It is important for the health of your business that you have a regular understanding of the numbers involved. It is good to know if you are meeting your sales goals but also that you have enough capital to pay the bills and keep the lights on.
Keeping a regular track of your finances need not be a big job that is done once a year at the behest of the tax man. If you keep on top of your finances in small bursts throughout the year then you will be in a better position at year-end.
Start with a budget that you check in on once a month to ensure that your finances are on track. Keep it simple with expenses and invoices so you can see what is going in and out of your business and take a view of what overheads you can cut.
While you will want to know what you outgoings are each month with your budget, keeping on top of those business expenses throughout the month will help you keep to your budget. It will let you know when you need to hold back from spending and what you should be focusing your expense account on.
Cash flow is essential to ensuring you have the money in your account when you need it. If invoices are not paid on time, then that causes issues. If you know that you have regular late payers, speak to them about their current credit terms with you and agree to a regular deadline by which the invoice needs to be paid.
Taxes can be complicated and time-consuming, but keeping on top of what you are likely to owe at the end of the year will hold off any nasty tax surprises. Depending on how you have registered your business and whether you have employees will all impact your tax bill. A local accountants Cheltenham based Randall and Payne for example, will be able to advise on what you need to do to make sure you are tax return ready at the end of each year.
You may find it easier to use accounting software to keep all your financial information in one place where you can set alerts for overdue invoices.