Managing finances well is one of the most important things when having a business. If you are not skilled enough in managing finances, get ready for business, you will experience difficulties in developing. A healthy business requires good financial management. The amount of income and expenditure must be balanced, not only managing the finances of business doers also need to understand the importance of managing cash flow and how to keep cash flow smooth. Unfortunately, there are still business people who underestimate financial management in their business.
If you want to have a business that runs smoothly and is more profitable, then make sure at least your company’s financial management is also quite good. Therefore, you need to know some tips and tricks for managing finances in business as follows:
How to Manage Optimal Finances in a Company
Make an Annual Evaluation
Making financial evaluations is an end in the flow of documentation in one period. There are 2 reasons why financial evaluation must be conducted.
First, the financial evaluation will show a company’s achievements over a period. The evaluation can provide information on whether the steps taken are correct or not. With evaluation also the financial condition for a period will be seen clearly.
Second, financial evaluation can also show the pattern of company spending in one period. If there are any shortcomings, then you can take corrective steps in the next period.
Determine the Term
To manage finances better you need to separate based on time period. Starting from making a general plan for business with a program that will be carried out for one period. Then, make a detailed requirement for each program. If you have made a detailed program, divide it into several categories of implementation time. Starting from daily, weekly and monthly expenses for the short term. Expenditures for the next 1 to 3 years for the long term.
Create an Income Plan
To start a job requires a good plan. However, if the planning is not carried out fully, the results obtained will certainly not be maximal. It is not impossible that it will cause losses. Therefore, to manage finances a plan is needed to regulate income. Think about which products you can produce for your company. Determine how much you can produce, look at market segments and confirm your sales target. Don’t forget, formulate a marketing strategy more mature so that you can reach the target as planned.
Separate between personal assets and company assets
One thing that often makes business people fail in business is to consider the money earned from the business as personal money. This perception is not wrong if the business belongs to an individual. This habit is what sometimes makes the business ultimately fail. For example, the costs required for production are used to finance personal needs. This is what makes these businesses lack capital.
The thing that you can do is to keep a record in order to help you see the company’s financial cash flow and of course with the bookkeeping you can separate from personal and business needs. In addition, you can also separate personal and business finance using a bank by creating a business account and a personal account. By doing this, all transactions from your business have clearer documentation.
Manage Cash Flow
Earlier we discussed a little bit about the importance of better managing cash flow. A business certainly needs funds to keep it running. These funds are used to finance the business for purposes such as funding employee salaries, production needs, and others. No matter how much income your business receives, but if most of the income is in the form of receivables, then over time the business operations will experience problems. Therefore this is the importance of managing cash flow in a business.
When managing finances make sure all records are matched with purchase receipts or other proof of expenses. After recording expenses, you must also document the income. Both of these fund details can later be used to make a balance sheet. From making the balance sheet, you can find out how well the financials in the company.
If the cash flow is smooth, you still have to do regular and periodic monitoring. Try all bills are paid so that it does not become a problem in company finances.
When you want to manage finance in a company, you need someone who clearly understands finance. For that, business people need to understand accounting or at least find an accountant who is truly an expert in this field. By understanding accounting, it is expected that owned businesses can have better financial management.
Prioritizing Company Needs
Remember this theory that income must be greater than expenditure. Not only that, but business people must also be careful in choosing what companies need and what they don’t. This is to reduce company expenses, too much expenditure compared to income will make cash flow unbalanced. Therefore, try to prioritize the needs that are indeed needed by the company.
For example, such as company expenses for office rent. This you can try to find an office with an affordable and comfortable price, no need to look for a fancy office.
Set aside Company Revenues For Business Development
Not that you can not enjoy the results of the benefits obtained from your business, it would be wise if you can manage these profit funds to become your business development funds. One of the important tasks of financial management is to keep the business growing and developing. The more developed the business is undertaken, the greater the income received by you. Therefore, set aside a portion of your business income to develop your business.
Prepare an Emergency Fund
Every business that is run will certainly not run smoothly as all that has been planned. The existence of one or two problems will certainly be experienced by us, such as the decline in turnover due to the emergence of competitors and several other things that require you to think hard to solve it.
One way to anticipate this is to have an emergency fund. These funds can later be used for purposes that are urgent. If you face a problem that makes a big loss in a company, you can use this emergency fund to return to make your company stable and you can still run the business.