2020 was likely tough on your business. But with the dawn of a new year comes a renewed sense of optimism; a sense that after facing the trials and challenges of the year that’s come before, we can do pretty much anything. While Australia has not yet completely shaken off the slump caused by the global COVID-19 pandemic, our businesses and economy have come back swinging in late 2020 and into 2021.
It’s not too late to make some resolutions, especially when it comes to your business finances. A few operational tweaks and changes today can make a huge difference to your company’s financial health tomorrow. Here are some practical tips to help you master your business finances and make 2021 your best year yet.
Look to the future
It’s important to focus your attention on the here and now, but a big part of managing your business finances means looking to the future. Today’s data can help you make an informed decision about how the landscape will look tomorrow. Accurate reporting and comprehensive budgeting are essential components of good financial health, enabling you to make accurate and reliable projections.
Not sure where to start? Take a look at these cash flow projection templates.
Take steps to boost liquidity
Liquidity is cash, and cash is liquidity. Maintaining a healthy cash flow is essential in keeping your bills and your team paid on time, maintaining good relationships with vendors and ensuring that you can make capital investments when and where needed.
Of course, this is easier said than done. The easier you make it to get paid quickly, the more proactive you are in managing costs and the more sensible you are in your pricing, the more likely it is that healthy cash flow will be a natural consequence of your operational processes.
Rethink the way you hire
The right talent is essential in giving you a competitive edge, engaging and retaining your customers and maintaining a high turnover. The raw material from which profits are made. But you don’t necessarily need the overheads that come with full-time employees.
Often, relying on freelancers, outsourcing and gaining the insights of consultants can be more conducive to delivering operational excellence and pursuing sustainable growth than adding another permanent member to your team.
Invest in a scalable infrastructure
You want your business to grow in 2021. But unless you have an infrastructure to cope with it, your operations could actually stymie growth rather than facilitating it. And when this happens, your team get overworked and overstressed, details get missed, mistakes get made, and inevitably your customer service suffers.
It’s never too late to start investing in scalable solutions for future growth. One practical example of this is moving your digital infrastructure to the Cloud. Cloud-based solutions are cost-effective and can scale in direct proportion to your growth. So you don’t have to compromise your cash flow with solutions that are surplus to your requirements.
Don’t follow the white rabbit of business finance metrics
Even business owners who carry out regular reporting can be guilty of burying their head in the sand doing this. It’s all too easy to focus on comfort metrics like turnover. But as soon as you focus too much of your attention on the top line, the bottom line will come up to bite you.
Turnover is the white rabbit of financial metrics, and it can lead you down a dark and dangerous hole. Instead, focus your attention on your margin, and drive down your bottom line.
We can help
If you’re interested in finding out more about any aspect of your business finances, then get in touch with our financial experts. Find out how GoCardless can help you with ad hoc payments or recurring payments.