When it comes to keeping track of your business’s finances, you know that you’re operating on a shoestring budget and that every penny counts. That’s why small businesses are especially good at keeping track of their finances.
A small business won’t be able to afford the same level of accounting, bookkeeping and invoicing services as a large corporation, but it can still operate like one. It’s also important for small businesses to keep track of their finances because of the other side effects.
If you don’t have a proper accounting system in place, then your small business will not only run the risk of misreporting its financial transactions, but it will also avoid getting the best rates for its borrowing. That’s why today, we’re going to give you a step-by-step guide to setting up a proper accounting system for your small business.
As a small business owner, you probably don’t have the time or the resources to constantly manage your invoices. That’s why it’s so important to keep track of your invoices as soon as you receive them. The sooner you get your invoices, the sooner you can process them, send out payment, and save money.
Unfortunately, managing your invoices isn’t as simple as sticking them in a drawer. They can pile up quickly and cause you a lot of stress. Fortunately, there are many simple ways to get started that will keep you organized and reduce your time spent on accounting. Keep reading for more information about invoicing for small businesses, including tips for getting started, common errors to avoid, and more.
How to Get Your Invoicing Strategy in Shape
Getting your small business off the ground can be a challenge, especially if you don’t have access to personal loans or a business partner to help you manage the books. To keep your finances organized and your books balanced, you’ll need to adopt certain business practices.
From invoicing customers to tracking payments and expenses, invoicing is an important part of running a business. But, especially if you don’t have a lot of prior business experience, it can be a little tricky. The good news is that there are a lot of small business invoicing tips you can use to make sure you’re getting the most out of your books. Here are some of the most common small business invoicing mistakes you don’t want to make.
Track your invoices
Whether you send an electronic invoice or hand write one, you’ll end up with a paper trail that can help you track your transactions. In the event that one bill or customer isn’t paid off at the end of the month, you’ll have a paper trail that can help you figure out what’s been outstanding. You can also use paper invoices to track your expenses. If you keep detailed receipts for your business purchases, you can track how those expenses are affecting your books.
Always have a copy of your invoices
One of the best invoicing practices is to keep a backup copy of each invoice you send. Whether you save that copy in a filing cabinet or put it in an online filing system, you’ll have a backup to help you identify what has been outstanding. And, if there’s an error in your original, you can easily correct it before sending the invoice to the customer.
While it’s not necessary to save a copy of every single invoice, you should keep a copy of all your customer invoices. That way, if there’s ever a question with one of your customer contracts, you can show that you had the documentation to support your invoice.
Set up your accounting software for every month
Setting up your accounting software for every month can be a bit of a challenge if you only have a small business to run. You might be tempted to only set up your books for the months you expect to receive payments. You’ll want to make sure you set your software up for every single month. That way, you can identify any potential cash-flow problems early. For example, if you have contracts that don’t go through until the following month, you’ll know about it early enough to take corrective action.
Don’t forget to track your payments
As you track your expenses and bill customers for their services, you’ll need to track payments as well. With inventory and other fixed assets, like the cost of your building or parking lot, your accounting software should be able to automatically track the amount that’s been paid. For other purchases, like vehicles or office supplies, track their purchases so you know exactly where the money is going.
Make sure you’ve got receipts for your expenses
With expenses, you don’t want to over-count them. While you can’t track everything with a bill and a receipt, you can track most business expenses with a bill and a receipt. That way, you have documentation to support your expenses. That’s especially important when it comes to tracking the cost of your vehicles.
Invoice management is an important part of running a small business. To make sure you stay on top of your finances, you’ll want to make sure you follow these invoicing practices. Fortunately, most of these invoicing tips are easy to remember. With a little effort, you can make sure your invoices get paid on time and that you always have a backup for each one.