Finance is the lifeblood of a business. It supports every part of your company’s operations.
No matter the size, the long-term success of your business will depend on how well you manage your finances. Apart from day-to-day money management, you need sound financial planning to gauge your profitability and achieve your business goals.
- Keep personal and business finances separate
If you haven’t already done this, now is the best time. Corporate finance management is easier when you separate your business and personal finances. You can track your operational expenses properly and get a better picture of your profitability.
This step is particularly essential for organizational and taxation reasons. More importantly, this protects your wealth should your business face legal problems.
House your funds in the right bank account, preferably one that will allow you to manage your corporate finances daily. Consider using a business credit card, too. It’s a great tool for keeping your business purchases wholly separate from personal ones.
- Learn business accounting
Whether you plan to use accounting software tools or bring in a professional, there are some accounting buzzwords and documents that you must learn.
Having a solid grounding in business accounting helps you understand how well your business is performing. Your accounting records will tell whether or not you are producing profit and provide foundational knowledge for the decision-making process.
- Pay taxes on time
Understand and fulfil your tax requirements diligently. The consequences of failing to file your business taxes can be harsh. For instance, if you are served a director penalty notice superannuation, you will be personally liable for paying the tax debt plus a hefty fine.
Keeping your business’ compliance record clean curbs unwanted penalties and liabilities. That’s money that could otherwise be used for income-generating pursuits.
- Maintain a strong cash flow
It’s critical to keep your working capital to a level where you can operate the business even during rough times. Some of the ways to do that are by keeping your assets liquid and staying on top of your invoices. Send out invoices immediately to alleviate the strain created by credit sales.
Set timely payment policies to ensure rapid collection of payments. Pay your bills when they are due instead of paying them ahead of time, so your cash is working hard.
Use a cash flow planner to outline upcoming receivables as well as outlays. That way, you can anticipate periods of tight cash flow. And with that information, you can plan your projects.
- Know when to liquidate
Sometimes liquidation is the best move for a business. It’s quite common considering that more than 70% of startups go under within the first few years of operation.
Liquidating a business will help get rid of excess inventory and pay off debts. Using a liquidation service can simplify and guide you along the process. You’ll need solid advice to wind up your business smoothly.
Knowing how to properly manage your finances and decide on the most important financial aspects can benefit your business as well as your decision-making skills.