Improve financial management by staying in control of the money and the important financial decisions. Business owners must sometimes delegate bookkeeping and financial tasks, but it is still important to maintain a high level of oversight; staying in financial control is vital for several reasons:
Errors can happen anywhere, but frequent, careful reviews of financial data will cut down on them considerably. Mistakes in data entry are common, as are computation errors, omitted transactions, number transpositions, and duplicate entries—particularly when there are multiple hands on the books. Routine reviewing and reconciling by a person dedicated to the task helps spot mistakes as soon as they occur—and not after months of accumulated fees or interest charges.
Billions of dollars are lost each year due to fraud. Accounts that are not monitored are highly vulnerable to fraudulent activity. Staying in control of the financial data cuts down on opportunities for fraudulent charges, unauthorized spending, misuse of funds, cash theft, check tampering, and deceptive manipulation of financial data that can wind up wasting thousands of dollars.
Good management of cash flow will help you efficiently operate your business day-to-day and also invest in your company’s growth when the time is right. Not knowing how much cash is on hand can lead to financial headaches, like becoming inadvertently overdrawn, overdue on bills, or unable to pay yourself and your employees promptly.
If you aren’t reviewing your statements regularly, you may be spending on items you don’t need, thought you canceled, or didn’t realize were continuing charges. Other needed items may be available less expensively elsewhere, but you will have spent months on wasted high charges before you realize it. Staying in control of your finances means reconciling your accounts, comparing financial statements and data, tracking expenses, and analyzing your budget to make sure you are on track so that you can make accurate financial forecasts and spend your money wisely.
A well-researched and well-timed loan or line of credit can give your company a lifesaving cash infusion to help you sustain and/or grow your business. But when the interest obligation starts canceling out the financial benefit, or when the payments become too burdensome for the revenue stream to support, all aspects of your business can suffer, including your ability to meet basic operating and payroll costs. Maintaining tight control of finances does not have to mean that you avoid spending, investing, or scaling, but it does mean that you avoid doing it recklessly, only to wind up compromising your credit and owing more than you can manage.
When a surprise downturn occurs—which, inevitably, it will at some point—you’ll be glad to have a financial cushion to fall back on. A major equipment outage, a weather disaster, an unexpected illness or injury, an economic slowdown, or another unexpected crisis can shut down operations for a prolonged time. Building into your financial plan a way to combat the unexpected event prevents it from turning catastrophic.
When financial control suffers, businesses can find themselves overdue and delinquent on payments, suffering cash flow problems, and slow to receive timely payments from customers. Some ways to get better control of financial matters before it’s too late:
· Hire a bookkeeper whose work you can oversee for greater accountability
· Analyze spending patterns
· Redo the budget with more accurate estimates
· Adopt a system for tracking expenses
· Set aside designated time for bookkeeping tasks
· Make account reconciling a priority
· Create an emergency fund
· Adopt online accounting and check printing software that handles bills, payments, invoices, and payroll for you
· Create a system for mailing on-time payments to suppliers
· Scan and upload receipts to cloud storage so that you have comprehensive financial records
· Use automating tools for routine bookkeeping tasks and mailing payments to free time and improve accuracy