Best Practices When Managing Finances

Best Practices When Managing Finances

It’s never a bad time for small businesses to review the financial plans they implemented at the beginning of the year to ensure that they are tracking towards prosperity. This is an important process that doesn’t need to be stressful, even if the future seems daunting, or the past was challenging.

From balance sheets to compensation plans, what you review and when you review it can help you understand the financial health of your business. By developing and maintaining good financial management habits, the process should keep you on top of your revenue and ideally support good cash flow.

What follows are a few tactics small businesses can adopt to help manage finances and ensure they maintain a position of strength.


Best Practices for Managing Finances  

Review Current Accounts and Bank Statements  

Though small businesses may hesitate to do so, the most important first step is to conduct a thorough review of where finances stand. Not just a surface-level skim of account balances either: It’s imperative that companies dig into the details of the last quarter or longer to uncover outstanding invoices, cashflow forecasts, nonnegotiable expenses like rent and wages, and each individual line item on tax forms.

The most important factor in successful financial planning is accuracy. Without it, the entire process is rendered moot.

The key aspect when reviewing finances is to establish a repeatable cadence throughout the year. This way, the mammoth task of consolidating records at the end of the year can be broken up and double-checked along the way, ensuring the entire organization is in sync leading up to December or whenever your fiscal year ends.


Go Paperless  

For lasting change to occur when managing finances, it’s important for small businesses to maintain an organizational system for past and future documents, ensuring nothing is lost and everything is prepared for the upcoming fiscal or calendar year. Making plans to digitize records and update current systems is a great opportunity to maximize financial controls for full-company visibility. That way, team members can quickly monitor for human error.

Best Practices When Managing Finances

Here are some suggestions for what to digitize first:

  • Accounts receivables
  • Accounts payables
  • Written off invoices that can’t be recovered
  • Employee’s payment summaries
  • Receipts

Lean Into Technology  

Today, there are many accounting software platforms that manage a business’s finances at all stages of operation. Many of these include AI functionality that can automatically organize expenses, automate workflows, and produce holistic financial forecasts and analysis.

However, not all platforms are simple to use and understand, or integrate easily into current business practices. The trick is to know what to look for:

First, ensure your software offers end-to-end accounting.

This helps businesses implement a holistic approach—from deal negotiation, to raising sales orders and invoicing—that unlocks the potential for every employee to benefit from the new technology on offer. Plus, this ensures that automation, which frees employees up to focus on financial tracking, permeates the entire business, saving time and resources.

Second, it’s imperative that you guarantee that your potential accounting platform can be easily integrated across your organization, even for externally facing stakeholders, to increase adoption.

Though it may seem reckless to include so many people, most platforms allow for role-based access, meaning executives can permit certain individuals to view and manage aspects of an account or process without removing the guardrails.

Much of the above process can be complicated when negotiating between multiple vendors—one for CRM, another for invoicing, etc.—which is why it’s worth considering an unified system under the banner of a single vendor, as we do at Zoho. When one piece of unification works, they all do.

By implementing the above into daily business now, you can develop good habits and best practices to manage finances that will ease the stress of this process for many years to come.

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