Starting a new business can be particularly challenging, which is why most start-up entrepreneurs or small business owners seek financial advice. Financial management is considered one of the most important aspects for a new business as runaway spending and bankruptcy can be a real concern for business owners.
If you need an accountant and your business is based in Wellington, Stephenson Thorner is an established accountancy firm that can help you secure your capital and to manage your cash flow. Here are some useful and simple tips that will help you make the best of your business finances, and avoid the most common financial pitfalls:
1. Maintain Records
A very common mistake business owners tend to make is that they throw away bank statements and receipts once a transaction is completed, when instead they should store them somewhere safe.
If you do not like to maintain the records the classic way, then you can always use one of the tens of smart phone and tablet applications that are specifically designed for this, such as the OneReceipt App or Smart Receipts App, which allows you to store, access, edit comments and download your receipts whenever needed. This way, you will never have to wonder where your money went!
2. Pay Attention To The Debt-Income Ratio
Whether in the black or the red your credit rating will affect the future of your business, adding to or removing the financial options available to you depending on your standing. The debt-income ratio is crucial when doing business, as it can make or break your business.
Unfortunately, many young entrepreneurs tend to neglect their credit card debt – debt that will not go away so easily and that can actually take its toll on your finances whenever you try to get a business loan. If you have recently started a business and you are thinking about taking out a loan that will help you expand it, then it is vital to firstly repay all your personal debt before you do so.
3. Cloud Apps Can Save You Time And Money
Over the past few years, cloud-based accounting software has become widely used worldwide. These apps are easy to use, user-friendly, cost-effective and have an intuitive interface. These apps grant you instant access to your business finances regardless of your location and you can use them for expense reporting, invoicing, finance tracking and so forth.
4. Never Over invest In Your Business
Another common mistake many entrepreneurs make is that they tend to over invest in their business, forgetting that it usually takes two to three years before they actually get to see a positive return on their investment. The chances are your business will need a “capital injection” at some point so you will need to have access to some funds which is why over investing is never a good idea.
These tips are a handy start for those who want to manage their business finances better and more efficiently.Stephenson Thorner – accountants Wellington are professional accountants that can help you navigate and stay on top of your business finances.