NFIB

Six Ways to Reorganize Your Business Finances
03/ 05/ 2002

In the frenzy of the work day, most small business owners have a hard time keeping their finances organized. With all that needs to be done, receipts end up in a shoebox, income statements are placed on a spindle on the desk and payments due are stacked in a messy pile. And one day, the owner wakes up to find that although the company is making money, the financial organization is a mess. In today's Workshop, Jeffrey Moses offers six steps to reorganizing your small business' finances.

1. The first step is to organize the records. Rather than slinging everything into a box or making separate piles on the desk, carefully separate all records and place them into labeled file folders. Keep records on receipts for purchases, bills, loan statements -- everything that affects your bottom line.

2. Calculate your financial outflow and inflow. Though you may have a rough idea of how much money goes to which purchases or bills, a detailed list will give you an exact record of your cash flow. The list of your expenses should be written to the penny. Once all is documented, this list gives you a starting point for cutting costs.

3. Write down a monthly schedule of all fixed business expenses -- salaries, insurance, leases and mortgages. Include the total amount and the due date, which can help you put aside enough money to never run short of cash when a fixed expense needs to be met.

4. Write down all non-fixed business-related expenses, such as equipment, entertainment or business meals. For several months, you may want to keep a journal or travel log to record these expenses.

5. Don't mix your business and personal expenses.

6. Consider setting up an automatic direct-deposit savings accounts, which forces you to save money. If you have to start small, don't worry. Investing just $50 a month at an 8 percent yearly interest rate will grow to nearly $48,000 in 25 years.

As your finances become more organized, not only will you experience greater control of your operations and planning, you'll gain confidence that the streamlined foundation you've set up will lead to a stronger and more successful business.

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