It’s another day at your office. You decided to get a jump start on your day by coming in at 8 am instead of an hour later.
You’re here early to get a grip on your cash flow: you want to make sure the money flowing into your business balances out with how much is flowing out. Yet, despite this early start, things quickly go awry as soon as you’ve drunk your first cup of black coffee.
It starts with an urgent phone call from a client, complaining about the quality of your work or the way your staff handled their project. This is then followed by your business partner calling in sick because they pulled their lower back. After this, there’s an emergency sales meeting because a major client dropped their big account once their contract expired to go with a competitor.
You decide to eat a sandwich at your desk for lunch, but even this noble effort to stay ahead does not help much. After your hasty meal, you call the client who dropped out, arrange a meeting, then head out to their office to see if you can renegotiate a contract and win them back. Your mission is a success because your client accepts your offer to get more work done for service they were already getting at a bargain price.
However, when you get back to your office, you find a stack of documents waiting on your desk, ranging from paychecks you have to sign, bills you have to pay, invoices you have to send out, and work orders you have to approve. Then, before you know it, it’s now time to pick up your son from school.
As a small business owner, how do you manage your money when you can barely keep track of your time?
5 Simple Strategies to Simplify Finances
The solution to worrying about finding time to manage your business finances is to simplify your money management systems.
Here are 5 things you can do:
- Streamline your banking. Do you understand how much you’re paying in fees and service charges for your banking? It’s not uncommon for small businesses to be signed up for more services than they’re actually using. Get a bank analysis statement that spells out what your service charges include in your monthly statement. If you’re not using some of these services, ask your banker to streamline all the expenses associated with your account. This will leave you with more money to put to work in your business.
- Make sure you’re invoicing correctly. If you have a large number of clients, each with a different billing schedule, it’s easy to get behind in your invoicing, or, worse still, even forget to invoice a few clients now and then. Additionally, you may be sending out your invoices on time, but losing track of when they’re getting paid. Services like Chrome River are beginning to automate the process, simplifying the whole invoice management system for accounts payable. Improved efficiency is a good thing.
- Avoid the financial convenience of making small payments on recurring services. By paying small bills in one large sum, say, paying for six months or a year instead of month by month, you will probably get a discount on your overall cost, avoid late fees, and stop wasting your time handling the expense every month.
- Merge the dates you have to pay for all your insurance policies into one. Ask your insurance agent to sit down with you once a year, review all the insurance you’ll need, and then renew all your policies on the same date. This will help you stop dealing with renewals several times through the course of the year.
- Set meaningful financial goals for your company. Instead of setting unrealistic business goals, either trying too hard or not trying hard enough, find out what other companies in your industry are earning and then use that as a bench mark. Look at industry statistics on overheads and profit margins. One reason you may have cash flow problems is that you’re under-charging, not optimizing the services you could be offering, or have bloated operating costs.
Ultimately, the purpose of your business is to increase profits and decrease costs, but the only way to do this efficiently is by monitoring the inflow and outflow of your money. However, this can often be difficult since you have many other critical things in your business that demand your attention each day, some of which may need to be resolved at once. If you simplify your business money management, you’ll be able to focus on running your business without worrying about how well you’re keeping track of cash flow.