Keeping track of your invoices and payments is absolutely vital to the success of a small business, as paid and unpaid amounts affect your business' cash flow. This therefore has an impact on the amount of money you have available to pay for expenses, whether regular or unforeseen.
Ways to approach organising your small business finances vary depend on what type of business you run, your business model and your goals for the business in the future. Knowing the exact state of your finances is essential to ensure cash keeps flowing to allow you to invest back into your business later.
Stay aware of your bookkeeping
The easiest and most important way to track invoices and payments is to track the balances of all accounts in the company. One way to do this is to hire an experienced and qualified accountant who will accurately and efficiently keep records of your financial affairs so that everything is ready on tax day.
You can also equip yourself with accounting software. When choosing your accounting software, it is important to consider the following:
- The accounting software should be cloud based. This will allow you to access the programme from anywhere and anytime.
- The software must also be sufficiently secure and provide a reliable encryption layer and firewall.
Track income and costs
Accurate tracking of your small business's income, whether it's monthly, weekly, or even daily, allows you to have a complete view of the money coming in and going out. It can help you make a forecast of income for the months or years to come, examine trends, and determine how and why your income may fluctuate. You will also be able to compare your business performance to your goals to see where you can potentially improve your profitability. By tracking your small business's expenses, you'll find that costs can add up quickly, so by keeping a close record of these you'll be able to better measure where your money is going, anticipate frequent costs, and plan for future expenses.
You will need to determine which payment method works best for your business and its structure. For example, if you are a service company, you can choose to invoice your customers regularly, for example every month.
However, if you are a business that sells products, you should be able to accept most types of payment, both at your point of sale and on your website.
You have to take into account both the costs this entails but also the practicality for your customers and finally, what allows you to keep an eye on your invoices and payments.
Digitalize important financial documents
Finally, one of the best ways to keep track of your invoices and payments is to file all invoices, licenses, employee details, bank and general accounting records and scan them.
Having quick and easy access to all the files you need, whether for your own tracking or for the tax authorities, will make your life easier. Finding and opening a scanned document will only take a few seconds.
As today most banks but also accountants offer their customers the ability to "go paperless", scanning your bank records and tracking payments becomes easier than ever.