Most small businesses cannot afford to hire a professional accountant or even a bookkeeper, but that doesn’t mean they can just ignore their finances. Records still need to be kept, reports still need to be reviewed, and cash flow still needs to be monitored. It doesn’t need to be a difficult process, but it needs to be done on a regular basis.
Here is some sound accounting advice for small business owners:
Use client invoicing software
You can make all of these things easier by taking advantage of client invoicing program. It will make it easier to update your records, it will save all the details of your transactions, and it will quickly generate the important financial reports that you need to review. Client invoicing software is a convenient and efficient way to manage all of your accounting, especially if you are trying to manage it on your own.
Work on techniques that will help you manage your cash flow
One simple technique is working with your suppliers to ensure that everything is not due at the same time. Many companies will request that monthly expenses are paid on the first of the month, but that doesn’t mean they can’t be paid earlier. Spread them out over the course of the month, so there is never a sizeable lump sum due at the same time. You can also work with your clients to ensure early or timely payments by offering incentives or sending reminder notices. Make sure that the money you are owned is coming in as quickly as it can, so you don’t have negative dips in your cash flow.
Set aside an hour each week to update your records
If you don’t have a bookkeeper or accountant updating your records, you will need to make sure they are still be updated at least weekly. Don’t grab a shoebox or a file folder and start stuffing it full of all of your receipts with a promise that you will enter them into your accounting program at the end of the month. The bigger the stack of bills becomes, the less likely you will want to deal with them. By spending only one hour each week, you should be able to enter all of your expenses and income into the program, so the stack never accumulates.
Use adequate details
Whether you are describing an item on an invoice or filling in a deposit slip, make sure that you include all relevant details. If you write “cash deposit” on every slip, you won’t know the origin of the cash if the question arises later on. Just in case you need to refer back to something after weeks or months have gone by, it is necessary that you have a clear and complete description.
Create a schedule for reviewing your financial reports
There are certain reports that you should be reviewing weekly, monthly, quarterly, and yearly. Using an online or physical calendar, assign a specific day to each of these reports. For example, you could review your cash flow statement every Monday, your financial statement on the first Friday of every month, and your income statement the last Wednesday of each quarter. You can review them more often that your schedule specifies, but having a set schedule will ensure that you are at least reviewing them regularly.