Inaccurate financial tracking is one of the top reasons that many new businesses fail. While most know how a financial system works, the added complications of multiple accounts, timelines, and fluctuations, the small things can fall between the cracks, add up, and cause huge amounts of damage to your business finance record. Keeping accurate, comprehensive financial reports and records can help eliminate lost profits, create clear financial projections.
What Should My Finances Include?
While every business is different in terms of what the financial plan should include, there are a few basic points that every plan should have. Your business finance efforts should include a business account that is separate from your personal account. You should also have accounting software in place to track all accounting accurately and efficiently. Accounts payable and accounts receivable lists are imperative, and should be itemized, dated, and split into valid subcategories to help track expenses and income. Some of these categories may include materials charge accounts, payroll, client payments, equipment depreciation. This will help you effectively project your financial earnings, gross and net profit, and profit loss along the way, helping you to manage your business better. Pay special attention to accounts that deal with company expenses such as lunches, gifts, and travel to ensure that these costs stay at a minimum.
While staying on top of your current financial situation is imperative, just as important is reviewing past business finance reports can help show fluctuations in both cost and profit as well as giving a starting point for financial goals and projections. However, keeping accurate, effective records is imperative for these tasks.
Track Everything: From business lunches to pen purchases, every dime should be tracked by a well-organized accounting program. These programs help create individual accounts, track spending habits, and can even loosely project profits and loss figures.
Evaluate Your Information: The effort of properly kept records loses its meaning if they aren’t used. Evaluate your data regularly to identify weaknesses, profit loss, and even profit gain. This will give you an idea of where you need to adjust and what’s working well.
Limit Access: While it’s great to have backup help in the event of a situation, letting too many hands in the cookie jar will most definitely end badly. When multiple employees have access to the accounting information, points can be accidentally adjusted, edited, or erased, causing misleading and inaccurate information.
Effective record keeping leads to accurate financial reports that can help you identify the exact position of your business in the market. Your DFW Biz Pros membership can help you get the information you need for more successful financial tracking and planning.