For many small business owners, financial planning may not be the most fun part of the job. However, it is essential for growth. In a recent Bplans blog post, author Anthony Decoste, president and CEO of Global Virtuoso, offers suggestions for a less painful approach to managing your business’ finances. He offers the following tips:
Invest in fintech apps
With a wide array of accounting and financial apps on the market today, you don’t have to manage your finances all on your own. Platforms like QuickBooks can automatically log transactions, monitor account balances and even prepare tax forms, ultimately reducing costs.
Commit to one accounting method
Among several accounting methods, accrual or cash are most common in the business world.
To avoid unintended accounting fraud, it’s best to pick one method and stick to it rather than switching it up each year depending on “what’s more beneficial to the business,” says Decoste.
Break down your financial statements
You don’t have to be an accounting expert, but you should have a general understanding of financial statements, starting with the basics: profit and loss, balance sheet, and cash flow. Each of those statements offers a window into the specific areas of the business, and together they paint a larger picture of your financial performance.
“Taking the time to understand them makes it far easier to start creating forecasts and proactively prepare for different scenarios,” says Decoste.
Auto generate reports
Consider using a tool that can aggregate and automatically generate financial statements rather than putting them together manually and analyzing them separately.
“This makes it far easier to identify top-level opportunities through a singular dashboard and then dive into the individual financial statements,” he says.