Chapter 2 – Financial Control – Rule your money
This is part of the ‘How to’ coaching series. An ongoing series of activities to make your business successful. Follow it step by step and see positive results as you develop a robust business model, set on a solid foundation.
Activity 21 – I monitor and track my receivables and payables on a regular basis
The healthy flow of money through your business is its lifeblood. If you’re running a busy business, and you’ve got lots of customers you’re supplying, it is all too easy to lose track of the pulse.
A robust process is needed to ensure you keep track of all the monies in and out. If you are not in a position to employ the services of a professional bookkeeper, there are many good bookkeeping packages you can choose from to run it yourself.
Once you’ve decided the appropriate approach – be that a professional bookkeeper or your own electronic system, you need to determine how it will set it up and kept up to date. Poor record keeping will soon get your business in a mess.
One key element of managing your financials is to ensure you have a clear set of terms and conditions and stated payment timeframes.
If you have a store (high street or online) you would usually have the customer pay at the time of purchase. It may be appropriate to have payment options for larger purchases, maybe some form of credit arrangement. By that I mean payment over a number of months; payment by credit card is received at the time of purchase, with a percentage cost implication.
Without a well-run process and rules, you can easily lose track of what’s going on.
You may decide to use the limit of the agreed terms with your suppliers; this will ensure you have a cashflow arrangement that keeps the cash in your business for as long as possible. This is useful if you have a cash gap. We will cover cash gaps and sticking to payment terms in other articles.
The ‘How to ‘bit:
Decide how you will monitor and manages the money movement in your business, and how regularly. Define a process that ensures you never miss a payment – both incoming and outgoing. A professional bookkeeper should provide you with regular updates on the movement of your money; good ones can offer additional services, such as invoice chasing.
Especially when using a bookkeeper, you still need to define and agree how/where your finances will be monitored, managed and reported on. If you are doing it yourself, the same rules apply. It is good practice to set up reminders to prompt when to pay/chase bills/invoices.
Keep on top of the cash in your business; it’s so much better to know what’s happening.
If you would like help setting up your monitoring/management/reporting process; Or, if you would like an introduction to our recommended professional bookkeeper, follow this link and Contact Us…