5 Money Management Tips to Help Avoid a Deficit

Business Money Management - Complete Controller

Managing your business’s finances is not easy. While operating your business, the company can lose money if it is not managed correctly. From production to marketing to paying your workforce, every aspect of your business requires some financial investment. If not managed properly, your business can quickly run out of money and push it into a deficit from which it may not recover. Here are five money management tips to help you avoid or weather a deficit. Check out America's Best Bookkeepers

Prepare a Cash Flow Plan

A cash flow plan is used to estimate the cash inflow (receipts) and outflow (disbursements) over a period, then estimating the cash balance at the end of that period. This cash flow plan must be as accurate as possible. It will help ensure the business is spending correctly and that there is money to pay salaries, operation needs, and have cash on hand for emergencies.

The cash plan only includes cash transactions and estimates. It is not to be confused with an overall company budget, including lines of credit, credit cards, bad debt expenses, inventory, or any other non-cash items on the budget.

Identify Financing Needs

A financial plan helps your business run in the right direction. It will keep you aligned with your goals and end products. When you plan your expenses, you spend accordingly. Furthermore, plans give you an idea of your financial needs; and where you spend most of your money. Check out America's Best Bookkeepers

After you identify your cash flow and then your financial needs, you may need to consider financing. This financing could be through investors, bank loans, business savings, or an increase in sales.

Hire a Professional

Suppose you are having difficulty managing your company’s finances and making a cash flow plan and financial plan to identify deficits. In that case, it may be time to hire a professional financial consultant. A financial consultant will help you identify the cash flow and other financial issues and then make recommendations about correcting these deficits. When it comes to your business, money management can be a challenge, so don’t hesitate to hire a professional before it gets too late to turn things around.

Once you have hired a financial consultant, be open to the recommendations as some of them will be difficult to execute.

Communication with Shareholders

If you have a cash flow problem or other deficits in your budget, it may be time to talk to your shareholders and investors. It would be best if you communicated downturns and deficits to your shareholders early for two reasons. One is that they should have no surprises regarding what is happening with their investment in your company. Two is that they may invest more capital into the business if it looks like that extra investment will turn the business around and make them the investment back quickly. Check out America's Best Bookkeepers

Negotiate

Another viable option is to negotiate directly with customers to be paid in advance. You can then offer them a discount in exchange for their advance. Conversely, do not hesitate to pursue payment from customers who have late invoices. You can also negotiate directly with your suppliers to obtain an extension on any payables you have with them.

If you have a bank loan, this is another negotiation area to pursue while you get your finances turned around. If you have been in good standing before this downturn, they will likely negotiate deferred or lower payments.

Conclusion

Managing your business’s finances can be a challenge, especially when it comes to having times of deficit. Before you get to those times, you can do some things to help lessen the deficit and pull through it easier.  These five money management tips will give you a strong foundation to avoid or weather any financial storms that come your way. There is no way to guarantee your business won’t have difficult times financially. However, implementing these financial safeguards will keep you in business so you can not only come back from a deficit, but you can come back strong and thrive.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers