compliance and reporting.

3. Have a budget and stick to it. A detailed monthly budget acts as your financial road map. It helps you to plan for upcoming expenses, set your revenue goals, and ensures that you’re not spending more than you’re earning. Breaking your budget down into categories such as rent, marketing, and supplies will help. You can keep reviewing this monthly budget regularly and adjust as your business needs to evolve. A budget isn’t just about restricting your spending.But it’s a tool that you need for decision making.

4. Look after your weekly cash flow. We just talked about having a monthly budget, but cash flow is the lifeblood of your business, so you need to be on top of it every week. Set aside some time every week to review your incoming outgoing cash. This can include customer payments, vendor bills, and other transactions. It’s a habit that will help you to identify any potential shortfalls early so that you can take action before problems arise.

5. Get an accountant on board. Even with the best of software out there, it’s smart to have professional financial support. An accountant or bookkeeper can help you to make sense of your numbers, handle your tax filings, and provide any advice that you may be missing out on. They can also catch the mistakes that software may miss and ensure that your books stay compliant with local regulations. If hiring someone full time isn’t an option, consider outsourcing or working with a professional.