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A fine financial management structure depicts how an entrepreneurship business is doing and why. A well-organized system for bookkeeping is critical to establish procedures to manage and control finances. Financial management is the system to place digits to work for a successful business. Financial management is used to formulate the decision that improves business operations and make it more successful.

Advantages of Financial Management

Financial management makes you a better macro manager. These are the advantages gained if you ace financial management:

  1. Turning your business with proactive management.
  2. Debts for business are easily approved.
  3. Quick formulation of an efficient financial plan for sharing with investors.
  4. Accessibility to good tools for making critical financial decisions.
  5. Investing money on fixed assets wisely.
  6. Efficiently maintain inventory and accounts receivable, develop working capital for short-terms.
  7. Clear knowledge of growth orientation and setting goals for sales.
  8. Improvement in margin of gross profit by effective pricing of your services and cutting the effective costs of direct labor, supplier prices. All of these measures affect costs of products.
  9. Cutting down of administrative expenses and general costs plus a more efficient business management.
  10. Planning for taxes.
  11. Planning in advance for worker settlement.
  12. Executing sensitivity analysis with the diverse fiscal variables involved.

Developing a System for Financial Management

The first step is to create the financial statements. For proactive management, you need a plan in which a monthly generation of financial statements is done. This statement needs to include:

  • Income statement
  • Balance sheet
  • Cash flow statement

All of this information can be extracted from bookkeeping, invoices, bank statements, and invoice receipts.

Master Financial Business Management with these 6 Tips from the Best Entrepreneurs

1. Profit Doesn’t Characterize Success

In financial management for entrepreneurs, profitability doesn’t indicate success. Rather, growth indicates that a business is excelling and on the right path. Profit is the ultimate goal for sound entrepreneurs but growth of the business is critical to determine how the business is doing.

2. Identify what Metrics Affect the Business

Identify the financial metrics which are universal and applicable to every business. Closely look into your specific business and identify specific metrics that affect your particular company. The universal metrics are revenue, operating expense, money on hand, gross margins, etc.

3. Don’t Drop Capital on Dumb Mistake

Efficient bookkeeping will help you in assessing your mistakes and where you are losing money. Identify all of the areas where money wastage is avoidable because early profits are more worthy in entrepreneurship.

4. Carry Out a Cost Review

An audit of the business should be done because you cannot monitor all of your employees all of the time. This should be done at least quarterly to have a close look on your expenses and how to justify them.  Audits also reduce the risk of fraud.

5. Make your Time Count

Entrepreneurs have to do many tasks themselves due to small budgets. They have to maintain bookkeeping, run payrolls, etc. Entrepreneurs do things themselves to save money but, in reality, this time should be spent in growth of their business. Use technology to save your time.

The monthly financial statement can be generated through the latest automated software package especially designed for accounting. These are to be used with your manual bookkeeping system. To save your time, you can also employ internal or external bookkeepers to provide you with monthly financial statements.

6. Build a Method to Track Success with Time

Every entrepreneur must have a system to assess success over time. This system is used to validate the financial management system and to reset goals, if needed.

Conclusion

To grow a successful business as a sound entrepreneur, you must have a deeper understanding of your financial management system. Sabrina Parsons, CEO of Live Plan, believes “budgeting, forecasting, and planning are not just for start-ups. If you do this for an ongoing business, you’re going to grow 30 percent faster, you’re going to be more successful and your numbers are going to mean more.”

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services 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 and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Woman wearing white apron and rubber protective yellow gloves, holding rag and spray bottle detergent. MORE FROM THIS SERIES IN MY PORTFOLIO
A spring cleaning refers to the ritual cleaning of homes in the spring. In the winter, everything is packed due to the brutal nature of the cold weather. When spring comes around, people open their windows, doors, and clean their homes out completely.

In business, this term ‘financial spring cleaning’ refers to the actions which are performed to streamline all aspects of the business. In this routine, you are primarily focused on increasing sales, revenue generation, and managing daily operations. You should take the time to refresh your finances.  Notice of pending invoices, old bills, and a revision of business plans should all be examined to take immediate and necessary actions. All of these steps will not only save the business from loss and complications but also benefit you greatly in the long run.  So, how do you open your proverbial windows and doors to rid your business of the clutter?  Let’s take a look.

Re-examine payment policies:

Increasing cash flow is the key to grow a business and enjoy a debt-free company. A small business owner should sit with their accountant with bookkeeping records. From transactions and customer history, determine the number of customers whose payments are pending and for how long. Generate an aging table for accounts receivable to know the period for which each payment is pending. Categorize the customer according to the time of outstanding payment, i.e. 30 days, 90 days or 120 days. This aging table is used to collect outstanding payments, to evaluate payment policies, and have a solution for the customer who is habitual in making delayed payments. If you get payments from a customer early, you may be saved from borrowing money or going into more debt.

Assess pricing models:

The other crucial part of a financial spring cleaning strategy is an assessment of your pricing. The pricing of your small business should be comparable to your market competitors. Pricing should be at levels which are profitable and you are not at a loss. But in fact, pricing is a difficult area for many small businesses. Many market conditions affect pricing and it is not easy to manage price, but the best strategy is to keep pricing of products and services comparable to your market competitors.

Review cash balances:

The coming of summer characteristically causes many businesses to postpone their huge purchasing decisions until the fall. This is typically a crucial time for small businesses because they have to pay fixed expenses like utility bills, office rents, etc. whether revenue is falling and you are at a loss. During this slow business period, you must prepare yourself well for the fall, maintain enough cash balances to get through successfully until your normal business is back. Reviewing of sufficient cash balances is a significant step for financial spring cleaning. If you contain adequate funds, it’s sensible to go for a working capital loan or a new line of credit.

Discover opportunities for re-negotiations:

Almost all business need to do long-term contracts. These contracts may include leasing a costly piece of equipment long-term instead of purchasing it or making a long-term service contract. All of these agreements are done to save money, sometimes a huge amount of fixed costs are allocated each month to pay for the fees of these contracts. These contracts should be reassessed and opportunities for re-negotiation should be explored so that money can be saved.

Analyze your subscriptions:

Many small business subscribe to different types of software. Some of them are only required for a specific project or a limited time, but due to hectic business routines, you don’t remember to cancel that subscription after it is no longer needed. In many cases, these are automatically renewed, as software companies have your credit card numbers. Each month, subscription fees are deducted and you may not even notice. A financial spring cleaning provides you the opportunity to re-evaluate all recurring expenses and cancel such subscriptions which are not in use.

Final thought:

Just like spring cleaning is necessary for cleaning your home and enjoying the refreshing feelings of doing so, a financial spring cleaning is also a good step to refresh the productivity of your small business and improve it’s financial health. To keep your business prosperous, a periodic and detailed review of the business and making adjustments accordingly is necessary.  And, good news!  It doesn’t have to be spring for you to start!

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services 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 and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

trouble with payroll - Complete Controller

Making payroll is perhaps the most important task in a business. If a business is running short on funds to meet payroll, the priority must be to secure funding from an alternate source. Here are five common payroll problems and how to solve them. Check out America's Best Bookkeepers

  1. Hiring Outperforms Incomes

Often small companies will experience rapid growth, and a business owner feels pressure to hire more employees. In some cases, a small business will not have had time to build up revenue to cover the added staff. The business owner must use the current working staff on the payroll to do better by coming up with smart strategies.  The expansion of staff should happen after the business has built enough steady income to meet payroll.

 

  1. Temporary Staff is Needed

If your business wins a project, and you need more staff to carry out the task before the deadline, you have to increase the payroll of your company. A temporary project also increases the expenses in a company. This is a common scenario in construction companies, landscapers, and designers. This process is predictable and calculable. You must know when to hire new staff, how to manage their payroll funding, when the revenue builds up, and how to overcome expenses until your revenue is generated. Prepare in advance and plan out the finances and other issues. You can take money out of the last season of your business or borrow money for the payroll funding until the next season yields revenue. Check out America's Best Bookkeepers

 

  1. Over Staffing

At start-up, business owners often hire more employees than are required. These owners can get in the habit of hiring staff for any new task that arises instead of dividing the work among the existing staff. Before hiring another team member, work on other options such as outsourcing contractors, finding automated ways for tasks to reduce the burden on the team, and reorganizing existing teams.

 

  1. Delayed Payments by the Customers or Discounts given to Customers

Many customers delay their payments. In a small business, if you are running short on income, quickly generate invoices and send them to customers immediately. This will minimize the delayed payments by your customers, to some extent.

Offer them discounts if the payment is made within a given time frame before the deadline. Always encourage your clients to pay quickly.

Use Invoice Factoring for typical slow-paying customers. Check out America's Best Bookkeepers

 

  1. Misconstruing Payroll Taxes

Carefully calculate the payroll taxes. Otherwise, IRS will send notice to you that you owe your employees money.

A taxpayer can request the IRS to make a negotiation on payroll taxes for small businesses and settle payroll taxes lesser than the full amount.

 

Conclusion

Payroll problems are a common issue in small business setups. If not carefully planned, the credibility of your business becomes uncertain due to payroll funding problems. Small business owners should strategically manage their payroll funding by avoiding common mistakes.

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