The Ultimate Guide for Managing Your Business Finances
Managing your business finances is the key to keeping your company operating smoothly. You can͛t keep the lights on and keep your people working if your money winds up tied up so you can͛t use it, after all. If you͛re struggling with financial management, you need to understand both what to do to give yourself the information you need, and also when to ask for help from an accountant or another money management professional.
To start with, you͛ll need to be able to prepare and review four major documents. Your balance sheet is like a checkbook register for all the money coming in and going out of your business, and maintaining it accurately is the key to understanding whether or not you are making money. Next, you͛ll need an income statement. This summarizes your incoming moneys from different sources, allowing you to better plan how it needs to go back out when you manage your cash flow. That allows you to prepare your cash flow statement, and then your income projections help you understand upcoming bumps in the business cycle based on past trends and known factors.
Altogether, these reports provide you with the information you need to make good choices about financial management. If you don͛t have the time or resources to prepare these all yourself, it might be time to hire an accountant. Leaving it to a professional can streamline your operation and give you the information you need without a major investment in an in-house accounting department. You can also learn to do it yourself using software like QuickBooks or Quicken. Most entrepreneurs find a balance between the two extremes, taking on some aspects of their own finances themselves and hiring a professional to check for errors and prepare more complex tax and money management documents.
If you combine diligent data collection and professional oversight, your company͛s financial management can become an easy part of your overall strategic approach to growth. All it takes is proper organization and a good sense of when to outsource your efforts to professionals who can deliver the results you need efficiently. Having well-managed finances will also make it easier for you to access financing when you need loans or new credit lines, so you won͛t want to wait to start on organizing your company͛s accounting. Make sure you develop a plan for getting your finances right before you move forward with your business planning, and that way you will get started on the right foot.