Starting and owning a business can be extremely rewarding while also being challenging. It involves much more than merely putting up a store and selling products.
For a start-up to be successful, one must not only have an innovative idea, it is also vital to successfully navigate hurdles encountered along the way.
In addition to the manufacturing and marketing aspect of a company, the financial aspect is a vital part that can determine the venture’s success.
From expenses to inventory, payroll, and invoicing, these factors are crucial to the day-to-day operations of a company.
Inefficient management of a business’ finance is a significant cause of the failure of most startups.
Studies have shown that more than 80% of companies crash within the first five years due to poor management of their finances.
The inability to separate revenue from personal expenses has caused the downfall of many businesses.
More companies fail to remit appropriate taxes and find themselves in trouble with the law, usually leading to the closure of the business.
Keeping track of a company’s cash flow, regardless of its size, can be quite tasking and time-consuming, thereby preventing you from devoting needed attention to other aspects of the business.
Many applications and software have been developed to ease the burden and make financial management easier for business owners.
The money management tools below help you to stay on top of your cash flow as well as save time, money, and energy.
Checking Accounts
A checking account dedicated to your business is an invaluable tool for a business owner. You need to first register your business and obtain the necessary documents, permits, and licenses.
Then visit any bank of your choice to open a free checking account for your business, using the documents you obtain after registering your company.
Separating your business account from your personal one reduces the risk of spending company funds on individual purchases.
You would also find it easier to keep track of cash flow and expenses and deduct the appropriate taxes.
Other benefits of a business checking account include:
- Protection from personal liability by keeping business and personal assets separate.
- Simplifies the process of paying estimated taxes.
- Increases credibility and professionalism by using a business name for transactions and payments.
With a business checking account, you can access more loans and credit facilities such as business credit cards, which you can use to scale up your business and take advantage of growth opportunities.
Payment Gateways
When deciding which online payment gateway is best suited for your company, choose one that will grow with your business and scale smoothly to continuously meet the needs of your customers.
The ease of payment is an essential factor that significantly affects the rate at which customers make purchases in your store.
A seamless payment system that allows clients to complete their payments in a few steps or clicks will help to reduce the number of abandoned carts on your online store.
Payment options apart from credit or debit cards such as PayPal, e-wallets, and gift cards should be included to reduce the customers’ exposure to identity theft and fraud.
The payment gateways should also be integrated with the Point-of-sale program in your physical store to allow for efficiency and up-to-date records.
Invoicing Software
Invoices are an excellent way of keeping track of clients’ payments and outstanding bills. They feature details about a clients’ order, your company’s payment information, due dates, and taxes.
However, it might be challenging to keep track of every invoice sent out and ensure that all payments are received when due.
An excellent invoicing software sends invoices to clients automatically and reminders at predefined intervals.
You will get notified when a client makes a payment, and all outstanding amounts will be visible to you at a glance.
Choose a software that offers professional invoicing and can be linked to the point-of-sale systems and your accounting software.
Accounting Programs
Bookkeeping can be time-intensive, especially when you are not well-versed in the principles and laws that guide the accounting process.
While you could choose to hire an accountant, accounting software can give you the same efficiency level while saving you time and money.
Accounting software should ideally keep track of revenue, expenses, and inventory; record invoices, orders, and shipped goods; collate outstanding bills, and process returns and refunds.
Link the software with your online store to get a visual representation of the metrics and key performance indicators that measure the success of your business.
Payroll Management
As your business grows and you recruit more staff into your workforce, you should consider shifting your payroll management from manual calculations and deposits to an automated system.
The system can calculate each worker’s salary based on their position in the company, remove necessary deductions, and deposit payments into your workers’ accounts.
Incentives and rewards systems can be easily implemented, especially when connecting your payroll management system to your accounting software.
With this system, you can also monitor purchases made by employees on the company’s account and process reimbursements effectively.
Budgeting and Allocation
From freelancers to small business owners, budgeting and allocation tools enable you to automate many financial tasks, such as tracking expenses.
The right tools can streamline workflows and increase efficiency. Taking account of the past performance of your business, you can create a budget that allocates funds to all the various sections of your business.
With good accounting software in place, you can look at your company’s income and expenditure in the past and envision how your cash flow would fare in the future.
You can make necessary changes such as allocating more funds to a particular department or reducing company expenses by looking for alternatives.
Budgeting tools use parameters from past performance to calculate the ideal budget, which you can tweak to fit your objectives.
Tax Calculation
Failure to remit tax payments to the authorities can cause a lot of problems for your business. Therefore, accurate tax calculations are compulsory and should be conducted with utmost care.
Use software that collates all your revenue and purchases and calculates the taxes based on the laws that apply to your business.
You can integrate the program with your payroll system, invoicing software, inventory system, accounting software, and employees’ expense accounts.
Ensure that all taxes are remitted and take advantage of tax returns and other benefits to help you save money.
Final Thoughts
New business owners face challenges such as marketing, staffing, inventory, and cash flow. However, the most vital concern is usually handling finances.
Reaching your business objectives often boils down to using the right money management tools to help you increase productivity, make more informed money decisions, and save money.
Without smart money management strategies and effective use of technological tools, start-ups face the possibility of losing control of their finances and losing their business.
With so many tools to choose from, it is often challenging to know which solution is best for your business.
Many software programs and applications offer free trials. Take advantage of these offers to test out platforms before making a commitment and purchase.
By following the tips above and utilizing some of the recommended tools early on, new business owners will have a solid foundation from which to scale and grow their company.
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