When the end of the the financial year comes round, a year’s worth of business finances must be balanced and accounted for. Sound familiar? Most business owners wish they had better processes in place to manage their finances throughout the year. Now is actually the perfect time to review what you’re doing and get prepared for the next financial year.
With these 5 tips, you can take the stress out of managing your business finances all year round, from forecasting and budgeting through to balancing your accounts.
Budgeting and forecasting
The end of a financial year is a great time to plan your finances for the following year. Try to assess what you expect to spend and what you expect to earn in revenue. This will help you to prepare for costs ahead and to avoid nasty surprises. Creating a budget sheet in advance will also help you to avoid over-spending. Look at trends from the last year, including peaks and troughs, and apply any seasonality to your forecasts.
Staying on top of cash flow
Your cash flow is a fundamental part of your business’ finances. Good management of your cash flow allows you to see whether your business is running at a surplus or deficit and to act accordingly. Effective cash flow management requires good book keeping as well as a robust process for credit control. It’s also important to ensure your business stays liquid and can meet all your monthly financial obligations, from rents or mortgages to salary and utility bills.
Managing your business relationships
Speaking of credit control… Your finances rely heavily on the reliability of your business partners. If you get paid late (or not at all!) then your finances take a hit so it is prudent to do your due diligence when it comes to reviewing existing clients and assessing new ones.
It’s important to have an in depth view of the credit profile of any business you work with or rely on, so that you can protect your business from financial risk. Services such as Experian Business Express can provide you with insight and analysis at the touch of a button.
Make use of Accounting resources
If your budget allows it, then seek the support of an accountant. They can offer professional advice on how best to manage your business finances based on your specific circumstances. Knowing that your finances are being handled by a professional will allow you to focus your attention on other areas of your business.
If an accountant is out of your budget right now, then make use of the many sophisticated accounting tools and software available. Accounting software allows you to manage anything from cash flow to invoicing and tax returns. In some cases, it will also help you to manage investments or foreign currency transactions.
Reviewing your business finances shouldn’t be something that you only do once every twelve months, it should be a regular process throughout the financial year. Get into the habit of frequently checking things like your cash flow, your performance against budget and your own business credit report. This can be easily obtained through Experian and will allow you to check for any information you’re not aware of as well as ensure there are no errors.
By following these five steps, we think you’ll find managing your small business finances a lot less stressful! Do you have any tips that you could share with us?
Are you looking to minimise your business’ exposure to bad debt and make informed business decisions every day? Qualify your customers, suppliers or contractors with Experian UK Business Credit Reports.