For OMG’s (one-man-gangs), juggling the demands of running and growing your business can be a difficult line to tow. Too often we find ourselves drawn into the day to day running of the business, being reactive to emails and phone calls and neglecting the growth of the business.
When you’re neglecting growth and spending 90% of your day on high priority, low importance tasks, the high importance but low priority tasks can go completely ignored. I’d class financial management in that bracket.
Realistically, tracking your finances isn’t going to make a huge difference in your business like focusing on growth is, but making sure you at least have this aspect of your OMG handled is going to help you save time, save money on tax fines, and help you to reliably predict future cash flow.
So what’s the best way for OMG’s to handle their finances?
There comes the point in every business where a pen and pencil just doesn’t do it anymore for tracking your finances. Some businesses may not need anything fancy for some time, and others might need good accounting software immediately. If you are making finance management decisions, you should consider using Quickbooks to manage your finances, using this accounting software offers tons of advantages.
If you are a business owner using QuickBooks to manage the bookkeeping and accounting aspects of your business, you may also want to consider utilizing some of the other management tools available within QuickBooks, including those that can help you to manage and improve the cash flow in your business. If you extend credit to customers, one of the key reports available in QuickBooks Pro is the “Accounts Receivable Aging Summary” report. This report summarizes the state of unpaid invoices. For each customer who owes money, the report shows what the customer owes for both current and previous billing periods. It’s a good idea to examine this report on a monthly basis and pay particular attention to those customers who have overdue balances.
For those customers you are having difficulty collecting payment from, there is an option available in QuickBooks Company, linked with Microsoft Word, to prepare letters using specific templates. For example, there are pre-written collection letters, both friendly reminders and somewhat harsher versions that you can use & modify to send to customers that have overdue balances. You can even limit the letter recipients to customers who are overdue by a certain number of days, as well as select specific customers. QuickBooks also has letter templates for credit application letters and for addressing NSF cheques.
Other tools available in QuickBooks Pro, that can be useful to improve cash flow management in your business include the ability to: customize invoices; set-up reminders for invoices to print and overdue invoices; create statements to send to your customers that summarize all invoice transactions for a particular period of time; and set-up finance charges or service charges for overdue payments. Reducing the average collection period by even a few days can have a dramatic impact on both your company’s cash flow and the bottom-line. So, if you are using a small business program such as QuickBooks, try utilizing some of the built-in management resources available, such as those designed to help you manage the cash flow in your business more effectively.
QuickBooks software has a very user-friendly interface and is easy to learn. A small business owner must know how to take and record payments, and enter new service items into their account software because this is what you are paid for. You may need multiple price levels for different types of services, such as a regular price, a sale price or a senior discount. Intuit, the company behind the software, included dozens of training lessons with the software. So even if you can’t tell the difference between a debit and credit, you can learn to use this software within a short period and manage the finances effectively.
Maybe you intend to outsource your financial management, and that’s fine – but remember you will still need to rack outgoings/incomings with a tool like Quickbooks.
If you really don’t want to bother learning how to use a new software system for managing your expenses then using Excel will probably be your best best. Google ‘excel template finance management small company’ and you’ll find hundreds of results for templates that will help you track costs, outgoings, incomings, tax, and so on. Your particular niche and tax rules will determine which template is best for you, but if you find something particularly excellent then let me know here.
If your business is significantly larger than an OMG, then a different solution might be more suitable, for example, you might need a tool that helps with supplier statement reconciliation like the one offered at Statement-Matching.com, however, again I don’t have too much experience in this field. Check out the link above and let me know if you find something ideal so I can pass the message along to readers.