Good finance management is essential in any business. While many large corporations need to have strict checks and balances in place to protect budgets and spending, smaller businesses can also face significant challenges.
Small business owners often tend to be so focused on moving their enterprise forward that they forget the essential things which make a difference such as what they are spending money on and how it is affecting that all-important bottom line.
Poor finance management could actually cost your business thousands of pounds each year. The good news is that it’s pretty easy to turn this around with a little more thought and by putting in place some best practice initiatives.
Review How You Keep Track of Finances
Most businesses have some kind of process in place for tracking how money is spent and handled. It’s important to review these on a regular basis and make sure that:
They are being kept up to date, and
Any potential improvements to the process are noted and made.
The Art of Financial Planning
Understanding your margins as a business requires you to have the right information at hand at all times. That means, at a bare minimum, keeping profit/loss spreadsheets and a cash flow forecast for your business.
You can’t hope to grow and move forward if you are not sure of your financial acuity. Keeping good records allows you to see where savings and extra profits might be made and improve cash flow at important times.
The use of business accountancy software in your business will help go a long way to keeping accessible and meaningful records – it’s also an important part of the Make Tax Digital transformation that’s going on at the moment.
Time Spent Working Out Finances
Staff who have expenses or need to balance budgets can also spend a lot of time trying to get the books right. According to some research employees, can spend as much as 4 hours a week handling invoicing, budgeting and working out expenses. These processes are often carried out manually rather than using specific software that makes things easier and quicker.
Those hours add up and can accumulate into a real loss in productivity where staff are undertaking administrative tasks without selling your product or service or completing the work they were hired to do. Making it easier to track and monitor employee financial matters can certainly save you money.
Tax Efficiency Saves Your Business Money
No business likes to pay more tax than it reasonably owns. Changes in the way businesses submit their returns and the switch to quarterly submissions can make it difficult to keep on top of things, especially if you’re busy and short of time. Best practice includes making sure that your company is tax-efficient, not just that it pays what’s owed to HMRC on time.
Many small businesses aren’t completely sure of what they can claim for and what tax savings they can make. That’s why it’s important to get good advice to improve efficiency.
Understanding your business finances better should hopefully leave to substantial savings and better productivity within your business. Introducing simple measures such as accounting software is one way forward. Working with a local accountant who can give you specialist advice is also a strong option and one that should really benefit your business.
Neil Smith Accountancy provides a comprehensive service to small businesses across London and Essex. Contact us today to discuss how we can improve your financial management and save your company money in the short and long term.