Who doesn’t need a system for handling your business finances? I know most of my clients do.
Here’s an all-too-common scenario I run into with clients. Mary is a service provider for several clients. She is hard at work growing her business and servicing her clients. She’s working lots of hours, and her hourly rate is respectable. But her cash flow is dismal and her finances are scary.
Why?
Because she’s working so hard finding that she isn’t taking time to actually take control of her money. Scary isn’t it?
Mary’s Invoices don’t get sent on time. Past due balances are ignored. Taxes aren’t done. And maybe worst of all, she’s got dozens of recurring payments that go out automatically each and every month, and she has no idea what they are or if she’s even using the programs she’s paying for.
Sound familiar? Sadly, that’s exactly what a lot of “successful” businesses look like. When you work at home, and you’re accountable to no one but yourself, it’s far too easy to let these “little things” slide until, like an avalanche, they have a devastating effect on your business.
The good news is, cleaning it up is easy, when you take the time to put some trusted systems in place.
Invoicing/Billing
Start with your billing. Sign up for (and use) a system such as WAVE (free for life) or Freshbooks (free 30-day trial), which will produce professional invoices with a few keystrokes. Once you have selected and set up your software of choice put your billing day on your calendar as an unbreakable appointment. Remember the system is useless if you aren’t using it.
Log in any new customers to bill, generate your invoices, and click send. You’ll be done in a jiffy. Not only that, but most billing systems automatically send follow-up messages for unpaid invoices, so you don’t have to worry about tracking down those slow pays. Also, take advantage of the reoccurring invoices options for those you bill monthly.
Expenses
For your expenses, use a single system. That might be PayPal or a dedicated credit card or even your business checking account. Look for one that can accept pictures of receipts record the purchase. Whatever it is, be sure it has a reporting feature that will allow you to send financial statements to your accountant. At the end of every month, quarter or year, bundle that up with your sales report and your receipts and send it off. When tax time rolls around, you’ll be sitting back with your feet up while everyone else scrambles to find documents and update their accounting system.
If you do your own taxes (kudos to you!) then look for tools that will talk to each other easily. For example, you can download a Quickbooks file right from PayPal for super-fast reconciliation at the end of every month. That alone will save you hours of “doing the books.”
Just putting this simple accounting system in place can easily save you 10+ hours per month, but the even larger benefit is that the money work will get done. And what that will do for your cash flow is priceless.
So, what accounting software you are using to manage your business finances? Let me know in the comments below.
