Experienced business managers will always share with you how much time the spend dealing with problems. Problems have a habit of leaping out at you when you least expect them. Discovering all of the problems you have to solve is a really difficult task. Solid business management means you have to excel at adeptly resolving complex problems quickly.
Good financial controls are critical to the successful management of any business. Think of financial controls as a sentries that sound the alarm when a financial problem occurs. You should be able to “layer” financial controls on to the reports of small business accounting software. Make sure you have sufficiently competent small business accounting software that can produce the reports you need to track and monitor budget versus actual performance in areas such as revenue, fixed expenses and profitability. Begin by identifying a minimal group of numbers and relationships that you need to monitor and then design your accounting or financial reports to present these critical factors in the right format.
Vigilantly keep an eye on the margin on sales and don’t hesitate to investigate any changes regardless how insignificant they might be. If you sell products in volume any sudden change in margins can multiply into losses very quickly and therefore it follows that any decreases in volumes should be immediate cause for concern and therefore having up to date information available is critical. Monitor your fixed costs like a hawk and make particularly sure they follow your plan or budget especially in the early months of the financial year. Scrutinise the debtors reports found in most small business accounting software specifically for the average number of days it takes for you to get your invoices paid, this is a really essential operating ratio that every business should have in place.
Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.
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