What Your Business is Getting Wrong About Financial Management

7th February 2024

Every business makes mistakes. When it comes to financial management, you can make only so many mistakes before it compromises the business’s success, potentially even leading to its collapse. Of course, you can only prevent that if you know what you’re doing wrong in the first place! To help steer you on the right path, here’s what your business is getting wrong about financial management.

You’re Doing it All Yourself

Financial management shouldn’t be entirely on the shoulders of the business owner. If you’re doing it all yourself, it’s time to outsource some of the financial tasks. One way of streamlining financial processes is using cloud-based financial software like Sage Intacct. This software allows you to simplify all financial operations, including accounts, purchasing, cash flow, and order management. Let technology assist you! It will free up your time while reducing the number of errors.

You’re Not Budgeting Effectively

Budgeting is crucial to running a business, but so many business owners get it wrong. Leaving things to chance isn’t an option here – you must always be two steps ahead, and a budget can help you do that. It’s almost like seeing the future! Keeping an adjustable, laid-out budget is critical here.

You’re Mixing Personal and Business Finances

Your personal life and business life should never conflate – especially when it comes to finances. While using some of your personal money to pay for business expenses may seem innocent enough, it is a terrible habit to get into. How can you understand your business’s budget if you’re constantly dipping into your own funds? Keeping personal finances separate is crucial, so create your own paycheque and avoid using it for anything to do with the business.

You’re Setting the Wrong Goals

Every business has at least one financial goal. The problem is setting goals that are too broad. Writing down the goal of “increasing revenue” might feel like putting you on the right path, but what does that tell you? All businesses want to increase revenue – you need to be more specific for a goal to work. For a better financial goal, you may come up with something like “reduce operating costs by 4% within two years”.

You Don’t Keep Accurate Records

If you don’t keep accurate records, you need to change your business’s financial habits. Accurate records are essential to the smooth running of a company; they ensure your budgeting, statements, and taxes are all correct. Not only will neglecting the records lead to more complicated financial management, but it could also get you into legal trouble!

You Have Too Much Stock

One of the most common financial mistakes businesses make is spending too much on inventory and then sitting on it. What is the point if the inventory isn’t bringing in any money? In fact, it will only drain you of cash, as you’ll be paying for its storage! Always keep the inventory moving, and find a way to profit from old stock so you don’t sit on it too long.