Business finances can often feel like a foreign language. One filled with jargon and numbers. As multi-passionates driven by vision and the excitement of opportunity, mundane bookkeeping tasks can fall by the wayside. (Even I myself have fallen victim to procrastinating on bookkeeping tasks in the past.)
As a business owner, you can feel extreme pressure to understand and be completely on top of your business’s finances. A prospect that for many can feel incredibly overwhelming. But imagine a different scenario: one where managing your business finances isn’t a source of stress but an empowering tool that helps you feel confident and in control. (Carrie Green writes about empowerment through financial mastery in her book – she means business, take a look).
I’m no accountant, and I cannot stress enough the importance of having the appropriate financial support in your business (something I’ll expand on later in this post). But what I am, is an expert in business operations management and optimisation across all areas of business, including finances. So in this blog post, I’m going to walk you through the essential best practices for leveraging operations to optimise your financial management, showing you how to transform this daunting task into an empowering strategy that drives your business forward.
Regular Reporting: Keeping Your Business Health in Check
Why Regular Reporting is Crucial:
Financial reporting might seem like a tedious task, but think of it as a regular health check-up for your business. Just as you visit the doctor to ensure your health is on track, regular financial reports offer a vital snapshot of your business’s economic well-being. These reports help you catch small issues before they become big problems, giving you peace of mind and allowing you to steer your business with confidence.
Types of Regular Reports to Use:
- Business Health Reports:
Monthly Business Health Reports are something we implement for all of our agency retainer clients. We support a wide range of professionals across a multitude of unique business models including Coaches, Agency Owners, Consultants and more. Therefore we tailor these reports to the unique KPI’s of each business. (Need support tracking your KPIs? – take a look at our ClickUp KPI Planner here).Something we always touch on one way or another is Finances. Common key metrics include cash and sales figures for the month, failed payments, unusual or unexpected expenses, capacity in offers and any clients on/off-boarding. These reports provide us with a vital snapshot of how the business is performing across all sectors. Giving us the information we need to make short-term decisions based on the data of any given month and zoom out to review the long-term performance of the business all at the click of a button. (You can peep our basic template for our business health reports below).
- Monthly Statements: You can be bringing in 6 figures a month and still making little to no profit, and that’s why it’s so important that you have visibility of the entire financial picture. Regularly reviewing your monthly statements gives you much-needed visibility of your bottom line. And knowing your bottom line every month supports you in spotting both positive and negative patterns, understanding the impact of unexpected income or expenses and assessing the overall profitability of your business.
Tools for Regular Reporting:
- Accounting Software:
Most accounting tools such as QuickBooks and Xero automate the generation of financial reports, making the process simpler and less time-consuming. - Management Platforms:
You can use platforms such as ClickUp and Airtable to create internal forms like the one displayed below for inputting and recording financial data. - Custom Dashboards:
Custom dashboards provide a clear visual of key financial metrics, making financial tracking straightforward and stress-free.
Finance Tracking: Stay on Top of Your Numbers
Effective Finance Tracking for Better Management:
Key Tracking Tools to Implement:
- Payment Plan Trackers:
Payment plans can be an excellent tool for both making your services more accessible to your clients and improving your cashflow. But if you don’t track them effectively, the positives they offer can soon become outweighed by the admin nightmare of managing them. By designing one or more set payment plans your clients can choose from, and setting up an automated tracking system where invoices are sent, records marked as paid and failed payments are chased without your direct input you can track the progress of your client’s payment plans with ease, avoid cash flow issues and stay on top of your own financial commitments.
- Monthly Income and Expense Trackers:
Recording income and expenses might seem like a lot of work, but once you put in the initial leg work of setting these records up maintaining them becomes pretty easy. It’s essential for you to understand what’s going in and coming out of your account within any given month. Tracking your income and expenses allows you to spot unexpected transactions and take any actions required in a timely manner so that you can stay aligned with your financial goals and avoid any nasty unexpected surprises later down the line. - Hours & Hourly Rate Trackers: For service-based businesses, tracking billable hours is a must. It can be very easy to get into the habit of “I’ll just do that” and before you know it, you have HOURS worth of billable time flying under the radar every month. Tracking your time has many (not just financial) benefits. It allows you to effectively capacity plan, review and improve how you and your team are utilising hours and most importantly ensures you’re compensated fairly for your work.
Recommended Tools:
- Expense Management:
Tools like Expensify and FreshBooks can simplify expense tracking, making it easier to keep your finances organised and accessible. However, depending on personal preference and your stage in business there’s also nothing wrong with a simple spreadsheet. (I’ve dropped an example template of the income/expense trackers we use below for inspiration).
- Time Tracking Software:
Apps such as Toggl or Harvest make tracking hours straightforward, ensuring you’re always in control of your billable time. You can also utilise time tracking softwares within your Project Management Tools – we love ClickUp’s time tracking software.
Budgeting & Forecasting: Plan for the Future
The Importance of Budgeting and Forecasting
Best Practices for Budgeting and Forecasting:
- Create a Detailed Budget:
Think of your budget as a financial blueprint for your business. It outlines your revenue streams, expenses, and financial goals, helping you plan effectively and manage resources efficiently. - Develop Financial Forecasts:
Forecasting involves predicting future financial performance based on historical data and market trends. This proactive approach allows you to anticipate challenges and seize opportunities before they arise. For service based businesses, we also recommend forecasting based on your capacity, allowing you to see what your potential revenue caps are, as well as helping you garner “good, better & best” financial targets.
Tools for Budgeting and Forecasting:
- Budgeting Software:
Tools like PlanGuru and Adaptive Insights offer features to create and manage budgets effortlessly, turning a complex process into a manageable one. - Financial Forecasting Models:
Using Excel or Google Sheets, you can build customised forecasting models that suit your business needs, providing clarity and direction.
Process Documentation: Streamline Your Financial Processes
Why Process Documentation Matters
Key Financial Processes To Automate And Document:
- Invoicing:
Automating invoicing means you no longer have to manually send out bills. This not only saves time but also ensures timely invoicing and fewer errors. - Payment Reminders:
Automated reminders help you stay on top of payments, reducing the risk of late fees and maintaining smooth cash flow. - Failed Payment Notifications & Follow-Ups:
Automating notifications for failed payments ensures timely follow-ups, making the collections process less daunting and more effective. - SOP’s:
If you’re like me and find bookkeeping tasks mind-numbingly BORING, then documenting these manual processes is an absolute MUST. Not only does this make the process so much easier for yourself, but it also makes communicating and delegating these processes 1000% times easier and more efficient.Having SOPs for these tasks means you don’t have to waste precious brain space on remembering how to complete them and that you can delegate these tasks without stress, knowing that the person completing the task has everything they need to complete it to the same high standard you would have yourself. (To get a jump start on this, check out our SOP Handbook Template).
Recommended Tools:
- Invoice Automation Software:
Platforms like Dubsado and FreshBooks handle invoicing and reminders, simplifying your billing processes. - Collections Management:
Tools such as QuickBooks or specialised collections software streamline the management of overdue payments, ensuring you maintain healthy cash flow. However you don’t need to pay for a fancy specialised platform for this. Most CRM platforms such as Dubsado, allow you to set up simpler automated remainders for this kind of thing too.
Task Management & Organisation: Embracing Financial Management
Transforming Your Approach to Financial Management
Why Embracing Financial Management is Essential:
- Stability and Growth:
Effective financial management provides a solid foundation for your business, enabling you to grow and thrive. - Empowerment Through Knowledge:
Understanding your financials empowers you to make informed decisions that align with your vision and goals. - Shift in Narrative:
Reframe financial management as a key aspect of your business that supports your ultimate vision. By doing so, you’ll see it as a powerful tool for achieving your goals rather than a task to be avoided.
Strategies for Better Task Management:
- Having The Right Support:
When building a company I’d strongly consider having professionals in your corner. I use the Orenda Collective and I can’t recommend them enough. But I advise doing your research and finding the right fit for you and your company. This allows you to focus on what you do best, with peace of mind that these important things are being taken care of for you. (For support with hiring, integrating and managing new team members, check out our team hiring and team dashboard templates).It’s also important to have an internal support network that can assist and encourage you with the internal aspects of your financial management, for example:
- Using Task Management Tools:
Implement software like Asana or (my personal favourite) ClickUp to organise and track financial tasks, making them more manageable and less overwhelming. The prospect of tax season, or getting your annual reports in on time becomes a lot less scary when you know that you have the systems in place to remind, guide and support you through it. - Create Visibility:
Having internal reports, reminders, task lists, dashboards etc is vital. This proactive approach gives you everything you need to feel in control and less anxious about your finances. And if this isn’t your forte, having support in your corner who can create this for you forms a pivotal pillar in the support network that is going to lead to your business’s ultimate success.
Master Your Finances for Business Success
Mastering business finances isn’t just about managing numbers; it’s about empowering yourself to make confident decisions that drive your business forward. By embracing best practices in regular reporting, finance tracking, budgeting and forecasting, process documentation, and task management, you can transform financial management from a source of stress into a powerful tool for success.
Build a future where you’re not just keeping up with your finances but using them to fuel your dreams by implementing these best practices today, and take control of your financial journey.
