How to effectively manage the finances of your business

For a business to be successful, you must ensure that you are on top of your finances. This will allow you to understand how you spend money within your business and how much expenditure your business goes through. Read this article to learn how you and your business can effectively manage the finances within the organisation.

Have a clear business plan

First things first, you should ensure you have a clear business plan. A well-written business plan will help establish where you currently are in terms of your business, and where you want to end up in the future.

A major part of this involves you detailing your business's finances and how you plan to spend your money. You should be aware of how much money you have and how you will source money in the near future. This will help you have more control over your finances and help you manage them into the future.

Keep track of your spending

The best way to manage your business's finances is to keep track of your company's spending. If you aren't aware of how much your company is spending, then it's likely that you will not be able to control your finances fully. There are various ways for you to keep track of your spending. It may be best for you to hire internally or externally accountants to help run the finances. This allows relevant experts to keep track of your spending on your behalf.

One useful way to keep track of company spending is to use a company card. There are physical cards that you can use, as well as virtual ones. You can discover the benefits of a virtual visa card by contacting Payhawk, which specialises in these types of cards. The virtual credit cards will allow you to keep on top of your spending as it happens and allow you to be aware of every payment you need to make, as well as view outstanding expenses.

It mustn't be just you that's aware of the spending within your business, but also the rest of your employees, particularly the executives. Those that manage teams and are in charge of any type of finances should be fully aware of spending and report all spending into a system so that it can be tracked.

Control your stock levels

In order for your business to have more control over its finances, you should ensure you are aware of your stock levels and that you have full control over them. Efficient stock control is about ensuring that you have the right amount of stock you need at any one time. That means not having too much stock around and not having too little stock around.

Having too much stock means you've overspent and will have to further spend money and time managing the stock. Some stock may also be perishable, which will lead to waste and more money wasted further down the road. Having too little stock can lead to a downturn in productivity and a loss in sales.

For you to get on top of your stock levels, you should consider utilising automated software that can keep your stock levels at the perfect amount. Some automated software will also be able to order stock when they reach a certain amount, and stop purchasing stock when it reaches more acceptable levels.

Ensure you have received all payments

It will be useful for you to ensure that you have received all the payments that are owed to your business. All payments must be received at the right time, so that you can plan your finances in the future accordingly. If you aren't receiving your payments at the right time, you won't fully understand your finances.

Even if you lose a few days of payments, this could set you back on your own payments, which delays everything. To reduce the risk of late payments, you should clearly state in your credit terms all the payment conditions. This will ensure that they are aware of any penalties for missed payments.

Likewise, you should ensure that you send out your invoices on time, and that they are clear and accurate. This can again be achieved via smart software, helping ensure everyone receives all the information they receive.

Be aware of tax deadlines

Tax deadlines are important to be aware of. If your business fails to meet the deadline for sending tax information to HMRC, you could incur penalties and have more to pay through interest. These are all elements that can be avoided by filing your tax information on time.

If you aren't sure when your tax deadlines are, you should check with HMRC. It depends on what sort of business you are operating and what tax you are looking to file. Filing your accounts and tax return is crucial, so ensure you or your accountants are on top of things.