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What Business Owners Need to Know About Everyday Money Management.

May 19, 2019 by  
Filed under Business, Money, Opinion, Weekly Columns

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( Life becomes much easier with good financial skills. Business money management is about more than just working paycheck to paycheck. Don’t worry if you do not have great accounting skills, money management is still easy. You only need to know a few things to improve the process.

Budgeting can improve your life

In business, decision-making is a two-part process. You need to determine your goals and then you need to clarify how fast you want to achieve them. Most companies’ budgets include production, operational cost, and sales. After you allocate budget for all those things, decide how to prioritize your return on investment, marketing, other expenses, and emergency funds.

For many people, a budget is a tool to accomplish short and long-term financial goals. For some, it is just another set of restrictions that stop them from spending money on certain things. As a business owner or a manager, you can easily get by without a budget, but if you are serious about money management then you need a budget. And if you don’t feel like deciding on your priorities, someday unexpected economic hardships will force budget planning upon you.

The first thing you should do is to create a business budget. Your budget doesn’t necessarily have to be accurate because there are many things which you just can’t predict, for example, cost of third-party services or taxes. However, in the long run, your budget projections will become precise, but first, you need to start.

Mixing finances is a bad idea

To track your business performance properly, it’s important to keep your personal and business finances separate. Using the same credit card or bank account for both business and personal use can badly affect your business. It can make it easier to take money from the business to fund personal goals, but it is one of the easiest ways to kill a business.

Many entrepreneurs do not keep any difference between the business and the business owner in terms of finance. It is common and the worst mistake entrepreneurs make. The golden rule of managing a business is keeping your personal and business transactions separate. If you can keep two accounts, that will be a big help for you in the long run.

Entrepreneurs should pay themselves a salary instead of withdrawing money as per their convenience. This is a more structured way to avoid muddling of finances. Treating your company as a personal ATM will kill your business. So, if you want to manage money in a better way, start practicing the processes mentioned above.

It is important to keep receipts

Receipts and records for any major purchase or payment should be documented. Businesses usually make files and keep track of cash flow. Staying organized is an important money management tip for business owners. The process of keeping these records is easier and it helps you keep track of your finances. There are many ways to do that. You can take the help of an accountant or you can download a mobile app that allows you to record or upload receipt details.

When you monitor your spendings and cash flow, you can easily identify overspending habits and you can also find more ways to save money. Keeping records of your company’s financial activities makes your tax filing easier. Transaction records help recreate a financial picture to help you see how your company is performing.

By following this process, you can answer some important questions like are you improving as a business? Which products and services are selling better than others? What problems do you see in everyday money management? You need to know how your business is doing to increase your chances of success.

Late payments can kill your business

Not getting paid on time can be frustrating, and it is detrimental to your company. It hurts when you expect the money to come before a certain date but it doesn’t reach you. There are times when even your most valuable customers delay payments and refuse to pay on time. You might not always want to do this, but creating an easier process for payment collection is important.

Business owners often don’t remind customers and vendors of their dues, and later they suffer. Companies do not want to lose customers and entrepreneurs don’t want to look desperate. If you’re also facing the same problem because someone hasn’t paid you, ask them. Sending a gentle reminder is not at all bad because that’s one of the ways you can get your money faster.

If you’ve been working with a client for a long time, try to build personal connections with them. Your relationship with clients will make it easier for you to collect payment and you’ll feel more comfortable in sending reminders to them.

Staff Writer; Corey Shaw

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