If you are an entrepreneur, then chances are you didn’t start your company for the joys of accounting and finance. It’s no secret that keeping track of taxes, revenue, and loan repayments isn’t much fun, but it is critical to the continued health of your business.
This is especially true if you are a small business because you won’t have a huge accounting department and a team of lawyers on call if anything goes wrong. As a result, if something does go wrong - perhaps you miss a loan repayment, your credit score plummets, or you fail to declare income - then you won’t have the people power to deal with it.
Instead, it is best to keep on top of your finances in order to make your life easier and ensure the long-term health of your business.
Here are three tips:
If you want to apply for business credit, then you will need to have a business credit report drawn up. These credit reports are a way for your chosen lender to find out more about you and your company in order to decide whether to grant you the loan.
Information included in the report might be your credit rating, business revenue, history of paying taxes and loans, and other relevant data.
However, these credit reports will need to be sourced, which is why it is important to find a credit report expert.
Command Credit offers experian business credit reports to help businesses cost-effectively minimize risks.
One of the most effective ways of staying on top of your finances is to keep track of your overheads. These are the payments that are set in stone, such as your office rent, staff wages, electricity costs, and product production costs, to name a few. Although these are unavoidable, they can quickly mount up if you lose track of what exactly you’re paying for.
Just like individuals, some businesses fall into the habit of agreeing to more and more overheads without checking to see what the overall figure they have to pay is. This would leave you spending far more every month than you might imagine. The obvious result is that you will make less profit, and your enterprise will be less healthy in the long term.
Instead, keep your overheads closely managed. It will prevent any nasty unexpected costs from catching you out.
Another tip for keeping on top of your finances is to avoid relying too heavily on additional capital in order to grow your company.
It can be tempting to take out loan after loan so that you can pay for more office space, buy more land, or whatever else it may be that helps you expand. The problem is, these loans need to be paid back in full and on time. If you start to overstretch yourself by expanding too quickly, you may find that customer demand doesn’t catch up fast enough, leaving you vulnerable to missed loan repayments and eventual financial issues.
Instead, try to expand more steadily, with the majority of funding coming from your profits rather than third-party loans. It is safer and more organic because you will only be able to expand when your company enjoys significant success. As a result, you will likely find customer demand is higher when you expand because you are growing in line with the rate of demand.