You have a business idea, the marketing plan is in action, the website is being made, you’re ready. However, when it comes to finances many business owners stick their heads in the sand and cross their fingers that everything will work out.
Its vitally important that care and attention is given to the finances because without proper management you won’t have the cash to keep your business alive. Here’s how to get your finances in order before the doors are even open:
Have A Budget
Make sure you spend some time putting together a budget. This will ensure you have a master document that shows your anticipated revenue and expenses. This document is vital because once the business is open you can refer back to the budget to ensure your spending isn’t getting out of control and track your sales progress.
Also, by preparing a budget you can ensure that you’re pricing is correct. There is nothing worse than 6 months into your business finding out that you’ve been selling at a loss!
Get Bookkeeping Software
Ditch the spreadsheets, they take too long to put together, accountants hate them and there is always mistakes. Get some cloud bookkeeping software such as Xero or Quickbooks and sync up your business bank account. Now bookkeeping can be done quickly, from anywhere and mistakes are next to none.
Document A Process
Keeping on top of the business finances is important. Design a process to ensure you keep on top of numbers and utilise software to help you do so.
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So firstly set some time aside each week to ensure the bank is reconciled and up-to-date. Then once a month, review the past months performance against budget and what you can do meet your targets.
Look into using additional software in tandem with your accounting software to help give you more data and save you precious time. So for example you can use Receipt Bank software to scan receipts and have them sent to your bookkeeping software or you can sync your Shopify store data to your bookkeeping software.
Find a Advisor an e-commerce Accountant
Before opening the doors search out a bookkeeper or accountant to work with you to help provide advice to grow your company. Having advice from day one will help guarantee your business success and help you to grow at a much faster rate.An e-commerce accountant can assist with financial planning and analysis, bookkeeping, and tax compliance, among other things. They can help you develop a budget and cash flow forecast, so you know what to expect and can prepare accordingly. They can also provide guidance on tax planning and help you minimise your tax liability, which can free up more cash for other areas of your business. Please get in touch with us to discuss your e-commerce store and personal tax, Vat and other services.
Cashflow Management
Cash flow management is a critical component of financial success for any business, and e-commerce businesses are no exception. In an e-commerce setting, it’s essential to have a clear understanding of the inflows and outflows of money and to ensure that you have enough cash to meet your obligations.
To manage your cash flow effectively, it’s important to track your sales and expenses regularly. This will give you an accurate picture of your financial health and help you identify any areas where you need to make adjustments. For example, if you have high expenses in one way, you may need to find ways to reduce costs or increase sales to offset the outflow of cash.
Additionally, it’s important to stay on top of accounts payable and sales ledgers. Make sure you pay suppliers and freelancers on time and follow up promptly on outstanding invoices. Late payments can damage your reputation and impact your credit score, which can make it harder to secure funding in the future. You can also incur a fine with late payments.
E-commerce accountants can assist with cash flow management by providing guidance on best practises and tools to help you stay on top of your finances. They can help you create a cash flow forecast and provide insights into how you can improve your financial performance over time. With the help of an e-commerce accountant, you can have confidence in your financial position and take your business to new heights.
UPDATED FOR 2023
We are accountants who cater specifically to e-commerce businesses. If you are looking to take the next step, our team are always happy to help, so get in touch today.
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