So, you’ve got your accounting software sorted (if you don’t check out our recent blog on the topic). Now how do you ensure you’re getting the most out of your finance function so your business can maintain a steady growth trajectory?
When it comes to maintaining business momentum, at Myssy + Co we believe that to achieve consistent growth, every business should live by the following financial best practices:
- Track your expenses properly
It might sound obvious, but it’s crucial to keep a thorough record of all your business expenses. Use paperless payables like Hubdoc to save and record your receipts on a weekly, if not daily, basis.
You’ll save your business precious admin time and significantly reduce both your and your accountant’s stress levels come the end of the financial year.
- Reconcile your bank statements regularly
Balance your bank accounts regularly (at least monthly) and make sure there are no unauthorised transactions in your bank statements.
Business bank accounts often have tight regulations, with a limited window of time available to resolve issues. Avoid being burned by ensuring your business is operating diligently in this regard.
- Review your chart of accounts
Your chart of accounts helps you to track and categorise your business expenses. While this might sound straightforward, many businesses don’t put enough thought into it and suffer the consequences – namely, accounting reports that lack value.
A common mistake we see is that too few categories are created. This makes it very difficult to create financial reports by business function (for instance, accurately reviewing your marketing expenses vs your operational expenses), which makes it even harder to view the full picture when it comes to profit and loss.
If you’re not sure if your chart of accounts is providing you with the level of financial visibility you need, we strongly recommend seeking a professional opinion.
- Automate your invoicing
To keep on top of your cash flow, you need your customers to pay you in a timely manner, and one of the best ways to ensure this is to automate your invoicing process.
Invoice data for repeat customers often stays largely the same so using technology to automate this process can also provide significant productivity benefits to your business.
- Use the right finance professionals
Who should be responsible for managing your finances will likely change dramatically as your business grows.
When a business is first formed, it is not unusual for the owner to take on all of the accounting responsibilities.
But as the business grows and transactions increase, the owner likely won’t have the time or expertise to effectively manage the business’ financial processes and strategy.
Outsourcing bookkeeping functions like payroll and expense tracking, and hiring a qualified tax accountant are both great ways to improve business performance and ensure compliance.
A business advisor or outsourced CFO is another common consideration as the need for strategic financial decisions increases.
- Keep tax time in the back of your mind
Speak to your tax accountant and bookkeeper regularly to ensure you’re correctly maintaining your records and tracking expenses.
This means when tax time comes around, you’ll have everything you need ready to go. It will also help you to make informed financial decisions throughout the year, which could help to reduce your overall tax bill and avoid incurring penalties.
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If you need a hand with your finance function, the qualified accountants and business advisors at Myssy + Co can help! Get in touch today.