7 Best Practices for Taking Charge of Your Business’s Finances

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(Newswire.net — August 11, 2021) — If you’re a business owner, staying on top of your finances is a must. Monitoring your bills, income, and accounts receivable can be tricky, though. If you’re struggling to keep up with your money, implement these seven best practices for financial stability today.

1. Get Professional Help

Unless you’re a trained accountant, you need professional help to get your business back on track. Reach out to a company such as Ageras for guidance on your budget and record-keeping policies. Whether you have an upcoming audit or you’re just overwhelmed by the state of your bookkeeping, working with professionals helps you better understand the situation.

2. Establish an Accounting Department

Once your accounting consultants have addressed any emergency issues, it’s time to make a long-term plan for success. If you don’t have an official accounting department yet, initiate the hiring process immediately. Depending on your budget, hire different accountants to oversee your purchases, accounts receivable, loans, and investments. Always consult with your accounting team before making a major financial decision such as buying a new property or opening another product line.

3. Save Your Receipts

Now that your bank automatically records each transaction, it’s easy to become lazy about your receipts. Keeping track of your spending is key to knowing how much money you have, though, and it’s a lifesaver if you get audited. Whenever you sign a contract with a new client, use paper that produces three carbon copies. Give one to your accounting team and keep one for your own records. If you buy materials with your company’s credit card, report the amount to your accountants immediately.

When assessing the financial health of a business, one critical question to ask is “what are accounts receivable,” as they constitute the credit a company can expect to collect from its customers for goods or services delivered.

4. Be Honest With Your Investors

Your investors have entrusted you with their savings, and they have a right to know what the exact state of your finances is. Always talk to your accountants before your shareholders’ meetings so you know about any possible issues and can answer investors’ questions. Be honest if you’re having problems; that way, your investors can help you identify solutions instead of staying in the dark about them.

5. Think Carefully About Loans

Loans are helpful if you’re opening a new location, investing in equipment, or renovating your store and warehouse. They allow you to complete major purchases without affecting the rest of your budget. It’s easy to take on more debt than you can pay off in the foreseeable future, though, particularly if your business is new and you receive high interest rates. Before taking out a loan, consider whether you really need to make the purchase in question. If you do, do you have enough savings somewhere to increase your down payment and reduce your loan size? Are any of your investors willing to cosign on the loan to cut your interest rates? Even small reductions in your debt make big differences in your long-term financial health.

6. Track Your Employees’ Time

If your employees are paid hourly, investing in time-tracking software is a great way to prevent time theft while also keeping better track of your schedule. Most companies offer their software as apps now, so you don’t need to buy an actual time clock. Instead, have your employees download your chosen app and clock in and out as their days start and end. Then, when it’s time for payroll, you can look through their submitted hours and make sure no one is fibbing about how long they’ve worked. Many systems even alert you to overnight shifts and other suspicious activity.

7. Look for Ways to Cut Costs

As you understand your finances better, you’ll probably notice areas where you’re spending more than is necessary. Perhaps you’re ordering too many raw materials and your inventory is overloaded. Maybe your vendors offer discounts when you order their products in bulk, or you could get a better interest rate by consolidating your debt. You also could have too many employees in some departments while other teams are short-staffed. Write these excess spending areas down and work with your accountants to start cutting costs.

As your business grows, so does your budget, and it becomes harder to keep track of your spending. Follow these seven best financial practices so you know exactly how much money your business has.