Starting a business and running it startlingly are two different things. Where one could be just a beginning, the other could prove to be a game-changer for the business in the long run. There are several factors that could make it happen. Managing the finances of a business is one of them. But managing finances effectively is the one which makes the business stand out from others.
Difference Between Just Managing & Managing Finances Effectively
Finances are key to any business, bet it a small business or a big firm. Bad finance management could dip your chances of success in the industry while effectively managing them could do wonders. The basic difference between them is like knowing what is draining your resources and what are the positives that could bring you up.
Management of finance could be simple or complex. It depends on the way it is managed. If you wish to have a close insight into what is troubling your business and what could really help you grow, you need to go for the complex or the detailed version of managing finances.
With the advancement of technology and the introduction of the end number of tools, managing money flow has become a cakewalk even for startups. In the past, innumerable paper books were maintained manually by a large workforce, today, a single finance professional can maintain books of innumerable businesses digitally on a single computer.
Here Are Top Ten Tips for Managing Business Finances Effectively
#1 Quality Bookkeeping Software
Purchasing a good bookkeeping software could take off a lot of load on your workforce and if you are a startup and happen to have little knowledge of finances, you can manage your finances on your own. Thus, the software is a must and the most important thing one should invest in at the time of the start of a business venture.
Not only this, but you should also have knowledge of the reports produced by the software as these reports will help you assess the company’s financial position as well as the budgetary expenses.
#2 Extend Your Payment Options
The business world has evolved from cheques, demand drafts, cash, and other older modes of payment to online payment options viz. RTGS, NEFT, Wallets, etc. Furthermore, it is much easier for clients or businesses to make payments digitally. Earlier, there have been several doubts which could have been true to some extend about the efficacy of digital payments, Nowadays, digital modes of payments are as safe as personally handing over of cash.
Being flexible means that you leave no scope of delay in payment from the client or business and this makes sure that you are paid timely. However, businesses should choose the payment options wisely by picking those which have the least transaction fees.
#3 Need for a Financial Dashboard
The name might not look appealing but the financial dashboard is a very powerful tool in assessing financial processes and managing funds. Not only thins, but the dashboard also allows you to have full control over the finances as it gives you insights into the financial needs of the company. The dashboard can be customized to your company’s financial needs and it always keeps you informed about the real-time flow of funds. In short, it depicts the inflow, outgoing, and other important transactions as well as marks and highlights high-value transactions so that you can keep a tab on the finances.
#4 Its Mobile-World, Say Yes to Mobile Payment Systems
In order to ease transactions and payments, you should say yes to mobile payment systems such as wallets and UPI payments. Today, everybody carries a mobile device and keeps personal or in some cases business accounts transaction ready. It becomes highly convenient for both you as well as for the clients to make or receive payments through mobile payments especially during travel. This makes sure that business processes carry on even while you are on the go.
#5 Know where Money Goes in and Goes Out
It is essential for any business to keep a tab on the flow of money. Businesses should know where the money comes from and where it goes out. This is highly important in the case of startup business finances as for a startup, things are new and funds are limited. Besides, when the startup owners are new, it becomes highly important for them to keep finances under close watch.
Also Read: How to Generate Company CIBIL Report?
#6 Hire a Finance Professional
Hiring a finance professional is like making sure that all the financial worries are taken care of and you can concentrate on your core business processes. Besides, a combination of a legal and financial professional can be very helpful in keeping your business stay protected from financial-legal problems related to monetary transactions.
#7 Petty expenses like Vehicle expenses aren’t too pretty
Many times, businesses ignore petty expenses that do not look pretty big on the balance sheet but may have a huge impact in the long run. For example, for a transport company, rising maintenance expenses of vehicles quarter over a quarter could indicate that the vehicles need overhaul or replacement and bad vehicles could become a liability soon. Another example could be courier or postage expenses. Though abysmally small in amount, these and such other expenses together could become high enough to grab your attention on the expenses chart. Besides, rationalizing them could be both beneficial for the business as well as for the nation.
#8 Tax Planning
Planning is key and tax planning is key to efficient finance management. It is advisable to hire professionals who can compute your taxes on the basis of projections. This way, your business could have sound financial planning and almost exact turnout of business projects.
#9 Business Accounts Vs Personal Accounts
When you run a business, do not mix your personal accounts with that of business accounts. Do not think that your personal account could come handy and rescue your business in times of capital needs. Besides, separation of personal and business accounts helps you get legal protection and God forbid, but in times of crisis, you have your personal accounts and personal assets all yours.
#10 Advanced Solutions for Effective Business Finance Management
In the modern age, there are innumerable tools available that make business finance management easier and even a person with little knowledge of economics could handle business books in an efficient manner.
Thus, an urge to manage finances efficiently coupled with advanced and most modern tools makes sure that the finances are managed in the most competent manner so that the business always keeps itself on the path to success