Building out a business requires money and lots of it. Paying for the first office, a skeleton staff, and all the equipment needed always ends up costing more than expected. This predicament causes all manner of problems where business decisions have to be continually weighed against available cash and cash flow forecasts. At an acute stage, poor financial management seriously interferes with the early stage growth of a company.
Here are a few ways to manage finances better to improve the business prospects of the company.
Use Conservative Numbers in Your Forecasts
One of the most common mistakes for business owners is to be overly optimistic when it comes to total sales and the timing of them. When there’s not enough money available on the marketing side, then it doesn’t matter how good your product or service offering is; too few people will hear about it. When there are fewer marketing dollars behind the launch, the sales will suffer.
Be careful with projections because they tend to ignore the realities that the marketing department faces. While the total number of customers may eventually match expectations, if the promotional campaign is spread out over a long period, the early numbers tend to disappoint. To do a better job of predicting future cash flows, it might be worth studying the Ohio University masters in financialeconomics course. This educational course at Ohio University provides training in all aspects of accounting, including preparing more accurate forecasts for business. The Ohio University online course allows students to study in their own free time, which makes it a useful one for business people too.
Streamline Accounting Processes
Use reliable accounting software that’s preferably available in the cloud. Doing so allows the CEO and senior accounting staff to access the information whenever they need to do so, even when the office is closed already. Access is no longer restricted to a software license and how many users are allowed access, which makes life easier.
A tool like Xero or Quick books works well for smaller-sized businesses that don’t need too many advanced features. Most modern software packages make it easy to keep up with accounts receivables and avoid accumulating debts from other companies owing money for too long, which can stretch the company’s finances.
Look for Discounts
It’s not just homeowners who can seek out discounts. There are plenty of smart businesses that do the same. For instance, companies often offer a discount on the invoiced amount when the bill is paid sooner, which saves them time later chasing up bills. Negotiations for a larger order can include the request for a more substantial discount than would normally be offered. Shopping around for all the supplies that a growing business requires is also well worth it. Consider in centivizing the staff member who’s responsible for purchasing by cutting them in on a percentage of what they save vs the sticker price. This will make them look harder at all the options to get prices down.
Being smart when running a business often involves managing money better than other startups or small businesses. Sooner or later, when a business mismanages their financial affairs, they’ll run into difficulty. If not caught soon enough, it could be catastrophic for the survival of the company. Don’t leave it too late to overhaul the financial management of the business.