One of the biggest causes of financial loss in business is poor financial management. This is because poor financial management means you don't accurately track all your expenses to see where every cent goes.
But the good new is, you can put a stop to poor financial management in your company today. All you have to do is put the right financial controls in place.
Today, I'm going to show you five easy steps you can use to do this so your business won't lose money this year...
Follow these five financial management steps so your business won't lose money in 2015
Step 1: Study your financial statements from last year
The best way to control what happens in the coming year, is to look back at what happened last year. Look at your experiences and decide what you could do to deal with them in future.
For example, if you made a 50% loss for two months in a row last year, what could you do to deal with this if it happens again?
Look even further back to 2012 and 2013 and you could spot trends that keep happening.
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Amazingly simple way to manage your financials, thanks to the Master Budget Series
When new expenses arise, no one could have imagined they would be a source of so many serious problems for your business cash flow.
Even the slightest discrepancy in your financial budget can result in you not knowing whether your business is over performing or underperforming.
This is why you need a solid financial budget for your business.
Step 2: Use this information to forecast your finances for 2015
helps you create a plan of action based on what you think will happen with your finances this year.
Don't forget to factor inflation and economic changes in.
Step 3: Use your forecasting to draw up your budgets for the year
Your budgets are the most important part of financial management. Because they help you break down exactly how much you're willing to spend on various expenses, you can see where you're over- or under-spending.
Remember, you need more than just one umbrella-budget that covers everything. You also need smaller budgets that focus on all the different areas. For example, you need an overheads budget
that includes sales. Then you need to break down those sales expenses into their own budget.
Step 4: Set up a tracking system on your business banking account
Use your banking account to track all the payments that come in and out of your business. As a payment happens, enter it in your accounting records.
Step 5: Compare your accounting records with your budgets
At the end of every month, compare what you budgeted and what your company really spent and earned.
Look for places where your company spent too much and went over budget. If you find problems like this, either change your budget to allow for more spending, or find ways to reduce the spending if you can.
This way, you can easily control your finances so your company doesn't lose money on unnecessary expenses.
Just remember to make this financial management process work for you. You must find the balance between being flexible and firm with your budgets.
To create budgets that help you do exactly that, check out the Master Budget Series
. It contains ten budget templates and tips on how to create all of them.