By | Kevin Faber
Dealing with finances amidst the excitement of creating a new business can be draining. It’s tempting to focus on the short-term with accounting and dedicate your time to decorating. However, budding entrepreneurs should avoid falling into this trap. Finances are the backbone of any business, and the issue should be given extensive thought. In order for a company to thrive, it needs to have a thorough and long-term plan for its finances. Determining methods for this plan is often difficult. So, here are five tips for taking care of your business’s financial future.
1. Find a Factoring Company
Factoring can be difficult to understand, but it is an excellent strategy for small businesses to use. In essence, selling receivables is called factoring. Small businesses often allow customers to pay over a period of time. It attracts more clients and breeds loyalty. However, this can be detrimental if you need the cash immediately. This is where factoring companies come into play. If you sell your account receivables to said companies, you’ll be able to get about 80-90% of the invoice almost immediately. Once the customer’s payment is due, the factoring company will give you the rest. There will be a slight subtraction from the funds for the company to keep, but it’s well-worth the loss. As a small business, you likely have charges that need to be taken care of immediately. Otherwise, you may lose essential components of your company, such as a shipment or your building. Having money delivered to you as soon as possible is key to staying afloat.
2. Use Mobile Payment
If you’re planning on catering to younger generations in any capacity, you should consider using mobile payment methods. These will allow you to complete every transaction through a mobile device. Turning customers away due to a lack of software would be detrimental. Due to the popularity of technology with young consumers, using it will attract more modern clientele. You will also be able to handle your finances with greater convenience. Having information on mobile software will allow for maintenance at any time, even while at home. Don’t get rid of regular forms of payment, but try to add this technologically-based one.
3. Hire a Professional
No matter how well-versed in finances you are, it’s a wise idea to hire a professional. There are legal matters involved in business transactions that require someone trained in the subject. You’ll have instant access to any necessary paperwork. This is especially helpful when creating your payment terms. A professional will help you form a clear outline that works for your business. While hiring someone to help with accounting can be difficult to fund, it will be a boon in the long-term.
4. Keep Detailed Records
The last thing you want is to lose track of your financial records. Besides all the monetary loss it could cause, paying your taxes will be near impossible. Financial reporting is also essential to do correctly. This is why having an organized system is key. Consider utilizing bookkeeping software that will ensure maximum efficiency. If you’re not technologically inclined, look for ones that advertise themselves as easy-to-use. Another reason to keep clear records is the growth of your company. Financial records can act as a map of your business’ progression, along with instructions on what to change. A particular team’s deficiency will stand out, as well as the success of others.
5. Invest In Long-Term Solutions
Purchasing the essentials for your business should come first, but investing in the long-term can be a game-changer for a growing company. Instead of using any leftover funds to buy yourself a new coffee-maker, save it for a piece of machinery your business would benefit from. This will be the determining factor for your continued survival. A company owner that thinks in the short-term won’t be able to keep going for long. Besides that, employees will have more faith and determination. It’s hard to believe in a small business that’s just starting out. However, clear signs that the future has been planned for will encourage belief in your cause. Determined employees will result in a higher success rate for your company.
Taking care of funding is draining at best. Consider having others help you carry out these steps. Determine who can be trusted with your business’s financial information and ask for assistance. Above all, ensure that everyone involved is looking towards the future. Staying focused on the company’s current state will only be a detriment. If you keep these methods in mind, your business will be more likely to succeed in the long-term.