How to Keep Your Financials Front and Center All Year Round

Jun 15

Financial management of a small business is a year-round task, not just something to deal with when tax time comes around.

In order to make tax season less stressful and to ensure the ongoing financial health of your operation, you need to keep financials front and center, day by day and week by week, all year long.

Here are some pointers for keeping your numbers under control throughout the annual cycle.

Automate Where You Can

Manual record-keeping is time-consuming and prone to error. You’re likely to find yourself entering the same number in multiple places. Many small businesses get into automation one function at a time. They then find themselves with a mishmash of tech solutions that don’t quite work together.

A business owner’s life is easier when there’s a modern, integrated financial system.

With the right tech stack, numbers are entered into the system only once, whether it’s at the point of sale, when an expense is incurred, or at any other time.

A good system does the balancing and reconciliation for you. It also provides flexible reporting. This includes not only tax reporting but also the standard financial statements you need to understand the state of your organization.

Perhaps most important, an automated system gets you out of the trenches of tedious, repetitive tasks and frees you up to concentrate on your customers and on the activities that earn money.

Build a Budget and Stick to it

There’s nothing more fundamental to a financially healthy small business than a budget. It keeps your expenses in check and shows you what to do with your revenue.

When an unexpected opportunity presents itself, a budget tells you whether you can take advantage of it and, if so, how. If unexpected expenses pop up, the budget guides you on operating within your means and keeping your business in the black.

Cash is the lifeblood of a young and growing company, and maintaining a healthy cash flow is perhaps the most critical financial challenge for a small business owner. Budgeting helps you avoid overspending, which can lead to cash flow issues.

Revisit your budget frequently and update it to keep it realistic. For example, check it before and after every major expenditure. The right budget tells you what capital is available as well as how much revenue and expenses you can expect.

Use Forecasts

Running a small business is a challenging task that requires a lot of attention to day-to-day issues. However, it’s important to step back and look at the big picture. Forecasting is a tool that helps you do just that.

You aren’t limited to a single forecast. You can build multiple forecasts that take into account potential variation in key factors such as sales growth and overall economic conditions. You can check in during the year to fine-tune forecasts to anticipate revenue, expenses, and profitability.

It’s essential to include cash flow forecasting. Your forecast income statement may show a profit, but, if you don’t have timely cash inflow, you may run into a crunch that makes it difficult to continue to fund your growth. This is especially important if your business is seasonal, and it can help you get through both the busy times and the less busy times.

Create a Schedule

To keep on top of your finances all year through, there are tasks you need to do every day, every week, and every month.

It’s easy to fall behind, and, once you do, it’s hard to catch up.

That’s why it’s important to build a schedule and stick with it. If you do, you’ll be ready to deal with every important financial decision or action as it comes up.

Your schedule might look something like this:

Daily: record all your transactions and expenses for the day. Do any necessary daily reconciliation. This can be easier if you have the right automated system.
Weekly: take care of your invoicing and payroll. An automated system may do most of this for you.
Monthly: ensure all bills are paid. Review your budget and adjust as necessary. Look over your financial statements, especially the cash flow statement.
Annually: review the year-end statements and build next year’s forecast and budgets.

Work With an Experienced Accountant

Automation, budgeting, forecasting, and scheduling are fundamental to keeping financials front and center throughout the year. They require ongoing attention.

You didn’t start your business to spend all your time dealing with the numbers, but understanding them and using them in decision-making are critical to your company’s growth.

Fortunately, you don’t have to do it by yourself.

An experienced accountant such as Teitelbaum CPA can help you keep your finances under control so you can focus on serving the customers and doing what you do best.

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