Running a business is never easy at the best of times, but due to the coronavirus pandemic, it has suddenly become a whole lot harder. Costs need to be tightened as revenues dwindle and sometimes whole new avenues need to be explored just to turn a profit. In order to concentrate your time on the important aspects of running a business, namely making money, it is important that you manage the finances of your business in an as efficient way as possible. Here we are going to breakdown all the financial aspects of a business and look at how to manage them so that you can help drive your business forward in these difficult times.
Manage Your Accounting
One of the most important aspects of any business is keeping tabs on the cash flow, and this involves having great accounting software that is easy to use. Sometimes it is best to hire an external bookkeeper to keep track of everything especially if you are a business that has many accounting entries, but if you are a nascent startup then it makes sense to keep an eye on costs by handling your basic accounting yourself. There are so many apps and programs out there that it is difficult not to find one that works for you.
Fixed costs are often your biggest business expense so it is absolutely crucial that you review your costs on a regular basis. You can often be tied into contracts with utility providers for much longer than you initially planned for, so always try to renegotiate the terms. Similarly, with suppliers, make sure you shop around so that you can play one against another in order to drive down prices. In the current climate do you really need a city center office space? If not, consider relocating your office to a suburb to take advantage of lower rents, or you could even consider closing your offices and have employees work from home. All these things need to be analyzed regularly so that your fixed costs are as low as they possibly can be.
Use a Payroll Service
Keeping track of all your employees and their payroll can be daunting at the best of times, so it can be really advantageous to use an all in one payroll platform that also allows you to handle your HR duties at the same time. There are many time-consuming aspects of running a business and the company payroll is certainly one of them, so use an integrated system that can track pay raises and bonuses, and that can also handle holidays, taxes, and benefits in a timely manner. After one month of using a payroll system, you will notice the benefits and the extra time that you have on your hands to concentrate on making money.
Just as important as keeping tabs on your business costs, it is also important to keep an eye on your revenues otherwise you will never make any money! Invoicing should be done on a regular basis and payment terms should be reviewed so that they come into line with the rest of your suppliers, helping you to manage your cash flow efficiently without having to take out costly business loans. Invoices should be referenced well so that you can follow up on their payment status regularly to make sure that payments are never overdue, and use a template system that will help cut down on the hours that you will spend generating the invoices.
It is extremely important to have forecasting models for the future of your business, especially the revenue streams. If you have no idea what money is coming in in the weeks and months ahead, how can you plan for the future and expect your company to grow? Forecasting should be done on a weekly basis so you always know the exact financial position of your business. It will also protect you from the downtimes because you will be able to prepare ahead and make savings when necessary, especially if your business is dependent on the seasons and the time of the year.
As we have learned, it is paramount that you keep on top of your finances if you want to run a successful business. You must have an excellent accounting system that can keep up with your cash flow and use a payroll service to reduce the time and costs associated with paying your employees. Review and re-negotiate your supply contracts and business costs regularly and make sure that you invoice in a timely manner to keep money coming into your firm, and forecasting will allow you to keep an eye on the general health of your business. Follow this guide and the financial health of your company will improve for years to come.