How Healthy is Your Company?
With so many moving parts vital to the success of operating a business, time is most managers’ number one challenge in growing their business. One way to save time is to know which financial management tools will help you easily measure your business’s success and achieve your goals.
Master these five financial and accounting activities so you’re putting your time and energy in the right places to grow your business.
1. Report and Review Financials Consistently
Financial data in the form of a profit and loss statement, a balance sheet, and KPIs are powerful tools to gauge the success and health of your company. Accurate data flowing into the financial statements and KPIs will help you make better business decisions. Reviewing these numbers monthly or quarterly allows you to see if you are on track to meet your goals.
2. Manage Cash Flow Regularly
Cash flow is about timing. Knowing how the money flows in and out of your business is crucial to the success of your company. Cash flow reporting tells you how much cash you have for inventory, operations, financing, hiring, investing, etc., which support the overall health and growth of the business. If managed properly, cash provides flexibility. And knowing your cash position at all times facilitates many financial decisions.
3. Implement the Right Technology Systematically
It’s important to review your current technology and choose platforms that will best address your situation. Increasing accounting accuracy and efficiencies with the right technology will improve workflows and the bottom line. Many times, changing technology is received with resistance by staff. Yet, adding technology that is intuitive, has easy implementation, provides minimal disruptions, and offers technical support will increase adoption of the changes with your employees.
Automating and using AI technology to do the heavy lifting will allow personnel to work on higher priority items that tend to create the most positive impact on your business. It’s best to have a schedule for reviewing technology rather than being surprised when the “latest and greatest” arrives. Then you’re rushing to find the budget at the same time as you’re trying to evaluate and implement the technology. There goes your day—lost in reacting mode instead of proacting and planning.
4. Standardize Accounting Processes Thoughtfully
Evaluate your current accounting processes and procedures. Is everyone on the same page? It’s common to find companies whose accounting departments are not working from clear-cut, standardized policies. At its start, a business may have some unspoken procedures to get the bills paid and money deposited. However, as a business grows, the volume of transactions increases, and eventually, tasks start falling through the cracks.
Using a simple workflow can be an excellent foundation for creating a template to build your accounting procedures. QuickBooks Online (QBO) is a great source for templates. Here are a few things to get you started: 1) Be sure to segregate duties, 2) Send out invoices immediately, and 3) Reconcile monthly. Streamlining your workflow and having clear, written procedures for your accounting staff will set you up for success.
5. Support and Empower to Retain Great Employees
Part of financial management is supporting accounting staff. Having the right people doing the right job is essential in every area of the business. The best accounting team will directly affect the company’s accurate financial reporting. Clearly defined job descriptions and responsibilities will empower the individual to do great work. Delegating higher-level work when appropriate is key to creating expanded leadership roles. People at the top of Maslow’s Hierarchy of Needs— the “self-actualized” individuals—want to contribute, overcome challenges with creative solutions, and be part of a supportive and winning team. The results will always be good for business with this combination of highly motivated staff and a desire for individual and collective successes.
Running a successful, growing business requires mastering sound financial management habits. We think the five listed above are a great start. The fun comes when you find you’re executing all of them properly, happily, and profitably within a culture that supports your company’s mission and vision. And before you know it, you’ll be back in control of your time.