Have you already implemented your healthy New Year’s resolutions in real life? If not, there is still time left to get on top of your finances in 2020. Nowadays, we don’t need to count on bank statements and checkbook register to keep track of our personal finances and manage spending.
Modern 2020 software and technological advances have made personal financial management features so much more convenient and easier. If you are willing to boost your business, manage your finances better, and seek financial success, keep on reading and follow our advice.
Financial Management for Entrepreneurs
Nobody wants to live paycheck to paycheck trying to make ends meet. Business owners are no exception. Some people say “I need money desperately” as they are strapped for funds and can’t fully manage their cash flow. The majority of entrepreneurs find it challenging to handle their cash flow and avoid pitfalls.
If you have trouble with your personal financial management, how can you run a successful company? Knowing how to manage your finances, both personal and business is necessary to handle your money flow and avoid mistakes.
“Every business bears certain risks. You should understand business and financial risks. This way your venture will be able to survive even a large-scale downturn,” says Stacy Francis, from Francis Financial, Inc.
There is a number of personal financial management features and tools that are helpful in terms of setting your business targets, budgeting, investing, as well as keeping track of income and expenditures. Learning how to plan your cash management can have positive consequences for your small business, avoid negative money flow, and just make sure you are earning profit.
Top-Rated Tips of Financial Management to Help Your Business
Here are some of the most significant tips to help you stay financially afloat and let your business flourish:
#1 Meet Deadlines
It’s really important to stay on top of any arrangements and deadlines you need to meet. Many young entrepreneurs take out small business loans to launch a startup or develop an existing venture. If you forget to pay the debt off on a regular basis, you may end up having higher interest rates and additional charges for missed and late payments.
Failing to meet important deadlines can lead to having no cash on hand. In the end, your business credit might lower. Why don’t you set automatic payments or special reminders to avoid late payments and know your schedule?
#2 Check Your Spending
Many business owners make a widespread mistake when they don’t keep track of their spending. Yes, it means you need to know exactly how much you spend every day or even month. If not, you could be just wasting plenty of cash covering unnecessary bills and overspending the funds you have. You need to learn how to monitor your spending as you probably have to use several accounts – a savings account, a checking account, and a credit card.
This is how the majority of entrepreneurs handle their finances. But when you know how much you spend each day on your venture and how much you withdraw from each account, you will be able to deal with an emergency. Knowing how to use your funds properly is essential when it comes to business.
#3 Separate Your Business and Personal Finances
It may be tempting to utilize your personal debit card or credit card for business expenditures. Separate your personal and business accounts so that you know how your venture is doing and how much profit it brings. Experts recommend entrepreneurs not to mix personal and business matters.
If you mix your accounts and take out cash from your personal account to fund business matters or vice versa, it may lead to overspending, disorganization. You want your venture to grow and expand rather than lose opportunities. It’s very easy to keep track of your business costs with the help of accounting books. We will talk more about accounting software for monitoring your spending below.
#4 Avoid Unnecessary Purchases
Another significant rule is to pay all bills and loans prior to making any purchases. If you spend cash on unnecessary items you may be left with not enough funds to pay the bills. This easy technique will help you prevent low cash flow and know how much you can allocate to other purchases when important payments are covered.
#5 Set a Budget
One of the best and easiest ways to keep up with your business expenses is to create a monthly budget. This way you will be able to set targets and reach income goals. It is better to manage your costs when you know exactly how much you need to allocate to various spending categories. Stick to the main expenditures necessary to let your company function. If you focus on the budget and stick to it, you will cut costs and have higher revenue.
Best Financial Tools to Choose From
Luckily, we have lots of useful tools and software necessary to help you maintain the financial health of your business. Many tools are designed to facilitate the work of entrepreneurs, help them with daily monetary tasks and the process of financial organization. Here are the top-rated financial tools for you to consider:
- Accounting Software – such online platforms are meant to take over the accounting duties. This software is helpful for every company and may include integration with POS tools, cloud-based entries. Moreover, you will be able to send data directly to tax preparer.
- Budgeting Tools – using this software is essential to the development and success of any venture. In order to manage the cash flow better and plan your company budget for the next months, you may install special budgeting tools.
- Tracking Costs – various types of expenditures may add up and lead to large sums you can’t afford. You can easily monitor the spending categories of your employees and see where the money goes with the integrated expense tracking tool.
Surveys show that many startups fail during the first year because business owners fail to control their funds. According to the U.S. Bureau of Labor Statistics, 20% of startups fail during the first two years and 45% fail during the first five years. But hope, these easy tips and useful personal financial management features can help your business flourish and become even more profitable.