Every year you have the best intentions of keeping the finances in order for your small business and perfectly organized but by the time summer rolls around, paperwork has piled up and nothing is on track. Sound familiar? It takes time and much effort to untangle and sort through disorganized financial records. According to our Summer 2018 Small Business Report, the top internal challenge small business owners face is finding time to accomplish everything they need to at the end of each day. As hard as it can be, there is a way to keep finances organized without eating into the precious time you need to run business operations. Here’s why and how you can keep track of the most basic yet crucial aspects of your business.
An effective means of organizing your finances allows you to understand your cash flow as well as amounts owed by customers and how much you owe your vendors or suppliers. On the revenue side, there is cash-based sales and credit-based sales. Regardless of the type of transaction, it’ s helpful to track sales activity and even trends with pre-numbered sales invoices. With this system, it’s easy to see amounts collected, accounts receivables and quantities sold. There are various software packages which help track sales activity. You can also get a summary of unpaid invoices to monitor customer payment activity and better manage the credit you provide to customers. At a minimum, you should review these unpaid invoices on a weekly basis. Using a program like QuickBooks enables access to viewing expenses and for all purchases.
With regards to purchases and expenses, consider using a credit card. A credit card provides a straightforward summary of expenditures and reduces the number of payments you should make. You can also review online activity intra-month to help control expenses. For unpaid purchases that are invoiced and cannot be paid for by credit card, these should be kept in an open invoice file. This file should be reviewed daily to ensure all invoices are tracked and paid promptly. Many credits card provide year-end statements that categorize spending, and the reward is a nice perk as well.
If you have substantial payroll obligations, the best advice is to farm this process out to a payroll service. A service will ensure all payroll taxes are correctly paid, allowing you to only focus on providing sufficient funds in a payroll account that they will draw upon each payday. Not sure if you need to outsource? If any of the below describe your payroll situation, you most likely do:
- You have hourly employees who work part-time, varying hours or earn overtime.
- Your small business has many turnovers
- Your small business is seasonal with large swings in staffing
- You are paying payroll taxes in more than one state
Make it a Habit
The most important aspect of staying in financial control is to make this a part of your daily process. Set aside a time at the end of each day to review both sales and purchase activity. Developing this habit will help monitor cash flow and facilitate business growth. If it still seems overwhelming, consider having an accountant come in quarterly to provide a balance sheet and income statement. Besides creating a snapshot of how you are doing, having a system in place will also keep you focused on maintaining clear and complete records. Your accountant can also assist in filing any required tax deposits.
We know obtaining working capital is one of the most significant challenges you face as a small business owner. If you’re looking for a flexible and easy way to get cash flow for your business without the hassle, we are the perfect business partner for you. Want more information? Call us at 1-877‑850‑0998 to get started today.