In some ways, managing your finances is a bit like passwords. They are hard to track, can sometimes be frustrating (“Wait, I’m sure that was my password??”) and there are times when we wish we didn’t have to manage either. There is, however, one big difference. Password management is needed to protect you from criminals. Effective financial management, however, is a great way to make sure you grow your business, profits and wealth in a positive way. Passwords might unlock your screen on your computer, but managing your finances is undoubtedly the key to success for your business.
And, with that in mind, here are 10 top tips for managing your bookkeeping, so that you can achieve greater success in your business:
1. Integrate invoicing into your customer delivery process
Whether you run an eCommerce business or you deliver face-to-face services, it’s important to make sure that you have a process that integrates delivery of the product or service and taking payment. You might request payment online before delivering your product, or you might complete a project for a client and immediately issue an invoice. If you don’t include invoicing or taking payment in your process, then there’s a risk that you won’t ask for the money that you have earned – and deserve. It might sound like a trivial thing, but so many businesses don’t ask for payment, especially when they are busy, and this leads to lost revenue.
2. Use incentives to encourage prompt payment
There are some customers that always pay promptly, and then there are those you have to keep on chasing, right? The annoying part is that it takes time to track outstanding payments and chase clients, which is why using incentives can really help. An incentive can include a discount for early payment, or it can be an additional fee for late payments. The latter one might not sound like an incentive, but it works as a client thinks twice before delaying payments on a regular basis. Incentives can also include ways to make paying you easier. If you have a customer that pays you on a weekly or monthly basis, then consider getting them to set up a direct debit so that you are paid regularly, for example, on the 10th of each month. At My Numbers Guy, we practice what we preach- we require on-going bookkeeping clients to be on an automatic payment schedule.
3. Chase outstanding payments
This might sound obvious after reading the previous tip, but many businesses struggle to survive, simply because they deliver their services and then don’t chase invoices that aren’t paid. Sometimes customers genuinely forget to pay, or the invoice gets lost in the spam folder (or somewhere else). A gentle reminder that the payment is outstanding is a great way to make sure you receive payment for the work you have put in for the customer.
4. Keep a close eye on cash flow
The long-term focus for any business is profit, but many businesses struggle to grow because they haven’t kept a close eye on their cash flow. Running out of cash and not managing finances properly can restrict the progress a business makes. If you struggle to monitor your cash flow, then set up a process that uses accounting software or a spreadsheet to track income and expenditure. Better still – use a professional bookkeeper who can help you stay on top of cash flow and your forecasts.
QuickBooks is a great platform for managing your accounts, and it has an easy, simple-to-understand dashboard that allows you to quickly view your outstanding payments as well as what your current cash flow situation is. At My Numbers Guy, not only are we QuickBooks ProAdvisors, we are also wholesalers for QuickBooks Online. So, if you sign up for QuickBooks Online through us, then you will get all of the support you need, and at a lower price!
5. Understand your results
Finances include a lot of gobbledygook for many of us, and understanding your results is key to effective bookkeeping. We don’t mean just understanding your annual report once a year. We mean understanding how you have performed on a monthly and quarterly basis. If you understand your business performance and results on an ongoing basis, then you can adapt to any issues that arise and can avoid any risks such as running out of cash flow or heavy losses.
6. Set time aside
Don’t leave expense receipts and invoicing until some point in the future when you might have time. It risks not getting your bookkeeping done, or errors as you try to work out what each expense was for. Business owners often forget to claim for expenses such as mileage because they didn’t track it at the time. By the way – if you need a good mileage tracking app, we recommend MileIQ which is completely free to use. Whether it’s to enter your expenses and send out invoices or to review your financial situation, it makes more sense to put time aside on a regular basis to stay on top of activities. If you regularly struggle to find time, then consider outsourcing your bookkeeping to free up time.
7. Stay up to date
When managing your finances, you could be losing out on tax breaks and expenses that you aren’t aware that you can claim. Make sure to stay up to date with the latest regulations regarding business finances. It also reduces the risks of fines for not complying with the rules that you possibly didn’t know about or forgot to comply with. If you are managing your own bookkeeping, then remember that it’s up to you to make sure you manage your finances correctly. Your accountant might tell you that you have done something wrong, but it could be too late if they only review your finances once or twice a year.
8. Automate as much as you can
Some parts of bookkeeping can be a tedious process, that needs regular effort. If, however, you can automate parts of the process, then you can free up time and make life much easier. There are various apps that you can use to track expenses and even take pictures of your receipts, for example. Modern accounting software also allows you to connect your bank and credit card accounts, then you just need to categorize and reconcile the accounts rather than having to manually input transactions. This leads us nicely to our next top tip…
9. Use professional accounting software
Spreadsheets have become more advanced in recent years, but they still don’t come close to the benefits of using professional accounting software. Using the right software can save you time and money – and reduce the risks of making mistakes. It’s also a great tool for collaborating with your bookkeeper or accountant as they can access your data and work with you to make sure that everything is running smoothly. If you aren’t sure what professional accounting software to use, drop us an email. We would be happy to discuss your options with you. There are some great free software programs out there, like Wave, which is a great starter software, depending on your business. But we can also save you money on your subscription if you decide to start with QuickBooks.
10. Outsource your bookkeeping!
Our final top tip for managing your bookkeeping is by far, the most valuable tip.
Small businesses don’t have an endless amount of time available, and the more time a business owner or manager spends on managing the finances, the less time they have to focus on what they are good at – whether that’s product design, marketing or business growth activities, for example. Outsourcing to a professional bookkeeper can cost as little as a coffee a day and can save you hours every month. It also ensures that your finances are managed properly, without the risk of errors that a busy manager or business owner might make when trying to juggle activities. At My Numbers Guy, we also work with Gusto to manage payroll and we manage the payroll process on behalf of our customers.
Time to get professional help?
If you are ready to get help from a professional bookkeeper, give us a call or send us a message at My Numbers Guy today. We come highly recommended and would love to have an initial chat with you to see how we can help!