If you are in business, whether as a business professional, a financial professional or a business owner, keeping track of your cash flow is essential to your financial survival. Without it, you will likely fail one day. Having a good way to track your cash flow and keep the money coming in is essential to the continuance of your business.
Keeping financial records current
The only way to really know how to plan for the future in your business, as well as knowing how well it is doing, is to keep your books uptodate. This requires the daily or weekly entering of all sales and expenditures. Expenses also need to be checked against your budget, to be sure that you are not spending more than necessary in one area. A great way to ensure this happens is by working with a fractional CFO.
The problems caused by inaccurate financial records
Keeping your financial records uptodate enables you to know the state of your business. Without it, you really have little idea how much money you have now, or how much you can expect within the next month – or before your next bills are due. This makes it easy to come up short and begin to bounce checks and ruin your credit.
Essentials of sound money management for businesses
Keeping track of where the money is going cannot be done haphazardly. Good planning involves several steps, including the following:
- Keep accurate records
There is no substitute for keeping accurate records of your money. You need to record all sales and expenditures, and know when the bills are due. It is also necessary to know which clients owe you money, how much they owe, and when it is due.
- Evaluate the data for trends
Once your records are current, it is essential to evaluate themthoroughly. Look for trends – weeks of the month when sales are higher or lower than usual, as well as seasons that perform poorly. You also want to know if there is a month that your customers are more likely to pay late, or even skip a month.
Knowing these things can enable you to plan better. You can reduce your expenditures and marketing during slower times, and increase them when people are more likely to buy. This will give you a bigger bang for your marketing dollar.
- Create an emergency fund
Keeping accurate financial records can also enable you to set money aside in savings to compensate for the lack of sales at certain times. This will help you get through times of lower sales volumes.
- Send invoices for better cash flow
Having a good invoice system will enable you to receive more money each month from your customers. It will also let you know how much to expect each month, and will reduce the time needed to prepare your bills. Computer invoice systems can even send out automated billing notices each month, and reflect extra charges for late payments and interest. This system saves you money and simplifies the process, giving you more time for other important aspects of your business. You can easily use an invoice generator by clicking here.
You can improve your company’s finances by better money management. Invoicing is a powerful tool you can use to accomplish this goal and start seeing more money brought in each month.