5 smart ways to look after your business’ finances

So, you've started a business. It's an amazing thing to do, to take your hard earned knowledge, your valued skills, and strike out on your own. Starting a business really gives you the chance to show the world just how good you are, and to make a mark on your industry.

The downside of course, is that starting a business means that you are unlikely to be able to draw on the specialisms of others straight away, opening up a whole new world of logistics and admin issues to deal with on top of your work. And nowhere is it more important to be sure that you're getting it right than in your company's finances.

It's pretty much impossible to overstate how important it is that you have a solid grip on your financial situation, but it's fair to say that it's an area that is alien to most and downright terrifying to some.

Thankfully though, there are some simple, effective steps you can take to alleviate the stress of handling your company's finances.

Use good accounting software

Chances are that you wont be able to pay for an accountant to take care of the money side of things right off the bat. Having to watch your expenditure at the start is just part of growing a business, and hiring an accountant is usually an aspiration for a little bit later down the line.

Having said that, it's vitally important to get a hold of some good accounting software.

If you're not numerically or organisationally minded then you might be understandably worried about being overwhelmed, but in all honesty tools such as Quickbooks, Xero, or Zoho Books have made their names by being both comprehensive and user friendly. They're aimed at making accounts as accessible as possible for laymen, with tools and guides that should let you get your finances on their feet as as possible and with a minimum amount of headaches.

Ask other business owners both inside and outside your industry which one they use and give them a try. It's the best way to find what works for you, and will help you take your business forward successfully.

Spend smartly on the things you really need

Do you really need a rented office space? How about a company car? 10,000 luxe business cards? While all of these things and more fall into the 'tax deductible expenditure' category, it's worth assessing whether or not you need to spend money on them.

An office, for example, comes with huge overheads, and if you're working solo and can meet clients and customers remotely then you'd have to ask yourself whether it's necessary.

By pruning away the things you don't need to spend money on, you'll be able to make your money last longer, and even make it work better for you by investing in items or services that will make an actual difference.

Look at the ROI that comes with your expenditure

Similarly, you should absolutely check the return on investment of every single amount you spend, especially if it's a regular outgoing. If it's not working for you financially, it's working against you.

If it's an essential product or service that you're spending too much on, then shop around and try and find a more cost effective deal. You shouldn't feel beholden to one provider if the money you're spending is proving damaging. Alternatively, you should reassess whether or not you need the outgoing (such as the need for a physical office we mentioned above) or whether a change in direction and strategy  would provide better ROI and give you a healthier bottom line.

Have a billing strategy

If you don't send out invoices, you don't get paid. It really is that simple. That's why you need to be sure that you have a billing system in place that lets you get invoices out the door without having to put too much thought into it. Ideally, the billing process – creating and sending invoices, but also checking due dates and marking payments received – should become second nature, running smoothly and continuously in the background.

In order to make billing work, it's best to create a conveyor-belt system. Mark down when an invoice goes out, when it should be paid by, and when it hits your account. That way you can see who is paying late and chase them up at regular intervals. It's also worth writing in your terms of business agreement just when you expect to be paid by. That way, if anyone proves reluctant to pay you on time you have a legal basis to make them cough up.

Look after your receipts

It's tempting to stick your receipts into your back pocket for a while before stuffing them into an old box or an envelope until the end of the year comes around, but you'll actually save yourself a massive headache and a whole load of stress is if look after them properly. No really, you will.

It doesn't have to be a laborious chore, and you don't have to keep piles of tiny slips of paper lying around the desk. If you either file them physically or scan/take a high quality photo and store it on your pc (creating monthly and yearly folders is a good way to keep on top of things), then you'll be much less likely to be overwhelmed or miss something important when it's time to tackle your tax return. Whether you input each receipt as and when, or save them until the end of the week or month, it's going to take discipline to keep up to date but the benefits are worth making it a part of your schedule.

Check out more financial advice from Transmit, here.