Money is always on your mind when you’re the CFO running a construction company’s finances, or any company for that matter, and with good reason! Financial problems are a big concern for a company, big or small, but for a small company, financial problems can be especially troubling and here’s why. Balancing accounting activities with sales and other activities can be a lot for a small business owner to deal with, which can lead to unnecessary errors and oversights. Supporting the following three exposure areas better, will keep you out of trouble and your finances on track. These are all easily manageable and correctable.
Not Keeping an eye on your Cash Expenses
Mixing business and personal funds is never a good idea, but it can be hard to keep the two separated. Paying cash for a business lunch meeting or ink cartridges for the printer may seem like no big deal, but it can add up over the course of a year to thousands of dollars. You have to grab a receipt for every dollar you spend and if you can’t get a receipt, you have to write it down in a notebook.
This is important not only for tax purposes, but also to know how profitable your company really is. Procurementexpress.com can help your company to have constant visibility over how much you are spending. It could help you pick up on and prevent overspending. With Procurementexpress.com you would allocate funds to budgets relative to your bank balance, because having purchasing processes in place is valuable for any company.
Without purchasing management of some sort, it is virtually impossible to know how much you are spending. A dedicated purchase order management system can give business owners full purchasing transparency.
Not Collecting on Accounts Receivable
I’m one of those people who would lend someone money but I’m too scared and too ashamed to ask for my money back, but taking a step back allows me to see the situation for what it is. It is only right to ask for money back, because I worked hard for it.
The same goes for companies. They struggle to ask others for money owed to them and this can make collecting accounts receivables intimidating. Poor cash flow kills a huge number of businesses every year.
If your company is regularly running out of money, or is in a position where one late client payment would leave you unable to pay your bills, then you have a cash flow problem. When assessing a potential job or order, pay attention to your overheads, expenses, and the expected date of payment. If it will cost you a lot of money upfront, and you won’t receive payment for several months, it is probably not worth it..
No matter if you’re paying with cash, check or credit card for business expenses, you should secure a receipt or keep a journal on hand to jot it down. If you wait until you get your bank or credit card statement at the end of the month, you may not remember why you spent the money, and if you need to tie expenses to customer accounts, you’ll struggle even more.
Make it a practice to scribble notes on receipts and log them into your bookkeeping software as soon as possible. Or even better, save a tree or two and go fully automated. This is where Procurementexpress.com comes in. Using a dedicated purchase order system creates the need to plan budgets carefully. Approval routing is now set in place so that each approver has to accept responsibility for spending within their allocated budgets. When a purchase request is sent for approval, approvers can view budget spend in real time, so informed decisions can be made.