Applying the following pointers on a weekly basis will create orderly, useful records that will help you better understand your business’s financial position.
1. Keep Your Books Current. Keep a set of books, keep it current and keep it to a point where you can read your reports,” says Mark. Try setting aside a specific time in your work day for daily and weekly bookkeeping. At the end of each week, complete the tasks necessary to know your reconciled bank balances.
2. Know Your Cash Flow. Take the time to calculate your weekly sales and weekly payments. “You should know your cash position—your bank balance and what’s coming up for receivables and payables—at all times,” notes Mark.
Knowing your cash flow allows you to:
- Better deal with unexpected expenses;
- Pay bills on time;
- Prepare for future expenses;
- Make adjustments for changing sales cycles; and
- Take advantage of opportunities such as setting up alternative financing, corporate financing, or benefits for employees.
3. Record and File Consistently. File your financial records and business receipts in a designated place at least once a week. Consistently separating your records into file folders with labels such as bills due, bills paid, credit card statements, tax records, utilities, loans, employee information and bank accounts, will make this information easy to find and use.
4. Use a Planner. You can use a day planner or electronic calendar to note when bills are due and when paycheques will be issued. Some day planners include a section for recording daily expenses. Application software (apps) and electronic reminders sent through office software can remind you to complete weekly tasks such as bookkeeping or filing.
5. Pay Your Bills on a Weekly Basis. Assign a specific day of the week for paying bills or, if you have a regular bill of a fixed amount, set up an automatic bill payment. Paying bills on a weekly basis eliminates forgotten payments and late fees.
6. Focus on the Future. “Project, budget and plan—time spent on these tasks enhances business value,” Mark says. Making time each week to look forward provides you with a better understanding of how much product you are able to produce, or service you can provide, and sell with each season. Knowing how much product and money your business generates can allow you to sell your business for top dollar; knowing your cash flow can help you to secure financing.
7. Hire a Designated Accountant. An accountant will organize your finances and reduce your time spent on administrative matters, giving you more time each week to devote to your business. “Small business owners often work far too much in their business and dedicate little, if any, time to working on their business,” Mark says.
He notes, “Spending all your time working in the business limits earning capacity, and can often lead to business owner burnout.” If all of your time is spent on completing day-to-day items, “this doesn’t allow for strategic thinking, for new idea generating, for the forward thinking that will be of most benefit to your business.”
The following accounting and finance services are popular with small business owners wanting to organize their finances.
- Budgeting and Pro-Forma Reporting: “Budgeting allows you to properly prepare for financial stability, no matter what the state of the economy,” says Mark. Budgeting also allows you to strategize how to increase and improve results and profit.
- Business Health Check-Up: “This service helps by identifying strengths and weaknesses in the business that should be addressed. A possible strength could include identifying a target or niche market that has growth potential or could provide a new revenue stream for a new product or service. A possible weakness could be that you are going to run into a cash crunch and need capital to get to the next level,” Mark says.
- Benchmarking: Mark explains that “benchmarks show you how you fare compared to your competition. Learning from others confirms whether you are working efficiently” or where you need to find efficiencies or improve quality.