If your business accounts are something you feel you “have to but hate to” do, you could be missing out on the opportunity they present. These 5 steps are designed to take you from dreading looking at your accounts, to prioritising them because you want the insights they provide!
Cloud Accounting Software
This is a no-brainer. If you’re serious about growing your business, cloud is the way to go. It allows real-time insights into your business finances which is the foundation of better decision making.
Having the cloud software isn’t sufficient in its own right – you have to use it! Whether you do the bookkeeping yourself or outsource it, you have to do it in real-time to get the benefits. The size/nature of your business (hence the frequency of your decisions) will determine how often the bookkeeping should be done. The key to keeping this up is having processes in place that make it as easy as possible.
Knowledge is Power
Finance isn’t everyone’s cup of tea (I get it) but it’s not something that can be avoided in running a business. Same as selling – whether you like selling or not, it has to be done and has to be done well to succeed. If it’s not your strong point, you either educate yourself or collaborate with someone who can fill that gap. An accountant or bookkeeper you work closely with could fill this gap, or perhaps a new hire, but keep in mind that knowledge specific to your industry and their level of expertise should be suited to the size of your business (e.g. Accounts Assistant versus Virtual CFO).
With real-time accounting info in place and the knowledge there to understand it, analysis is the next step. Analysing the key components driving your profit and impacting your cashflow will uncover potential solutions to better financial management. Analysis can be done by tracking KPIs (Key Performance Indicators) that are suited to your industry. Or even better if a Budget is put in place, analysing the Actual Performance against Budgeted Performance can provide valuable insights to better plan for the future.
When the above foundations are solid, finance should then form an integral part of your business strategy. Finance can become a driver of decisions in your business, not a consequence of. Whether it’s pricing strategy, capacity planning, growth strategy, having financial insight at the forefront of strategic decisions can enable businesses to grow with confidence.
If you’re ready to uplevel your business finances, talk to us to see what we recommend for your particular circumstances.