Keeping up with all the tasks needed to manage a small business can be challenging. If you’re like most small business owners, chances are you’re so busy focusing on generating profits that you’ve never got enough time to keep up with managing the bookkeeping tasks. However, if your business is expanding it can be overwhelming.
Managing your cash flow is a crucial aspect of any small business’s success. Staying on top of money coming into the business and costs going out of the business on a daily basis makes it easier to track your progress and monitor your expansion progress.
Here are some tips for streamlining the management of your small business cash flow.
Create a Cash Flow Statement:
Managing your cash flow begins with creating a cash flow statement that gives you a snapshot of the business’s financial situation. Don’t confuse your cash flow statement with your balance sheet or your income statement.
Essentially, you need to create a statement that makes it easier for you to complete a cash flow analysis each month to see whether you’re on track to reach your goals or not.
- The amount of cash you have on hand
- Itemized list of operating expenses
- Cost of goods sold
- Debt repayments
- Total invoices and cash receipts
- Any other cash or income the business is owed
When you have all the items on your cash flow statement lined up, you’re in a position to do your cash flow analysis. Simply add up the cash on hand and any other income expected to come into the business. Then deduct the operating expenses, costs, repayments, and other outgoings.
Your end result will give you the cash position for your business at the end of the reporting period. If the number is positive, you’re making a profit. If the number is negative, it’s time to work out ways to cut your costs and increase sales.
It’s up to you whether you choose to run your cash flow analysis weekly or monthly, but it’s a management step that helps you stay on top of your business’s financial health.
Streamline Your Reporting:
It’s surprising how many successful business owners still don’t have an organized way to track and monitor their business financials. Many of them rely on checking the cash coming into the business but don’t really stay on top of operating expenses and costs. By the time those entrepreneurs realize there is a problem, it could be too late to rectify the damage.
By comparison, creating a streamlined way to monitor your business expenses, you’re in a position to stem spending or cut costs if the money coming into the business is slower than usual during any given month.
Credit cards for small businesses can offer an option for many entrepreneurs. Using the same card to cover expenses makes it easy to see at a glance the amount of incidental business spending throughout the month.
Some business owners may be able to benefit from using their credit card’s interest-free period to their advantage. For example, if you’re careful about always repaying the entire outstanding balance in full before the statement date, you won’t pay any interest on the amounts you’ve spent.
Managing your business might occupy the majority of your concentration, but it’s critical to ensure all of your expenses are under control on a daily basis.
- Making Your Small Business Appear Large
- Small Businesses That Still Matter in Today’s Tech Age
- How Top Businesses Stay On Top of Their Finances