Many small businesses fail because they do not focus enough on bookkeeping. Maintaining proper accounting records allows you to monitor cash flow, manage your debt, and ensure the health of your company finances.
Here are some basic accounting strategies you can implement to help stabilize your small business and spur continuing growth.
Collect Payments From Clients
You may look at your stack of invoices and think that your business is thriving, but accounts receivables do not boost your cash flow until the cash due on them is collected. Be sure that your clients are aware of your billing terms and deadlines. Make your invoices clear and easy to read. Send out notices of upcoming payments due. Your accounting records should include a system for tracking accounts receivables so that you always know when they were sent out, the amounts that are due, and the deadlines for payment.
Record Expenses Daily
Instead of compiling expense records every few weeks, keep track of your expenses every day. This process allows you to monitor your finances more closely and also to forecast costs and prepare budgets for upcoming weeks.
Target a Minimum Income
Don’t simply make do with whatever income your small business receives every month. Instead, consider your needs for adequate cash flow and continuing growth, and calculate a minimum income that you can set as a monthly target. If you realize that you’re falling short of your goal, you’ll work harder to catch up to ensure your company’s financial health.
Obtain Professional Assistance
When starting up their businesses, many entrepreneurs take on a variety of roles, including bookkeeper. However, as your company grows, it’s worthwhile to get help from a professional accountant to maintain your books. If you can’t afford a full time accountant, consider taking on a part time independent contractor. Alternatively, use state of the art accounting software that’s sophisticated enough to separate your borrowed finances from standard income.
For more tips on small business accounting, get in touch with Value Capital Funding.