8 Tips and Resources for Managing Your Business Finances

One area many business owners struggle with is keeping track of their finances, but it is one of the most important areas given that cash flow is the lifeblood of the business. Small mistakes and a lack of knowledge and resources can be costly and problematic.

We’ve selected some of the most important things to consider and provide these tips and resources.

• Find the best local credit union. Given their frequent willingness to provide loans, finding a credit union that understands the needs of your business can go a long way. There are many online tools to find credit unions based on specified criteria. Many local credit unions require membership in an affiliated organization, often listed on their web site, but costs to join are usually minimal and well worth it. Here are a few tools to start with: Find A Credit Union, Credit Unions Online, Credit Union National Association.
• Find a trusted mentor. Access to free help is just a click away, with sites that help connect entrepreneurs with mentors fitting their needs. Having a mentor assist with setting up finances can be invaluable if the person is trustworthy. One resource is the Association of Small Business Development Centers, which provides access to full-time business counselors around the country, often former entrepreneurs or M.B.A. graduates. Other sites for finding mentors include SCORE (affiliated with the Small Business Administration), iMantri and MicroMentor.
• Choose the correct accounting software. While software is a mainstay of small business finance, sorting through dozens of choices isn’t easy, since there may be better options for your specific needs than the popular QuickBooks program and related packages. Find Accounting Software is a free tool that helps find exactly the right solution through a detailed questionnaire. TaxSites provides extensive resources including a list of software for small businesses.
• Consider hiring a bookkeeper. A good, trusted bookkeeper can handle all of the mundane tasks that go along with keeping finances on track. Be sure to understand the various types of bookkeepers and how to avoid fraud. A free bookkeeper hiring test (to be taken by prospective hires) can be requested.
• Accelerate cash flow with mobile payment systems. Mobile payment systems can allow faster and easier acceptance of payments for products and services. A system called GoPayment from Intuit allows acceptance of payments through mobile phones and can directly download the data into QuickBooks. To monitor transactions, users can access Intuit’s online Merchant Service Center to search, view and create reports.
• Look into factoring receivables. Accounts receivable financing allows immediate payment for invoices rather than waiting 30 days or longer and tying up working capital as a result. Factoring services advance the amount of the invoice minus a “discount”, or fee (advances of 80 to 90 percent are common), and provide a “rebate” when invoices are paid – the amount depends on how long it takes the customer to pay. FactorFind provides a directory of factors specializing in small businesses. Businesses can be matched with the most appropriate factors at the International Factoring Association, BuyerZone, and Resource Nation.
• Understand and measure capital versus operational costs. The goal often is to drive down the totals on the capital costs side of the spreadsheet and move more over to the operational side of the equation. Operating costs don’t require complex depreciation calculations and are more easily adjusted from year to year. Outsourcing is one way to do this because it sits on the operating cost side and helps to free up cash by not tying it up in capital investments (such as IT infrastructure, servers, etc.) or tasks like head hunting and payroll management.
• Measure bottom line impact by looking at the service budget year over year. Are the costs for delivering a service going up, staying the same or dropping? Figure out how much it costs to deliver specific services to the business such as recruitment, payroll or benefits management. Understanding cost-to-serve offers the business great insight into projects and tasks, how long it actually takes to do them, and as a result how much they cost. If you want to pare back on the budget, there are hard numbers to work with that show exactly what the impact on quantity and quality of service will be if resources are reduced.

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About the Author: David Cotriss is a business/tech and new media writer, having published 500+ news and feature articles to date worldwide in magazines ranging from PC Magazine to The Industry Standard.