1. Have a Budget
Having a carefully prepared budget is the financial equivalent of a business plan. It sets out financial goals and sales targets, and helps to keep spending in check. But only if you actually use it! Putting it in a drawer will do nothing other than keep it safe. Update your budget with actual expenditure and income each month and review what you have achieved against budget and also going forward. Alter, your budget as your business changes. This makes a budget a business management tool, which is its real function.
2. Use Cloud Accounting Software/Real Time Information
Time is money, and if you are double-handling information, this is an inefficient use of your time. Cloud accounting software options allow synchronisation and one-time information input. In addition, on the cloud you are getting real time information and it also makes it easy to keep your accounts up to date, giving you the power to make quick and informed decisions, if needed.
3. Cashflow Forecasting
Cashflow forecasting goes hand-in-hand with budgeting, enabling Actual v Budget comparisons. Cashflow forecasting also highlights times when cash will be tight, giving you time to prepare for those shortfalls. The most useful type of cashflow forecast is to run a 12-month rolling forecast so you are always predicting 12 months ahead.
4. Debtor Control Policies
Cash is king and without good debtor control policies and practices you become financially vulnerable. If it's not already, make it a key performance indicator. Put in place strict policies to ensure that you invoice quickly and get your money on time.
5. Understanding Your Numbers/Targets
It's all very well having a budget, forecasts and reports, but you need to understand them. What are your daily, weekly, monthly targets? What is your break even? How much time/units do you need to sell? What is your required margin? Is your quoting/pricing right?
6. Review Prices - Both Yours & Suppliers'
It's good practice to undertake an annual review of what you are charging out as well as what your suppliers are charging you. Take the opportunity to meet with suppliers and business partners and negotiate. Can you save money somewhere?
7. Experienced Accounts Person/Bookkeeper
Ensure that your financials are administered by a very experienced accounts person who knows about P&L, margins, budgets, tax etc. Or alternatively, outsource to a bookkeeper. As a business owner you are the last person who should be managing your daily/monthly accounts. Your time is best spent on driving your business forward.