How to stay on top of your business finances? Whether you have a big or small business, being on top of your finances is crucial to running a successful business.
As a business owner, you need to ensure you have a positive cash flow to prepare for unforeseen events, emergencies, or debts.
As a business owner, ignoring financial management can lead to severe consequences, such as supply-chain delays or interruptions caused by negative cash flow.
Business owners need to find methods of reporting and analysis to assess the company’s financial health.
In this article, we will share some tips on how to stay on top of your business finances.
Have a Plan
Having a business plan allows you to avoid not understanding your business’s direction and proximity to your financial goals.
To approach this, you need to understand your current situation and consider all the issues that can hinder you from accomplishing your goals.
Your business plan must include a budget that includes your expected profit and loss and an estimate of your cash flow.
As you’re planning, be ambitious and realistic simultaneously.
Starting a small business allows you to make all of the financial decisions, where some aren’t always a good idea, but you’ll get to learn from these experiences.
Having a plan and clear financials will also be part of the storytelling when you are seeking funding. Financials is the piece of information where investors tend to focus the most amount of time.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Have a Billing Strategy that Works
Cash flow problems may lead to your business failing. Avoid this by ensuring your clients pay their invoices on time.
You’ll need to get creative when you experience difficulties collecting money from specific clients.
An idea you can try is to change the payment terms to give your customers a 2% discount on their total bill if they pay it early.
Another idea to implement is to charge a late fee to customers who fail to make a payment within ten days.
Manage Your Debt
Debt is something most businesses have to deal with and can include:
- Mortgage payments
- Initial funding
- Loans for equipment
Managing your borrowing costs can set you up for success, especially managing your credit card spend and loans with variable rates. Additional things to consider include:
- Regularly assess your debts
- Verify the repayment costs
- Check if there are any changes in circumstances
- Decide if you need to increase or decrease your debt funding
Speak to your accountant to determine if there are additional ways to borrow, as you can save money by choosing a different lender.
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