Simple is a word not often associated with business financials. Instead, accounting typically brings to mind frustration, confusion, and worry about potential tax problems.
At SIMPLY Financials PLUS, Simply is right there in our name and our purpose is simple: To change the accounting experience for our entrepreneurial clients.
We want to provide you with the peace of mind that comes from a combination of three things:
Having complete confidence in your compliance, and meeting tax obligations
Having a high-level view of your business and profitability
Having better control of the time and effort you put into your business finances
Does this seem impossible? That’s because too often we are intimidated by accounting and by putting it off we are fighting an uphill battle.
In this guide, our goal is to lay out what a simplified financial system looks like. With this guide, you’ll have the fundamentals in place to have confidence in your numbers - which will translate into confidence in your business.
Let’s get started.
The ROI of Financial Peace of Mind
As a business owner, you most likely have an endless to-do list. You need to make sure the day-to-day operations are working as they should be, you need to look after your team, and you need to make sure you make the right decisions so your business keeps on moving in the right direction. It's a lot of work.
The last thing you need is to spend your precious mental bandwidth worrying about your business's finances. This guide will help you make sure that you have all the systems in place. Financial peace of mind means avoiding common accounting pitfalls and knowing everything (regarding your business’s financial health) is in order.
It all starts with the right mindset
Unless you come from a solid financial background, most business owners have a hard time managing the financial aspect of their business. They love getting work done, but looking at financial reports and spending time on financial planning will often be relegated to a lower priority.
In other words, you may feel as if spending time looking at your finances takes time away from the actual work that needs to get done.
This feeling toward your finances is understandable. For many business owners, this is the first time in their careers that they have to deal with accounting and financial data. But if you are to make a lasting change towards long-term financial security, shifting your mindset will be necessary.
Here are two tips to help you change your mindset about your business’s financials.
Tie your business goals to your financial milestones: The best way to stop seeing your financials as something that’s taking away your time is to tie them with your business goals. What happens to many business owners is that from an operational standpoint, everything is moving forward and progress is being made. But unfortunately, the financial statements don’t reflect the same results. Tying business and financial goals together helps you ensure both aspects of your business go hand in hand.
Get your team involved: Every aspect of your business affects financial performance. The better your customer service team helps customers, the longer they’ll remain with your business. The more accurate your inventory, the better the bottom line. The marketing and sales crew obviously directly add to sales. Connect each aspect to the company’s financial success.
Make sure you have the proper foundation
Today you’ll find dozens of accounting and financial apps that can help you make managing your accounting significantly more accessible and more efficient. If you’ve managed your own business finances, this means no more staring into a spreadsheet for hours on end.
Plus, there are a number of useful software tools. Some apps help you take care of your books, payroll, or inventory. Just about any aspect of your business that you can think of, there’s a solution making it easier.
Accounting Software for Reconciliation
At the foundational level of your financial peace of mind is the bank reconciliations. This is made possible now with software like QuickBooks to connect an accounting system to your bank and credit card transactions.
There are a few key pieces to reconciliations that will set you up for success:
Chart of Accounts
Reconciling your transactions involves categorizing everything that happens in your business. In order for those transactions to have meaning, it’s important you have the categories set up properly to begin with. This is your chart of accounts.
This is important, because an e-commerce business is going to have an entirely different chart of accounts than a manufacturing business. Having a professional help with your chart of accounts will make everything else flow more naturally.
2. Consistency
Once you have the right software and chart of accounts, you have to have the discipline (or help from someone) to stay on top of your reconciling.
When the transactions pile up, and you start to fall behind, it can become very challenging to play catch up.
3. Sync with your Bank
With QuickBooks, you can import or sync your bank and credit card transactions to make the process of categorizing much simpler. You should be able to see the flow of money, and do reporting without dealing with a ton of spreadsheets.
Payroll Software
Just like in bookkeeping, your payroll becomes much more efficient with the proper tools. QuickBooks again helps in payroll, because it does more than just pay your employees.
With QuickBooks’ payroll you can also:
Sync with your accounting: This means you don’t have to repeat work, and can have confidence your payroll information is consistent with your accounting
Deduct taxes and benefits: Building in your taxes and benefits in your payroll system allows you to have confidence in your compliance. A professional accounting firm like SFP can help with this.
Payroll again is a big part of the business financial picture and can cause a lot of anxiety. By getting the right setup in place, with the right tools, you can approach it with confidence.
Get your financial reporting in order
Since you now have your accounting software up and running, you can take advantage of the other great benefit of using financial apps. That benefit is reporting.
Getting your financial reports with a few clicks is one of the best things you can do for your business. These reports will help you make informed financial decisions with real-time data. This way, you can have confidence that you won’t come across any surprises.
Additionally, many accounting suites have the option to generate reports in real-time with graphic interfaces that make it significantly easier to understand and analyze compared to seeing everything on a spreadsheet.
Here are some of the main reports you should generate consistently.
Financial forecasts: No one can predict the future, but you can prepare for it. Economic forecasts use your past data so that you can build models based on different outcomes. This way, you can have a plan in place for whatever results you get. The general idea is to create several forecasts ranging from worst-case to best-case scenarios. This way, you'll be covered and won’t have to improvise.
Cash flow statement: It’s said that cash flow is the best indicator of a business’s health. So if you want to quickly know if everything is okay without going into all your reports, then focusing on your cash flow statement is a good option. One of the main benefits is that if you have your bank accounts integrated with your accounting software, this report can be generated automatically.
Budget vs. actual: This report gives you a clear idea of how you’re doing versus your projected budget. This allows you to know if you’re on track with your spending versus your revenue generation, and allows you to meet your forecasted goals. This can help you detect areas that are under budget, which might be hindering your growth. Or, on the flip side, it can help you see if you are over budget so that you can make the necessary adjustments.
KPI Tracking: This will depend heavily on your business model, but keeping a close eye on all the KPIs that directly affect your cash flow is a good practice. Customer acquisition cost, average order value, and lifetime value are some of the metrics that can help indicate that everything is going to plan.
Find the right financial partner for your business
The last piece of the puzzle is finding the right financial partner for your business. Having a team that can help you with oversight, accountability, and being a second set of eyes to see the big picture, can give you the peace of mind that you need to focus on growing your business.
The right partner will simplify your financials and communicate them back to you in a way that makes sense. You won’t have to worry about a big surprise at tax time, problems with payroll, and can even help you create your growth plan.
Here are 3 aspects to keep in mind when looking for a financial partner.
They have industry knowledge: A financial partner does much more than just keep your books or pay your taxes. They’re a strategic ally that can give you the insight you need to make the decisions that’ll bring you closer to your goals. As such, they need to take the time to understand your business and the competitive landscape of your industry.
They provide the support you need: Besides having the required competence, a good financial partner gives you on-time reporting and services. A great deal of financial peace comes from quality data, delivered when you expect it.
They want to work with you: This refers to their disposition to build a genuine long-term relationship with your business. This commitment makes the difference between just having someone help you with your accounting versus a team committed to helping you grow your business.
Partner with SIMPLY Financials PLUS
Keeping track of your financials doesn't have to be time-consuming or stressful. If you have the suitable systems in place, you’ll find that having the peace of mind that your business’s finances are in order is easier than you thought.
SIMPLY Financials PLUS can be the financial partner for your business. We work to understand your business, integrate all the right tools, and deliver the right reporting so you make data-backed decisions in your company.
Take a look at our services, or get in touch with us to see exactly how we can help you find financial peace of mind.