Every company, big or small, is always concerned about one thing – managing money. Here are some financial management tips to help small business owners navigate the tricky financial waters so their businesses can thrive
One of the first things that you should do is educate yourself about the various aspects of finance. For starters, learn how to read financial statements (if you don’t already know how). This is one important statement that tells you all about your money – where it originated from, how many hands it changed, and where it is.
Create a Realistic Budget
Financial budgets within a business are often treated like a chore and an unnecessary piece of paperwork to handle. This is not the case at all. Just like with a business plan that is only good on paper until the business gets off the ground, a budget at least lays out what the financial plan is moving forward.
Understand Your Cash Flow.
Calculating cash flow is one of the most important tasks of a business owner. Revenue and expenses are rarely constant in a business and cash requirements need to be planned for shortfalls, seasonal factors or one-time large payments.
Keep a Tight Rein on Accounts Receivable
Ensure that as the business expands, the accounts receivable doesn’t expand too much with it. At the very least, be careful to ensure that the average number of days that invoices are outstanding doesn’t grow over time along with expansion
For business leaders, financial management is often just another responsibility to add to a growing list. Don’t be afraid to use plans, you don’t have to stick to them but they will help you.