Every logistics business owner knows how hard it is to stay on top of your business finances. A common mistake most nascent-stage business owners make is ignoring good accounting practices because you have ‘just started out’. This lapse could cost your business dearly. Here are five easy tips to help you get your business’s accounting in order.
Maintain a separate business bank account
Most first-time business owners make the mistake of using their own personal bank and credit card accounts for business requirements. They fail to realise that mixing up their accounts this can lead to complications later on. By maintaining separate business and personal accounts, you will be able to keep track of all deductible expenses and save hours of rework in the future.
Keep a track of expenses
Track every business related expense, big and small. Categorise all expenditures and track cash flows. Using a separate credit card for business expenses can make tracking easier while reducing the number of payment receipts to keep track of. However, if cash transactions are the only option, make sure to keep a record of every expense on an account software to save yourself hours of sifting through receipts at a later stage.
Keep your book of account up-to-date
Bookkeeping is an important aspect of accounting and a way to maintain healthy business finances. Regularly go through and update your company’s books to avoid financial mishaps. Set aside some time every week for this purpose and make sure you stick to it no matter what.
Take into account all labour costs
Make sure to account for all labourer payments and cash given to daily wage workers. Most business owners tend to overlook this. Make it a point to note and keep track of every penny spent on the factory floor and paid in cash.
Follow up on payments
Remember to follow up on any kind of payment due to you, invoices or receivables. Maintain regular records of this so that you do not have to deal with late payments. Keep a tab on when invoices are paid, which customers pay on time, which of your customers default, etc. Late payments could affect your business’s cash flow and threaten its very survival.
If all else fails, consider alternative financing options such as invoice discounting services in India. KredX is the country’s leading invoice discounting marketplace helping businesses gain quick access to working capital in 24-72 hours by selling their unpaid receivables to investors thereby, helping businesses maintain a healthy cash flow and tide over working capital crunches.
It’s important to learn good accounting practices to ensure the financial well-being of your business. If you find accounting too daunting, it is wise to hire a professional accountant because the money you spend today will save you much more tomorrow. Happy accounting!