5 finance questions all business owners should ask themselves

Money makes the wheels of your business go round, but many business owners are confused by their finances, and some even fear them. It’s easy for things to ‘plod along’ a bit, but cost savings or investment opportunities might be passing you by. Processes and procedures set up at the beginning can continue even if they’re out of date or take ages.

Here are 5 questions every business owner should ask themselves regularly to keep their financial management up to scratch.

Are my financial processes fast and reliable enough?

Complex accounting and legacy systems could be slowing you down more than you realise.

If a supplier came along with a really good deal, would you be able to check the finances there and then and make a decision on whether to go ahead? If you needed to take on some temporary staff to get a project out the door, how easily could you work out if the costs are affordable? Financial processes need to be on demand and available in a couple of clicks, or they’re not really worth sticking with.

Do I closely manage my invoices?

Are you raising invoices as early as possible, or sending them all out in batches? Do you have a specific timeframe for payment and chase promptly if someone exceeds that? Getting paid is the most important thing, so why not?

Whatever the payment terms, they start from the date an invoice is raised, so that date should be as early as possible to give you the best chance of fast payment. Late payments should be chased pragmatically, so if you don’t have the time to dedicate to it, use an automated service.

Slow and late payment of invoices can cause serious cash flow problems, which is the reason why 60% of small businesses don’t reach their 5th birthday.

When was the last time I updated my software?

It is easy to stick with the same old financial management systems year in, year out. Replacing them means learning something new and paying for it too.

Many online applications, tools and services are really affordable and straightforward - no tutorial necessary. You can handpick the most useful for your needs, customise it, and store it all in the cloud for use on loads of different devices.

An annual review of all financial management processes keeps you focused and stops you wasting cash on software that doesn’t work for you. Don’t let those Direct Debits go out unsupervised.

Am I looking at the books often enough?

Once your software’s up to date and working like a charm, keeping a regular eye on your accounts is relatively quick and easy. You’ll be able to see what’s in the bank, sitting around in inventory, due from invoices, and what is clear profit.

This gives you a thorough picture of how your business is performing now and over time. You’ll also be able to spot problems before they become a big one. Checking it daily is ideal, but a couple of times a week really is the minimum to stay on top of all the detail.

Am I making the most of my accountant?

Some business owners fear dealing with accountants slightly, often because they associate them with high cost. However, a good accountant should do more than just produce regular financial statements and sort out tax return. They can advise and support you in most financial matters, have access to wider networks, and they might even have a few suggestions for managing processes and cutting costs.

Use their experience and pick their brain - they’re a great source of information and advice.

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