Whether it’s stuffing receipts into a shoe box or failing to reconcile bank statements, when business gets busy it’s easy to let admin slip.
Although it’s tempting to put paperwork to one side, it pays to beat the quarter-end rush by staying on top of your businesses finances. Our friends at Clear Books have put together 3 handy hints on how to keep on top of your finances when business is booming.
- Make sure you’re getting paid
Growing businesses usually mean growing expenses, and if the money isn’t coming in, you won’t be able to settle your dues.
Having a running tally of what’s invoiced and what is paid is essential and doesn’t have to be a manual and time-consuming task. Thanks to Open Banking, software can scan your bank statements and automatically match payments to outstanding invoices. That means that you’ll know what’s outstanding, paid and overdue at a glance. If you like, you can also set reminder notifications to go out automatically once an account becomes overdue. Staying on top of your debtors has never been easier.
- Stay on top of expenses
Now you’ve got money coming in, it’s easy to relax about the money going out. Be careful though, too many small expenses can quickly add up and have a significant impact on your profit margin.
You don’t have to set aside time each month to track your outgoings, using some nifty small business tools you can keep on top of that train ticket or client coffee expense in seconds. AutoEntry and ReceiptBank are just a couple of these great tools. Simply take a photo of your receipts and use automatic text recognition software to keep a record of the amount spent. Tools like these integrate seamlessly with invoicing and accounts management software, so you can also save time entering the same information into multiple places.
- Know your profit
Your profit margin is the amount by which revenue from sales exceeds costs in a business. Now that your business is a little more established, profit margin is a very important metric to understand. If you’re spending £1 pound to make £2, you’re on a good wicket. If you’re spending £1 to make £1.05 however, you may want to look at your operating costs or pricing strategy more closely.
To calculate your profit margin take profit before tax and divide it by sales revenue then multiply that by 100. Overtime, you want your profit margin to increase.
Whilst very few business owners actually enjoy doing their accounts, keeping on top of them ensures you can sit back and enjoy the benefits of your hard work. After all, it’s your blood, sweat and tears that have made your business grow.
Clear Books Micro is online accounting software that’s made for Excel spreadsheet users, and those small businesses who need to comply with Making Tax Digital but don’t want the hassle and commitment of a full-blown accounting system. It’s free for small businesses and will help you stay on track with financial tracking as you grow. Contact us to access a free trial, or call on 0345 177 5500.