New business owners often wear many hats at once, acting as their own sales, marketing, administrative, and accounting departments. Unless they’ve had prior experience as a CPA, most business owners will agree that accounting and managing finances can cause the most headaches and take up the most time. Fortunately, there are some easy tips to make managing business finances easier so you can streamline the accounting process and focus more on getting sales and growing your operation.
Keep Business Finances and Personal Expenses Separate
On the outset, this rule seems fairly obvious. As time goes on though, the lines can get blurred. Using personal savings to fund your business shouldn’t happen, but some start-ups do use personal money to launch and maintain operations. Additionally, some business owners make purchases such as office supplies, and purchase an item or two for personal use in the process. It is imperative that you keep business finances and personal expenses separate. Not only will this help to simplify accounting, but when you need to justify tax deductions with receipts, tracking business versus personal expenses becomes much easier to track.
Working Capital and Cash Flow
Working capital is what allows you to maintain and grow your business. Working capital can come from business lines of credit, revenue, or other sources of funding. Cash flow, on the other hand, and seem like a constant tug of war. Ideally, business finances are constantly improving due to a regular influx of revenue from sales. However, since most invoices are issued with payment schedules of 30 to 90 days, many small businesses experience staggered revenue with expenses outweighing income. Maintaining a healthy cash flow can create stable business finances to achieve fast growth without relying on loans.
Staying on Top of Customer Invoices
Waiting on payments from customers and tracking unsettled accounts can eat up a lot of time and resources. Your business depends on receivables, and waiting a month or longer to receive payments can place a big strain on business finances. To speed things up and boost cash flow, many small businesses use accounts receivable factoring. Factoring turns unpaid invoices into cash within 24 hours, so you can maintain a positive cash flow, build up working capital, and make the accounting process much easier.
At New Century Financial, we provide the most comprehensive factoring services nationwide. Contact our offices today and get the factoring solutions you need so you can focus on building and growing your small business.