Tips to Effectively Manage Business Finances

Operating a business requires managing personnel, being innovative in the delivery of goods and services, and above all, having a sound financial management. The last factor is essential in the sense that your company will not survive without it.

The numbers, surprisingly say that 8 out of 10 businesses survive during the first year. The survival rate drastically falls soon after that. By year five, only half of the small businesses survive. Unfortunately, the data are not on the owner’s favor. Luckily, budding businesses can rely on accounting services for small businesses in Singapore, and avoid the financial pitfalls of running a startup.

Handy Tips to Manage Finances

Majority of accounting services in Singapore recommend these tips to effectively manage business finances:

1. Track your finances – The first thing to do is to set up an accounting or bookkeeping system. It is best to hire a third-party accounting services provider in Singapore for an independent evaluation.

1. Update your financial records –This is not only for your own needs but also in compliance with government regulations. This is important for audit and tax purposes.

1. Prepare a projected cash flow – This will tell you if you still have sufficient money to pay your suppliers and employees. It will also help you determine whether you are still liquid or not, and for how long.

1. Do not dip into the business money – It is highly recommended to separate personal and business accounts. There are many reasons for this, including an accurate accounting system, a tighter tax audit, and prevents confusion. At the very least, this speaks volumes about your professionalism. If you consider the business as your main livelihood, set aside a salary for yourself and make sure that is in the books. Lastly, if you declare bankruptcy, your personal assets are protected.

1. Stick to your budget – Every company has an annual budget, which outlines the expected income and expenses. This budget can be amended throughout the year depending on the circumstances. Nevertheless, it’s important that you stick to the budget that your financial planning has come up with.

1. Innovate your payment terms – Make it more convenient for the customer to pay. That means you do not just stick to cash payments. Instead, you can accept credit or debit cards, mobile payments, digital wallets, and other forms of financial transactions.

1. Do not forget your taxes – Remember to give the government its due. If you find the process overwhelming, an accounting service provider can help you. In fact, you should consult first accounting experts even before you start your business. That way, they can recommend ways on how you can get the most out of your money when setting up a business.

1. Track your loans – Expenses are one thing, but loans can very well kill your business if you fail to account for them. Imagine the interest rate if you fail to pay your loan within the period terms. While you’re at it, make sure to work with accounting service companies in Singapore to set up a deposit or payment scheme that factor in the legal and banking requirements.

Manage Business Finances with an Accounting Firm

Outsourcing to an accounting services provider in Singapore will ensure sound financial management of your business. You do not have to worry about what the accounting firm is capable of if you hire one with a good standing. Finally, you save money as opposed to having an in-house accountant where you pay a monthly salary even if there are no services rendered.

Teo Han Siang is a tax accountant in an accounting services company in Singapore. He manages a wide range of accounting, audit and tax clients portfolio.