Whether you’re running a small business startup or an established company, one thing is for sure. You will need to ensure proper management of finances to stay in business and grow. This means managing a broad range of financial aspects, from budgeting to timely invoicing, prompt payments, and accounting. It is often a huge undertaking, which is why business owners employ managers and accountants to take charge. Here are some tips on how to manage your company’s finances more efficiently.
1. Embrace Bookkeeping and Accounting Technology
Alongside accounting, proper bookkeeping is among the fundamental things to ensure efficient financial management in any business. With proper bookkeeping principles and processes in place, it becomes easier to keep track of every coin earned or spent in the business. It also makes it easy to pay taxes as you assess and keep an eye on the financial position of the company.
It is true that you will need to work with a professional accountant from time to time depending on the size of the business. However, having reliable bookkeeping and accounting software makes this a lot much easier. A professional bookkeeping tool helps ensure that your financial records are in good order at all times, thus making it easier to manage your money movement.
2. Stay Abreast of the Exchange Rates
If your business involves transactions in foreign currency, one of the best things you can do is invest in tools and resources that help you manage FX risk. As vividly explained by the folks over at OANDA, this not only helps you save money but also allows you to stay compliant with financial regulations. The best exchange rate API tools will give your real-time information, plus you get access to historical data that can be used to make predictions or future business decisions. You also get access to FX rates in real-time, average exchange rates, and forward rates, among other crucial and insightful information.
3. Plan Ahead
When it comes to the financial aspect of business, there is a need to plan ahead of time. Even as you plan and budget for the short-term needs or objectives, it is helpful to be futuristic and think about your business finances a few years from now. Having this mindset will keep you ready for what’s to come and even inspire your company’s growth.
4. Keep an Eye on ROI As Much As Your Expenditure
Cutting costs is a popular term in the world of business. While it is good to keep an eye on your expenditure to avoid overwhelming your cash flow, it also pays to be keen on your ROI. This approach can help you determine which investments are worth the risk and the effort, as well as the ones that should be dropped. This means evaluating each of the major expenses in your company to find out the expected return on investment before you actually incur it. This way, you can cut back on expenses that do not pay off and maximize on those that bring in good returns.
5. Borrow When You Must
When running a business or startup company, it is hard to stay completely away from loans. Your business’s growth may depend on borrowed money in various ways. For instance, you may have to approach a lender for operating capital to pay workers or settle supplier invoices as you wait for your own invoices to clear. You may also need some cash to expand the business by acquiring new equipment, getting a new warehouse, or extending your office space. The possibilities are endless.
If a loan can help bring in more cash or keep business processes going, there is no harm in taking one. However, be sure to conduct thorough market research to find out which borrowers have the best rates. Also, ensure you stay up to speed with loan repayment to avoid late fees and penalties. These could be very expensive in the long run.
6. Maintain Good Business Credit
As a company grows, it is not uncommon to encounter new objectives, goals, and challenges too. For instance, you may need additional insurance coverage, procure new commercial real estate space, or even get a bigger loan to fund expansion. Pursuits like these will often require you to have a stunning credit score as a company and individually. Borrowing smaller loans and paying them off in time, for instance, can help build good credit for your business. Also, have one or several checking accounts and ensure they stay active. Accepting various modes of payment can also help build credit in a way.
Finally, do not forget to pay yourself as much as you need your company to grow. You need to compensate yourself with priority just like you do everyone else. Apart from having a salary and allowances, advancing your studies can also be a way to pay yourself. All the same, managing your company’s finances should be easier with the above few tips in mind.