Forming good habits is half the battle when it comes to running your accounts successfully. It keeps stress to a minimum for you and keeps everything ticking over and running smoothly right through the financial year.
So, what are the key habits to form?
See your accounts as an integral part of your business
Your business accounts should be viewed as a way to monitor how your business is doing rather than an annual compliance exercise.
Our accounts tell us so many things about the financial health of our business such as whether or not our revenue is growing, whether or not your expenses are growing in line with with an increase in revenue and how much we owe and is owed to us, amongst many other things.
Without this kind of knowledge, it’s hard to make informed decisions about how we run our business.
Although it may seem daunting at first, take an interest in them and understand them. They’re too important not to!
Regularly review how your business is performing
Often, businesses fail because of poor financial management or a lack of planning.
Get into a rhythm of regularly reviewing how your business is performing. It’s easy to let this slide, but it’s key to spot any problems earlier rather than later.
It also prevents last minute stresses to try and hit deadlines.
When reviewing your finances, you might want to consider your cash flow, growth and borrowing, amongst other things.
Keep an eye on your tax
Many people get caught short when it comes to paying the tax bill.
Put aside funds into a separate bank account to build up a reserve to cover your tax. and don't be tempted to touch it – it's not really your money anyway.
It’s important to know when your deadlines are too to prevent cash flow difficulties and avoid a last-minute panic that can put financial pressure on a business. The earlier you file your returns, the sooner you know as a business where you stand, and you can then move forward.
Remember to pay yourself!
This may seem obvious but can often be overlooked. Get in the habit of paying yourself out of the cash your business generates.
Then keep your expenses in line with what cash is left over (after putting some aside for tax and paying yourself).
Profit First is a great book by Mike Michalowicz and it goes into detail about this. It’s certainly worth a read!
Keep track of debtors
It’s crucial for your cash flow, and peace of mind, to keep track of who owes you money and what invoices are overdue.
Often, late payments are resolved wither by an email reminder or a phone call.
However, you need to protect yourself from those who can't or won't pay. I recommend sticking an overdue invoice list on the wall - getting paid is that important!
Do you have any other habits that keep you on track with your finances? Let us know in the comments!