Ensuring your business has good financial health is crucial to staying afloat in today’s economy. If you lack planning and preparation when it comes to your finances, poor decisions are likely to be made. And, with fears of a UK recession looming, it’s more important than ever to get on top of it all.
Know your numbers
Your business is entirely made up of numbers – and these numbers are important. Knowing your numbers matters when it comes to having financial awareness of your business. Even the smallest transactions must be accounted for in the books.
Whether you’re a numbers person or not, having a clear insight into what’s coming in and going out is key.
Keep on top of invoices
You must maintain consistent and timely practices when it comes to your billing and invoices. That’s why it’s worth reviewing and streamlining your existing processes to ensure your invoicing doesn’t go off track.
Consider utilising accounting services to optimise your resourcesand know exactly what’s going on, without having to worry that you’re falling behind on various financial elements of your business.
Avoid late payments
Late payments don’t bode well for the reputation of your business. With the risk of fees and penalties, you don’t want to be paying more money for things that could have been so easily avoided.
Be aware of exactly what you need to pay for each month to ensure your operations don’t get disrupted. Whether it’s rent, utilities, payroll or tax payments, you have financial obligations as an organisation to make these payments on time.
Create an emergency fund
Expect the unexpected when it comes to running a business. Over the last few years, issues around the globe have impacted businesses directly, with COVID-19 closing the doors of many organisations.
Don’t get caught out by unprecedented events that could come up at any time. Setting aside funds for emergencies will have you thanking yourself in the long run. Having between three months and a year’s worth of expenses is a general rule of thumb to ensure your business can survive during the tough times.
This fund doesn’t just have to be used for these types of events either. Perhaps you need to hire someone immediately, or your office needs an upgrade due to continued company growth. Whatever the reason, having an extra stash of cash for emergencies is always beneficial.
Stay separate
When starting a business, you should always try to keep your personal and business funds separate. If everything is combined, your accounting is going to be more difficult to analyse and keep track of.
By keeping clear records of everything you’ve spent for business purposes, there’s no risk of getting your finances mixed up with your personal spending.
