Financial management is an indispensable component of any business, whether it is large or small. As opposed to what a great many people think, financial management is considerably more than simple accounting and balancing the checkbook. Business entrepreneurs need to think about their funds for a number of reasons, from planning for survival in down times to rising to new levels of success when times are good.
Effective financial management can make the difference between a business that is constantly able to move up the ladder of success and one that trips at the first obstacle. Ann Puig, a successful entrepreneur and business operator from Costa Rica, provides several tips that will help any business find its success.
Create an annual budget. This will enable the business to manage its finances effectively throughout the year. The budget will act as a guide to allow for proper business decisions before they become an emergency. It will also help to lay out plans for future expansion.
Puig asserts, “You need to set aside the time to rethink your expenditures and wages in an effort to update spending habits. This will allow your money to work smarter and harder for you.”
No one gets a kick out of having to weed through stacks of balance sheets and papers. With cloud-based business tools now being so prevalent, it is easy for any business to become paperless. Everything can be organized on digital platforms that can automatically create backups for the important data and documents.
There are also a number of invoicing and accounting tools available online that will help in efforts to streamline the business. They provide efficient and accurate records that can help tremendously when it’s time to file tax returns.
Paying bills can be a chore. Remembering all the due dates is virtually impossible and paying bills manually is extremely inefficient. “Automate all bill payments,” suggest Puig. “Whether it’s a credit card or utility bill, use online banking as much as possible to automate payments and make sure the accounts are properly funded. This will help to prevent late payments and save considerable time and energy.”
Investors are a great asset to any business. They allow for more funds to be collected than what can be received through loans and can help a business scale properly or weather rough times. Selecting the right investors is an important part of the business’s success – research the potential investors and look at their recent ventures to determine how involved they might want to be in a new business.
Cybersecurity is one of the top priorities for businesses today. In order to properly leverage any eCommerce or electronic payment platform, it is imperative that anti-virus software and firewalls are always up to date and that the company’s data, as well as that of the clients, is protected.
Puig also recommends studying market trends and forecasting the business’s financial position and business plan annually. “This step will allow you to create a clearer image of where the business is going to be and will also allow you to make changes and formulate a better strategy that will drive the growth of the business,” explains Puig.
Always try to avoid carrying debts over from one year to the next. Create an in-depth plan to repay debts before loans are taken out and make sure any outstanding business payments are paid off quickly.
A plan to create backup savings is vital. This can be a great weapon during difficult times, which all businesses endure at one point or another. Laying out a budget for the next financial year should also include whether or not there are sufficient savings that can cover any potential losses.
The last tip is to rely on professionals. Financial oversight is an integral part of any business, but managing finances is not necessarily every entrepreneur’s forte. “Don’t be afraid to call in a specialist,” explains Puig. “If you’re not great at bookkeeping or managing finances, rely on an expert. This will not only allow you to ensure that the money side of the business is handled properly, but will give you the time to keep the business moving forward.”