Better budgeting and managing of your cash flow is important to the success of your business.
It’s imperative to know the precise amount of your income, expenses and savings to get a clear picture of your business’ current financial state, so you can amend any mistakes and plan for growth and prosperity.
Making a budget is the best way to ensure that you’re managing your finances well.
This week, we’re sharing some tips that will help you manage your business’ cash flow.
Step 1: calculate your income
Make a comprehensive list of all the income you receive periodically and from where it comes.
Determine your sales figures and other revenue raising methods and calculate that into a weekly, fortnightly or monthly total.
This information is important, and vital that you make accurate, because it will impact all subsequent budgeting measures.
Step 2: calculate your expenses
Your business’ expenses could be a mile high and seem impossible to track or calculate.
It’s really important to gather your bank statements and receipts together to get a clear, comprehensive view of your business’ expenditure.
And by comprehensive, we mean as detailed and thorough a list as possible.
All your bills, wages, and variable expenses should be listed in a spreadsheet.
Step 3: calculate your savings
How much money could you be saving? Possibly a more important question: how much money are you actually saving?
This is such an important question and you should talk to your accountant or bookkeeper for valuable advice.
You should have some goals that you should be saving for, to help your business grow further.
Whether that be a some office equipment, a bigger office space, or a new employee.
With the right advice, and the right strategy, you’ll be on the right track to success.
Step 4: create and stick to a budget
Once you’ve tracked your income, expenses and saving the final big step is to follow through on that budget, and stick to it like glue.
You might notice in the first month that you might have been a bit too optimistic and have to adjust your budget accordingly.
You’ll also notice there’s nowhere to hide once you start a budget and all those superfluous expenses will be glaring you in the face.
It will make things so much easier, like cutting on your spending and avoiding those bleak periods of no funds.
And when it comes to deciding on changing your expenses, a budget will help make things very clear to you.
Step 5: get a bookkeeper to manage financial transactions
Do you have a good bookkeeper? How do they work with your accountant?
The relationship between a bookkeeper and an accountant is so important: it should be seamless, so the accountant’s “bigger picture” tasks are constantly aided by the bookkeeper’s day-to-day tasks.
A bookkeeper, as the title suggests, keeps your books. What does this mean?
A reliable and qualified bookkeeper will:
- Manage financial transactions and data entry
This time consuming job must be done with the utmost accuracy.
- Record and reconcile expenses
Painstaking? To you, maybe! But that’s what we love to do!
- Send invoices on time and follow up on late payments
You and your business should get paid on time for the service you provide! We will help manage money that is coming into the business.
- Calculate and manage payroll
This includes super contributions and tax calculations.
Choose a registered BAS agent who abides by Australian law and is up-to-date on best practices.
The last piece of the bookkeeping puzzle. We help you understand how your business is performing.
Maximum Business Solutions is a team of qualified bookkeepers in Melbourne helping improve a business’ financial transparency. Need some bookkeeping support? Organise an obligation-free consultation with us today!