How to Optimize Your Small Business Finance Process?
In the entrepreneurial age, businesses are popping up at every corner, each with a unique story to tell and a not-so-unique product or service to offer. Don’t worry, you needn’t reinvent the wheel in order to make it big in the increasingly expansive marketplace of tomorrow, but you do need to optimize your finance processes if you want to reach your second year.
In fact, in an oversaturated marketplace where competition is plentiful and everyone is fighting for the piece of the proverbial cake, it only stands to reason that you need to minimise expenses while maximising revenue in order to drive innovation. Oh, you thoroughly agree? Great. Let’s take a look, then, at how you can optimise your finance process today for a better tomorrow.
Keeping track of expenses
Creating reports and monitoring every penny that goes out of your company is not only time consuming and tedious, but the entire process is also extremely prone to human error. Needless to say, this is one of the most important aspects of running a solvent and liquid company that will reach its second year with a positive revenue stream.
Luckily for you, modern technological advances have made it infinitely easier for 21st-century businesses to automate the process of creating reports and monitoring business-wide expenditure. Simply choose one of many online accounting platforms and have your accounting process monitored by smart software that requires very little human oversight. However, this is not your be-all-end-all financing solution.
Managing cash flow
Cash flow management is another crucial process that could define the future of a small business venture. The keyword you’re looking for here is liquidity, or the ability of your company to cover its immediate debts and expenses while driving the innovation process and keeping the business operating smoothly.
You can improve liquidity by minimizing your expenses across the board, taking out a small business loan, and even by using factoring to receive cash upfront in exchange for a percentage fee of every invoice. How you approach cash flow management will be up to your financial planner, but the key takeaway is that it should hold top priority in your company.
Improving payment processing
Small businesses can not only minimize cash loss and omit the problem of slow-paying clients with the use of credit and direct debit system but also capitalize on automated payment processing and management. The time has come to integrate new payment solutions into your finance process in order to allow your repeat clients to make payments at their pace.
This will not only help you develop healthy relationships with your customers, but it will also help you avoid the potentially crippling problem of outstanding, failed, and late transactions through the failed payment handling processes these solutions can offer. Moreover, by offering a variety of payment options and streamlining the sign-up process, you can easily attract new clients and customers to your brand. Remember, relying on a single payment method is not a great way to optimize long-term solvency.
Creating actionable finance reports
Finance reports are not exactly exciting to look at, but they do serve a very important purpose – they help you create viable long-term strategies that will help your brand grow quickly and efficiently. Provided that you act on those reports, that is. Creating truly actionable finance reports is a lot of work, and it goes beyond monitoring your expenses and revenue into the realm of cash flow statements, monthly and yearly projections, balance sheets, etc.
These reports will be instrumental in giving you the relevant insights about your performance in the market, as well as how you stack up against your peers. Moreover, an actionable report will also help you invest in innovation, optimize your payroll expenses, and bring new talent into your company without risking financial dips in the long run.
Preparing for the tax season
Lastly, every small business would be wise to prepare for the tax season thoroughly by using online tools that automate many a process, but also by keeping track of the ever-changing tax requirements. Ensuring compliance and minimizing the chances of financial penalties due to non-compliance is essential, so make sure you always know how much tax you’ll need to pay by monitoring your gross profit and calculating your net profit accordingly.
It’s important to note that handling tax obligations in the modern business environment doesn’t have to be an arduous task if you introduce smart software into your accounting department. Allowing your financial managers and planners to take any guesswork out of the equation and minimize human error will go a long way in avoid financial ramifications and staying solvent down the road.
One would think that managing finances in a small company would be easier than in a big corporation. Alas, the harsh reality is quite different, and much modern business struggles to maintain a positive revenue stream on an annual level. This is why incorporating these solutions into your finance processes will be instrumental in the pursuit of long-term success in the industry.