Strategies to keep company finances organised
It's the one thing that every business should be absolutely clear about: what is the company's financial position? It can be easier than you think for the finances to get out of hand. To use a nautical metaphor, it needs a firm hand on the tiller before it gets to the stage of all hands to the pumps.
Keeping an eye on the money
When you run a business, you can't be everywhere at once, especially when you're working to develop and expand. That means you need to have good people to work with you and keep you informed as to what's happening on the financial side of your company. Taking your eye off the ball and just expecting your financial team to keep you abreast of what's going on may work when things are going well, but if there are irregularities, for whatever reason, you may not be in a position to spot them.
Running a business is a big responsibility, so keeping those financial checks on a regular basis is essential for avoiding significant problems. If your finances are under pressure, you want to find out the reason and deal with any problems. If you don't do this, there may be serious consequences: you could have to make staff redundant or reduce wages, neither of which is conducive to a good and productive working atmosphere. In the worst-case scenario, your company could go under – not an outcome anyone would wish for.
Unidentified financial problems could lead to meltdown, so it is as well to be aware of what could be an underlying cause of the company finances not being in the state you expected them to be.
- Poor management: As previously mentioned, you can't always keep an eye on everything all the time. You trust people to give you correct, up-to-date financial information on a regular basis. However, employees are human, and sometimes, if the financial section is not being managed well, there can be gaps in information where things are happening that are slipping through the net. You need good checks and balances so that if you detect that there are problems within the financial department, you can deal with them quickly.
- Invoicing: Late invoicing can lead to serious cash flow problems. After all, you have supplied the goods or services, so invoices should be sent out promptly and chased up when necessary. Most clients and customers respect the need to pay on time (and there are always measures you can take for perennial late or poor payers), but it always pays to check the status of invoices. To help with the invoicing process, you can always get support from the likes of invoicehome.com to manage your cash flow more effectively. Reliable invoicing is the lifeblood of your business.
- Staff fraud: Unfortunately, this does happen from time to time – there are many media stories that reference staff stealing money from businesses, even from charities. If you or colleagues working on the finance side suspect that there may be fraudulent activity, you should first go through the finances carefully to identify where fraudulent activity may be occurring before pointing fingers. You are entitled to get checks made on the personal finances of staff members who are suspected, but you should also look at deals that were previously made by employees who have left the company. It's not a pleasant process, and when you start to point fingers without evidence, then you could affect productivity, and that won't help the financial position.
It can be easy to get lost in a bubble when you're running a business, concentrating on the internal aspects, whilst promoting a good customer-facing service externally. Many businesses now look towards outsourcing certain activities that are essential to the smooth running of operations – for example, marketing and IT are frequently outsourced to specialist companies because the in-house expertise isn't there.
It's certainly worth considering bringing in a professional accountant to handle your books. You get an impartial view of your financial situation, will be asked questions about a whole range of subjects relating to your accounts, and have experts whose job is to help you. They can also assist with limiting project budgets so that you don't overspend.
The way forward
Taking control of your finances means you have every possibility of ensuring your business thrives. Make a plan that flags up irregularities, and then make sure you deal with them effectively and fairly.