When was the last time you tried to keep track of the money that flows into your firm? Probably not recently. Business owners, particularly those starting out new, have little or no idea about how much money their business earns and where it all goes. Apparently, there is a slew of managerial and operational tasks that keep business owners occupied. Hence, they fail to pay attention to the cash flow on a regular basis. But that does not mean business owners need to keep going with the flow. Accounting software such as cloud-based QuickBooks and the following money-management tips can help.
Here are some of the ways business owners can keep track of their expenses:
Efficiently Manage Your Inventory
Spending too much or too less on inventory means you are wasting money. An empty inventory means you are leaving your customers unsatisfied. Spending too much of your money on inventory means your product is sitting idle on the shelves, while you could have devoted that money in a more productive venture. The best thing to do is to plan your cost of sales expenses to avoid wasteful expenditure.
Manage Your Orders Well
With everything happening digitally, people prefer complete transparency about their orders from their sellers. On the other hand, as an owner, you need to have complete knowledge of where your shipments are. In most cases, sellers who fail to keep track of the orders they have received, end up sending them again (and again). This practice is harmful at many ends: one, it wastes time; two, it causes a loss of money and resources; and three, it is derogatory in terms of your brand image.
Give Your Clients Their Bills In Time
There are many reasons why doing this is so important. Out of the many causes, the most prominent one is- it prevents you from losing your own money. Bills are your gateway to receive payments. A seller who shows little or no interest in handing out the bills, unknowingly sends out a signal to its customers that they can postpone their payments and the seller can wait. So, if you want to see your money flowing in regularly, generate your customer’s bill at the time of the transaction. Accuracy in bill generation also plays a key role in maintaining cash flow.
Payroll Is Equally Important
Your employees are one of the costliest resources in your business. Paying them accurately and in-time is imperative to track your expenses and avoid wastage. Payroll calculation needs you to include every aspect that relates to your employees, for example, their salaries, perks, vacation etc. If you are unsure how to calculate payroll, it is best to seek advice from your professional accountant and leverage a smart accounting software solution such as QuickBooks Hosting for your day-to-day accounting needs.
Pay Your Bills In Time
Now, there is a huge difference between the bills you generate for your customers and those you receive from your vendors. While, on the one hand, it is important to timely generate bills, on the other, it is equally important to pay them off. This way, you get a clear idea of your gross earnings. Once you pay your employees and clear off your bills, what remains is the actually earned profit which can be redirected into business for expansion and renovation.
Know What Your Bank Statements Have To Say
Every business has its own bank account and it gives a wide picture of your company’s finances. As a business owner, it is necessary to cultivate the habit of tracking your money frequently, be it cash inflows or outflows. Compare your internal financial records with your bank statement to identify discrepancies, if any. Owners who lack experience and are relatively new in the area must take help from an expert. A strong balance sheet is a must to survive competition, thus it is important to keep a check on the cash inflows and outflows.
Why is it important to keep track of your money?
Well, it is simple: for financial security in times of need. Every firm needs to have a working strategy in place to keep track of the money that is flowing in (and out). Not knowing ‘where your money is’ can raise a number of red flags. For example:
You are leaving your money with your customers. A lot of customers need to be constantly reminded to make payments in time. If you are not keeping track, you might never receive your payments. So, you are wasting money without even realizing it.
Your employees may be cheating you under your nose. Although rare, there are instances where employees steal from their company. It is important to keep a check on all the payments made by checks to ensure there is no foul play going on.
You earned a profit, but when required it is never there. Often, business owners are seen with their heads in their hands, wondering where all their money went. Your books say you earned a profit, but your bank account tells a different story. This happens when you are not constantly keeping track of your money.
Every successful business has an owner who works hard and doesn’t shy away from embracing changes. But, most of all, it needs an owner who knows how to keep track. If you are leaving multiple loose ends, you are only creating outlets for your hard earned money. Keeping track is, thus, a necessity for every entrepreneur who wishes to grow a successful business that yields profits.