By Rieva Lesonsky
As I write this blog post, our senators and congresspeople are at odds over financial reform. Only time will tell what the result of their debates will be, but in the meantime, thinking about the concepts of financial reform, regulation and oversight made me wonder how these concepts apply to your small business.
Leaving aside what happens in Washington and who’s going to be responsible for overseeing what, perhaps more important to your business is how you take responsibility for overseeing your own business finances and regulating how they operate. Here are some tips for regulating your business finances.
Keep on top of your income and outgo. With today’s multitude of software programs that enable just about anyone to manage their own accounting, there’s no excuse for not knowing the state of your business finances at any given time. Regularly reviewing your books helps you prevent unpleasant surprises and enables you to plan ahead so you can take advantage of opportunities as they arise.
Get help when needed. Of course, even with accounting software, not everyone is a natural accountant. If tracking your finances is taking up too much of your time, outsource the task to an accountant. The time saved can be well worth the expense when you can devote extra time to your business.
Understand your finances. You may give someone else the job of doing the nuts-and-bolts, but you still need to understand the basics of business finances. If you don’t, take a course at your local community college or your local Small Business Development Center (SBDC) or get help from SCORE.
Put controls in place. Never give one person unlimited control of your finances. Too many business owners have been burned by a trusted employee who turned out to be embezzling. Make sure you review your books regularly so you notice anything unusual. Set up your systems so that more than one person must review and sign every check. Limit who has access to company credit cards. You get the idea.
Build banking relationships. The economy is starting to get back on its feet and, when it does, the companies that get financing will be those who have continued good relationships with their bankers. If you’re not getting what you need from your bank, talk to other business owners and get some ideas for banks that can better handle your business requirements. Once you’ve found a good banker, keep him or her in the loop about your business and ask for advice to maximize your money.