3 Ways To Plan For Your Company's Financial Well-Being
As a business owner, you need to take an active interest in protecting your company's financial well-being. Here are a few actions you can take that will help you drive your business to ensure that you turn a profit and stay in business.
#1 Keep Loans & Receivable Payments Separate
When you take out a loan, you are going to want to keep that money separate from the money that you bring in from receivable payments. The money that you bring in from loans or start-up funds needs to be spent as intended. For example, if you borrowed money to purchase equipment, you need to make sure that your loan funds are used to purchase equipment, not pay off your monthly bills. If you took investment money to help grow the research side of your business, that needs to be what you are using the money for.
Keep investment and loan money separate from your accounts receivable to make sure that the money is being spent in a proper manner. Your accounts receivable should be used to pay for everyday business and inventory expenses.
Stay on Top of Accounts Receivable
You need to have a set system for dealing with sending out invoices and making sure that you are paid for the work that you do. You need to make sure that you give clients a set deadline for paying off their invoices. If clients do not pay off invoices on time, you need a system in place to deal with this.
For example, after a bill is not paid for seven days, you send out an email notice. After a bill goes unpaid for two weeks, you send out a written reminder. After a month, you send out a final notice, then send the bill to a collection agency. Have a plan for dealing with missed payments to ensure that you bring in the money that your business needs to keep things going.
Plan for Everyday Expenses
Finally, you need to make sure that you are planning for everyday expenses. Create a weekly or bi-weekly budget for everyday expenses. For example, little things like buying toilet paper or purchasing extra bags can add up on you.
Make sure that you create a list and a budget for these everyday expenses. That way, you can track the everyday items that you are purchasing and make sure that you budget for these things.
All of these actions will help you when it is time to do your taxes as well. The more you can show what you spent your money on, the more accurate your taxes will be. You don't have to implement all the suggestions above on your own; you can have an accountant or bookkeeper help you develop systems for tracking invoices, how you spend your loan and investment money, and budgeting for and keeping track of everyday expenses. Contact companies like Blueback Accounting to learn more.