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Financial Tips for Business through Tough Times
It may sound like the ultimate challenge when you’re starting a business during a recession or growing a business during tough times, especially if you’re an entrepreneur or small business owner. With agility, planning and the right resources, small businesses may even spur growth even during tough times. Business strategies and growth may vary, depending on what kind of business it is, but there are also common denominators that characterize the success of small businesses during rough times, therefore, here are some strategies that may help tide your business through.
Re-evaluate Your Business Budget
Careful management of costs and expenses, through well-planned budgeting and implementation, in your business is an essential factor for your business to continue to grow even during tough times, which will prove to be your valuable asset to succeed in your small business, most especially if the business relies on credit. To be able to achieve a well-planned cost management system, you may have to provide an accurate system of profit and loss projections and, at the same time, make short and long term forecasts.
Anticipate the Pros and Cons in Business
Since there are many risk factors in maintaining a business, it is also important to anticipate any possible scenario that may affect your business, so that putting up an emergency fund can help you finance your decision to change some of your business applications or operations for your business to be able to survive. With an emergency fund to fall back on, whatever changes you plan to introduce will help pull your business through hard times.
Be sure to always check on your cash flow, as well as managing it properly, as this will help you know the situation of your business and will help survive through seasonal ups and downs. Weighing if an additional capital requirement may be needed for your business, especially during hard times, will be difficult if your cash flow system is not properly managed and accurately accounted; therefore, it is equally important to monitor regularly your cash flow.
Prepare and Review Monthly Statements
There are three monthly statements that must be prepared and reviewed, and they are: balance sheet, profit and loss statements, and cash flow statements. By keeping an accurate account of all the money entering and leaving your business, as well as consulting your budget and monthly statements in case of any big purchasing decisions, this shows that you have succeeded in managing your business at all times.
Automate your accounts receivables (AR) process, using the appropriate accounting software, to improve your billing and collections process, and in that way you get these advantages: 1. E-invoicing offers AR departments the freedom to produce both paper and electronic invoice format in order to match every customer preference, 2. Moving from manual to automated invoicing not only increases AR departments efficiency, it can also reduce processing costs by 44%, 3. An e-invoicing solution allows companies to send out invoices as they are prepared in real time, giving customers the chance to immediately initiate their internal payment process and getting you paid faster, and 4. Automatic emails to customers reminding them of their payment owed helps speed up collection times, reduce calls, and improve customer relations.