The importance of good financial management is emphasised throughout this module, The key elements of running the money side of your business are highlighted. This section provides a checklist to help you manage your finances effectively.
2. Managing Finance effectively
A vital part of running a successful business is looking after your finances. A good set of figures provides you with a detailed picture of the business and enables you to make informed and meaningful decisions.
Even if you have an accountant and/or a bookkeeper, as the business owner, it is your responsibility to make sure you know what is happening with your finances so that you can stay in control.
Here is a checklist to help you manage your finances effectively:
- put together a sound and realistic budget
- keep clear and accurate records and update them regularly (once a week is ideal). Remember, this is a legal requirement, as well as helping you to keep control of the business
- hold onto all invoices, bank statements and business-related receipts
- review your cashflow on a weekly basis. Remember, a sale is not completed until you have received payment
- check your bank account and cash account daily
- make sure your terms of business are clear and your customers are aware of them
- invoice as soon as work is completed
- make chasing late payers a priority
- react quickly if you are not performing as well as anticipated. It is better to be in control and seek help early.
Use these templates to create the key financial statements for your business.
- forecasting your monthly sales (MS Word 313kb)
- preparing your cashflow forecast (MS Word 329kb)
- preparing your Profit and Loss Account (MS Word 374kb)
Next: Keeping track of your finances