Finergy Five - Are You Doing These Five Activities?
This week’s Finance Friday is another addition of The Finergy Five! This week I am excited to bring you Five Financial Activities you should do every month.
When you run your own business, there is a lot going on every day. It can be hard to keep up sometimes. Even when time is tight, you should do at least these five finance activities every month. If you find it hard to make the time, you can consider hiring a bookkeeper to help reduce the amount of time you need to spend on managing your books. Your finances are a critical part of running your business.
Update your books -Monthly make sure you have accounted for all your revenue and expenses in your books. Whether your use Quickbooks or , make sure everything is up to date.
Monthly Bank Reconciliation - Prove your checkbook! Yes, you. Yes, it is important. Yes, you must do it every month. I cannot emphasize how important it is to prove your bank accounts, credit cards, PayPal account and any other account you may have. You need to do this every month for several reasons. First, you want to make sure the bank has not made a mistake. Banks can and have made and there will be errors in the future. Second, you want to make sure you know what has cleared and is still outstanding so that you ensure you have enough funds in your account. Lastly, you want to make sure you haven't made any errors when recording the transactions on your end. P.S. you should also do this monthly for your personal accounts, but we won't get into that here.
Review Accounts Payable – Review all your expenses for the month. Ensure that payments have been made for anything that is due.You don’t want to miss any payments. Being late to make a payment can create trouble down the road. You could hurt your credit, have to pay additional fees and interest and damage relationships with vendors.
Create your invoices and review Accounts Receivable - If you are a service you will want to have a regular practice of sending out your invoices. Depending on the size and type of business the frequency of when you create and send invoices may vary. Always stick to a regular schedule. This will allow your clients to know when to expect their invoices and keep the cash flowing into your business regularly. On top of creating the you also, review accounts receivable monthly. If any of your customers haven’t paid by the due you can now follow up clients and attempt to collect payments.
Create monthly reports – Have a few good reports to review each month that will help you see the changes in your business. Some reports to run would include your AR and AP reports as well as your profit and loss statements.By reviewing each you will have a good idea of changes that are happening in your business.
Every month there are many things that need to be done. As a small business owner, many of the tasks will fall on your shoulders. Keeping up on your finances is a critical step. If you don’t have the time or the knowledge to manage your financials looking for a qualified bookkeeper can help keep your business moving in the right direction.
See You Next Week!
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