Organizing Your Finances

Keeping track of finances and managing money are vital skills to have as a business owner.  Understanding where your money is coming from and where it goes is important in order to keep your business running properly. Below are some of the top things you should always be aware of to ensure your business is running smoothly in and out of your balance book.

Bank Account

You will want to open a new bank account for your business. This makes it easy to track and view the flow of money in and out. Do a little research into what banks offer benefits to small businesses, such as online banking, small business advisors, accounts with low fees, etc. Make an appointment with this bank to come in and set up your new account. Be sure to bring with you two pieces of ID, as well as a business license or other important documents regarding your business.

Tips to Avoid Cash Shortages

Without cash, your business can’t operate. Keeping up to date financial statements can help you to manage your cash, but here are some more tips to keep the flow.

  • If you can, match customer payment terms with your supplier’s terms. If you can ensure that cash comes in at the same time that it goes out, you wont have to invest your own money or resort to more borrowing.
  • Ask customers for deposits on large sales. This way the cost of supplies is usually paid before you collect cash form customer invoices.
  • Make bank deposits often. Making daily bank deposits is the fastest way to turn payments into cash. Also, this will allow you to spot NSF (non-sufficient funds) form customer cheques quickly.
  • Monitor your inventory. When you have too much inventory, this is ultimately cash you can’t use. You will have to sell it before you will have cash again. Don’t stock up too much on product. Keep a good balance between being prepared for customer purchases and having enough cash to operate.
  • Offer discounts on slow moving inventory. Cash is more valuable to you than waiting a long time to move product.
  • Price your products with cash in mind. Fast moving products should be priced higher, with slower moving products priced lower. Fast moving product usually means high demand, meaning the customers are willing to pay more. Slow-moving products is a signal of low demand, and price cuts can attract customers.
  • Keep an eye on your account receivable. If customers are overdue on payment, call quickly. If payment is late you will need to know as soon as possible to plan accordingly.
  • Don’t offer credit to everyone. Reserving credit to only your best customers saves you money. Offering credit costs you money, you will have to borrow or invest personal finances to cover costs.

Daily Books

If your business is something small in scale, such as washing windows on weekends to make extra money, you don’t necessarily need to spend money on expensive bookkeeping software to keep track of your cash. You can simply purchase a ledger and write down all revenues and expenses or obtain a scaled down version of bookkeeping software that can often be found for free. Don’t confuse personal expenses with business expenses; it will complicate your books.

Government Grants

The government can provide you with capital to help you start your business. There are many grants available for global expansion incentives, technology development, job creation incentives, aboriginal business incentives, environmental initiatives, and so many more. There is a lot of funding available for projects all over Canada, to look at what is available in Ontario visit this website.