Many business owners are not equipped to survive years of hard work and achieve overall success. One of the main reasons is the lack of funding. For many small and medium business owners, managing finances is one of the most difficult tasks.
Poor accounting practices leave business owners in the dark about their financial situation. While in many businesses this is a role filled by the Chief Financial Officer (CFO), in a small to medium sized business this is just one of the many hats a business owner needs to wear.
Business owners make sacrifices in life, take risks to pursue their dreams and pursue their passions.
It is essential that they have the information they need to ensure that they can focus on their business and make a leap into the future.
Here are four sure-fire tips for keeping your business financially healthy:
- Separate business accounts from personal accounts
Dedicating an account to the income and expenses of a business is essential to ensure that personal and business expenses are tidy.
This is also useful when it comes to tax season and saving money. If an accountant or bookkeeper bills by the hour, having them stick to their work finances instead of managing personal expenses will save them time and money for the business. A detailed business account also helps in managing and projecting cash flow.
2. Track company expenses
Sustaining the bottom line is not just about increasing sales and revenue, but also controlling expenses.
Tracking and limiting spending will automatically increase profits and also bode well for tax planning. This not only provides a clear picture of the company’s financial situation, but also cuts costs and potentially increases tax breaks.
3. Automate yourself: find good accounting software
Good accounting software that can grow with a business, preferably from a vendor that also started out small and understands the challenges of that market, helps a business owner keep a finger on the financial pulse of the entity. .
The introduction of cloud-based accounting software has also made the costs of this service more financially viable. Technology has the ability to automate and speed up business expense calculations such as taxes and payroll and ensure their accuracy. By automating accounting processes, this will allow staff to focus on other activities.
4. Precise invoicing and collections
Ensuring that billing is accurate, delivered on time and up to date is a critical part of financial success. Using an automated accounting system allows you to stay on top of who and when to pay. It also ensures that the cash flow of the business is always kept healthy.
Daryl Blundell is Managing Director of Sage SSB (Start-up and small business) Accounting South and Southern Africa, made up of Sage One and Sage Pastel Accounting
Distributed by APO (African Press Organization) on behalf of Sage.
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