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Improve Your Financial Admin Management for a Profitable 2023

Around tax season, many business owners take a hard look at their finances and make resolutions to manage them better during the next financial year.

Here are 7 tips from our financial admin consulting team for staying on top of your small business finances.

#1 - Set Aside Tax Money Every Month for the Next Financial Year-End

When you received your tax bill this month, you might have been overwhelmed by the number at the bottom of the page. Even though you know each year that you will be paying a fair amount, we are aware that having to do the calculations and gather the funds is still a stressful affair.

We suggest setting a small portion of your revenue aside monthly, perhaps in a separate savings account. This way, you’ll have a sum saved up come next tax season that you can draw from to pay your dues.

#2 - Separate Business and Personal Finances

Even though as a small business owner you are your own boss, it is wise to think of yourself as an employee. Demarcate a portion of your revenue to serve as your salary. Pay this salary into your personal bank account so that you can avoid denting your business funds.

You can also approach a trusted person to act as your accountability partner when you are inclined to make superfluous purchases.

Bottom line: always keep your business and personal budgets separate.

#3 - Set Up a Budget and Stick to It

You need to have a clear understanding of what money is coming into your business, and which expenses need to be covered. This includes your personal salary as described above, but it also includes loan repayments, purchases, and employee salaries. Determine where different funds are needed in the business and allocate that amount to specific areas in advance. Practically speaking, make a list of expenses and income. This can be pen-and-paper or a classic spreadsheet. Sticking to your budget is simple if you delineate your funds clearly.

Some pitfalls of poor budget management include making impulse purchases that seem like a good idea in the moment, or “borrowing” from cash that you have put aside for a recurring expense. This quickly adds up and can leave you in the red by the end of the month. Refer back to your spreadsheet periodically so that you don’t lose track of your budget.

#4 - Perform Regular Age Analyses on Your Projects and Invoices

Age analysis is the act of determining how much time remains till the due date or how overdue any specific income or payments are. It is imperative to do regular age analyses on all your invoices. Doing so will ensure that you remain in line with your original budget as far as possible so that you can cover your expenses. For every invoice you issue, make notes on the payment due date as well as any partial or full payments that are made by the customer. Refer back to these notes regularly and communicate clearly with your customers when the deadline approaches. Better yet, try to encourage immediate payment instead of leaving invoices to age.

#5 - Practice Friendly but Firm Debt Collecting

When an invoice exceeds its due date, it’s time to begin debt collecting. As a small business, you probably know many of your customers personally. Few business owners enjoy debt collecting. However, every business, big or small, must learn to deal with debt collection effectively. It is best practice to not shy away from the subject of debt collecting from the very start. Inform customers upon purchase what your payment procedures are, how payment reminders will be sent, as well as how debt collecting will occur when their payment is overdue.

If you’re not comfortable with collecting overdue debt, you may be able to task your accountant with collecting debt on your behalf if that’s one of the services they offer.

#6 - Analyse Your Profit and Loss Statements to Weed Out Your Problem Products

Another way to successfully manage your finances is to be selective as to which products to continue investing resources into. Analyse your profit and loss statements so that you know how well each of your products or services is performing. You can decide from there which ones are worth the investment you are currently putting into them. At a certain point, it ceases making sense to continue pouring funds into an unprofitable product.  Stop pouring time and money into poorly performing products and champion the ones that are actually bringing a substantial return on investment.

#7 - Reach Out to Cross for Professional Help

The best financial management decision you make this year might be to reach out to a professional. The right person will take the time to get to know you and your business well, and will coach you in the above aspects in an understandable way.

In Conclusion

At Cross, we believe no business owner should have to struggle alone. Our team will gladly speak to you about your budgeting concerns and other financial admin pain points.

We can also help you help determine which products or services in your business you can champion, and which you could ditch. What’s more, we’ll cater to your needs in a way that ensures you remain within your budget.

Keeping your financial admin under control this year doesn’t need to be a huge headache. Contact us today—our admin experts are ready to help!

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