What is financial management for small business owners?
Money management is the process of managing corporate finances through budgeting, goal setting, expense and revenue monitoring and investments.
With a good money management plan, you can avoid negative cash flow periods and make sure your business is on the right path to profit.
If you do not manage money wisely, it can lead to problems such as late payments, more money and no collection from your debtors.
Money management tips
To keep your business running smoothly, you need enough money to cover your expenses. Use these nine tips to learn how to manage your money effectively in a small business.
1. Keep yourself informed of deadlines
If you don't know when your bills are due, like creditors, commercial loan payments or credit card payments, you may not have enough cash at hand. Not to mention the fact that no one knows when the invoices are due, it may be necessary to face late commissions or additional interests, to reduce the trade credit, the acid financers and the relationships with suppliers.
Stay informed of deadlines to avoid non-payment of invoices. Set payment deadlines and set reminders so you don't fall behind. Draw deadlines on a paper, telephone or IT calendar and ensure a consistent payment schedule.
2. Monitor spending
Do you know how much money you spend per day, week or month? If you do not monitor the expense, you can collect unnecessary invoices. And if the expense is not controlled, it can lead to excessive costs and abuse of funds.
Many entrepreneurs have multiple accounts, such as a checking account, a savings account and a credit card account. Make sure you know how much you are withdrawing or spending on each account to keep track of account balances.
It's easy to use your business credit card, debit card or checks to cover small expenses. A breakfast for the staff here, a new coffee machine for the break room there ... But the small expenses are good. If you don't keep track of your expenses, you may receive a large invoice for which you are not prepared.
When keeping track of expenses, you should also consider unpaid checks. When writing a check, the recipient must not cash it immediately. If you forget to check your expenses, you could end up with an account and be in red.
Keep track of your expenses by managing your accounts. You can use simple software to record accounting transactions. When you record your expenses, you can easily keep track of expenses.
3. Don't forget the debtors
If you offer credit to customers, you know that you may not receive money for goods sold or services provided until or after the expiration date. After a week or a month, it can be easy to forget about progress. But if you want to manage your money better, you have to remember the money due to your business and make payments.
Write this down in your books to remind the debtors. Overview of credits to keep track of total credits. An overview of the credits shows which customers owe the company money, the amount owed, the customers who have exceeded the deadlines and the total credits.
While monitoring your progress is essential for intelligent money management, receiving payments is even more important. You can continue payments by sending invoices and expired messages to customers. And if your company needs cash before the expiration date, you can offer a discount on prepayment.
4. Individual company and personal funds
Do you have a separate corporate bank account? Even if you do not have to separate professional and personal funds, this is essential for money management. In addition, company bank statements are used.
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