Handle paper once.
Buy yourself an expanding plastic folder, the concertina type, and keep it within arms reach. Label each of the tabs to cover all instances of paperwork. These include supplier quotes, supplier invoices, client quotes, client invoices, expenses, government documents and bank statements.Open your mail weekly, print any emailed PDFs and file paperwork under the correct tab. Prevent paper accumulating on your desk and crowding your productivity. Handle every piece of paper once and you’ll make life easier when you do you books at the end of the month.
No software.
Don’t be talked into buying software. For a service-based business, MS Excel will suffice. Setup MS Excel using two sheets. One tab for expense items (out), and the other for income (in). From these two sheets you can quickly calculate monthly profit and loss.At the very least record income so you can chase accounts receivable (people who owe you). Check you have been paid by ticking off income line items on your bank statement. Note any missing sums or discrepancies and chase them up diligently.
The more granular the Excel spreadsheets, the more data you capture when you import later into a professional accounting application.
Be consistent.
Set a recurring day in your calendar to do the books each month. This is a sacred day when you put aside all other duties and ensure you maintain good relations with stakeholders by paying them on time. Brand your company a good pay master and you will receive triple back in reputation.By being disciplined about the pay day, you condition suppliers to your billing cycle and reduce the number of nuisance inquiries on outstanding payments. If you are drafting contracts include a clause on the billing cycle.
Summon a finance advisor.
Create a fictitious finance advisor. They are going to be your exchequer when it comes to all matters of money. They are a great asset to the team, especially when the money you are spending is not yours.Each time you reach for the cheque book or the credit card, your finance advisor will appear and interrogate your decision to purchase. Look after the pennies, and the pounds will take care of themselves.
Give them their own email address and watch them come to life as they chase payments and scrutinise expenses large or small. Pretty soon you will develop a six sense for numbers and won’t need a report to tell you how well the company is performing.
Your new friend will help during negotiation. Ask them to budget for salary, suppliers and cash expenses. When lured into situations where you may be tempted to overspend, explain to the other party that ‘finance’ has set a budget. Refusing to spend beyond a limit gives you leverage when negotiating salaries and supplier quotations.
Manage small ticket expenses using cards.
Card companies do the work for you by producing itemised statements that list the item purchased, date of the transaction and total amount spent. Use the credit cards to help you manage spend, but not as a means to spend more.Cabcharge is another indispensable card to carry. It is easy to share with staff and means you won’t be late to a meeting because you didn’t carry cash to pay the driver. Try to make one card your primary method of payment and use a different card for personal and businesses expenses. If you mix personal and work expenses, you create more headaches for a professional bookkeeper to resolve later.
Manage large ticket expenses by saying ‘no’.
Delay purchases of computer equipment, and prefer leasing over purchase. Although computer equipment appears as an asset on the balance sheet, computers and furniture are in fact liabilities. They need to be fixed when they break down, carted when you move office, and thrown out when they become obsolete.Service-based businesses should be building cash at bank, and reinvesting these cash reserves to buy people and ideas, or return money to investors. Skip the expensive gadgets and furniture. Trust me – you can live without an iPad.
Time wasters disguised as freebies.
Beware of getting things done for free from friends or family. It could be a time sucker in disguise. Free often comes at cost of compromising quality. You don’t have time to do things twice. If you want to accept help from friends, set a quality threshold you need to achieve, and be prepared to pay a small sum to ensure you exceed the threshold.When you are starting out and learning, pay more money for services and be glad for the time it will save you later.