Economic factors, increased competition, and changing consumer demand are three challenges that small businesses are constantly facing. These factors can take a toll on the financial health of your business, calling on the need to implement strategies to improve your position. Effective methods of improving your business’s financial health shouldn’t take weeks or months, which is why the following 5 tips should be considered.
#1: Focus on Cash Flow
One of the major aspects of financial health is creating a steady cash flow stream. This can be done by precisely timing the payments of invoices and speeding up your receivable collection process. Real-time integration of accounting data and regular reconciliations will be needed to fully understand your cash situation.
#2: Invest in an Accounting Software
Most small businesses don’t have the funds available to hire an in-house bookkeeper, which is why utilizing an accounting software is so important. Accounting software programs have come a long way in the past few years, allowing your business to take advantage of features that replace an in-house bookkeeper, such as automatic integration of bank transactions.
#3: Timely Invoice Customers
Once work is complete or goods are shipped, your customers should be promptly invoiced. The sooner the invoice is sent, the quicker you receive payments and improve your cash flow. Consider investing in an invoice template for quick invoice processes or utilize an accounting software with invoicing capabilities.
#4: Hire a Bookkeeper
When the accounting function of your business becomes overwhelming, it may be time to hire a bookkeeper. A bookkeeper can not only keep your accounting information current, but they can assist with report tracking to give your business clear insight on where changes may be needed.
#5: Sell Old Assets
Old and inefficient assets often get replaced with a newer version, but what happens to that old equipment? Does it sit and take up space in your warehouse? If so, you may want to consider selling these old assets. Not only can you free up space in your warehouse, but you can also enjoy a little extra income, improving your financial health.
Finding new ways to improve the financial health of your business should be a top priority to attract new investors and continue growth. Each business is different, calling on the need to uncover strategies tailored to your situation. Tax Geaks understands there is no one-size-fits-all approach when it comes to changing your business’s financial health, which is why we take a creative perspective with each client. Reach out to a team member today for more information.