Business finances are fairly easy to manage when a business first launches. But, over time, things become harder. There are more lease agreements, loans, different streams of income, payroll for employees, the list goes on.
It’s important to keep a good grasp of these finances. For some, it comes easily, for others who are a little less organized, it can be a lot harder. Here are some tips for keeping a good grip of your business finances.
Know The Value Of Your Lease Payments
Some businesses have pretty small lease arrangements, others have hundreds, maybe even more. If you’re of the latter keeping track of your lease payments, as well as knowing the present value of your leases can be frustrating.
Especially since the ASC 842 guideline updates that pretty much require all of your lease arrangements to appear on the balance sheet. If you’re struggling with the present value you can use a present value calculator to save you some time.
A present value calculator will determine the present value of all of your lease payments under the new aforementioned guideline, ASC 842, IFRS 16 and GASB 87. Knowing the value of your lease payments can help you get to grips with your business finances.
Use An Accountant
If you don’t already, using an accountant can really make a difference to your business financial control. Sure, it’s another expense but using an accountant can actually save you a lot of money. It also means you don’t have to gain control of your finances yourself, you’ll have someone else to do it while you run the business.
Finding one is pretty easy, you just need to make sure it’s one you trust and has a good reputation. You may also need to look at a specialty accountant. Again, using leasing as an example, if your a lease based business you might need an accountant who specializes in lease payments etc. and who knows all about the recent lease accounting changes.
Use A Dedicated Business Account
A lot of business owners will still use their personal accounts, but that just makes it so hard to properly keep up with business cash flow. Use a business account. This way, everything that comes in and goes out is related to the business so it’s super easy to keep tabs on what’s going on.
Most banks will offer business accounts. You just need to look around and work out which is the best for you. Some have better perks, like extended overdraft facilities etc., whereas others offer more perks. While you use a dedicated business account, you should also use a dedicated business card.
If you’re spending on the same card everything will be easier to track. Also, you can gain points which you can use to reinvest into your business by buying equipment etc. American Express offers good points systems for business cards but other providers do the same thing so you just need to shop around.
Draw Up A Budget
Again, this is something you’d do with personal finance, but you can do it with your business too. Draw up a budget and check exactly how much you pull in and pay out each month. It’s a simple way of working out how profitable your business actually is.
Doing this makes it easy to make savings if things get tight, because you know what you can cut and what you can’t. If you don’t have a budget this becomes a lot harder. It doesn’t have to be anything special either. Simply using excel will do.
There are many free budget templates online that you can download and use, so you don’t need to draw up your own budget sheet. If you’ve never done this before then an easy two column sheet can give you a wide view of your finances and enough to go on to make improvements.
Do your own accounts and don’t want to use an accountant? Then use accountancy software instead. Software can really help you stay on top of things. There’s a multitude of software out there that you can use if you want to. It depends on the level of help you need or want along with your technical ability.
If you’re not sure what kind of software to get, first, check on how much of your time you’ll have to dictate to accounting. If you don’t have that much time, then getting the software might not be for you. Sure, it’ll save you a small amount of time, but not a large amount as you’ll need to learn how to use the software too.