by Jerry Mooney
If there is one thing that all businesses cannot afford to get wrong, it is their finances. It does not matter what type of business you run, be it a consultancy firm or a marketing agency, you need to get your finances in order. So, are you going down a bad financial path? Here are three key signs that you could be…
Mixing personal and business finances – Are you currently mixing your business and personal finances? A lot of people fall into this trap, as it is very easy to do. After all, we have all got to a checkout and simply paid with the first card that is available. However, this isn’t a good move for your business. There are a number of reasons why this is the case. The first is because tracking your expenses becomes a nightmare. The second is because it can lead to complications when the time comes to submit your tax returns. You will struggle to back up your claims, and this could spell a disaster if the tax man gets on your back and requires an audit. They are not going to be happy if you have failed to keep a consistent banking and bookkeeping process. They may even assume that you have done this intentionally, which could lead to you being fined.
You borrow money without thinking about the consequences - Almost all business owners are going to need to borrow money. Perhaps you are looking into commercial real estate loans? Maybe you need money to invest in technology? No matter what applies, you simply need to make sure you borrow responsibly. Make sure you fully understand the terms and conditions of your loan agreement so that you do not end up in any hot water.
Poor invoicing methods – The final sign that your business is going down the wrong road financially is if you have poor invoicing methods in place. When do you send out your invoices? Do you do so the moment the work has been completed? Do you have a clear payment policy in place, which all of your clients are aware of? Cash flow problems can spell the end of any company, but in a lot of cases, they are self-inflicted. Make sure this is not the case with your business by getting all of your invoicing processes in order so that you do everything in your power to be paid on time.
If you are heading down a bad path, use the advice above to rectify it sooner rather than later! There is no need to panic about the situation, but you do need to take some action so that you can get all of your numbers in check.