3 Financial Tools Every Small Business Should Use
As an owner of an SMB, you may find that the financial aspect of your business is sometimes much more stressful and time-consuming to handle than other areas of your business.
The IRS is strengthening their efforts to clamp down on tax fraud by passing new, stricter guidelines for businesses of all sizes. This means that simple mistakes in accounting and record keeping could backfire into something more serious, such as an IRS audit.
Fortunately for SMBs in this growing digital era, there are quite a few solutions out available to help you keep your SMB finances in good order. Tasks such as bookkeeping and payroll are time-consuming and tedious.
But with business automation becoming more and more affordable these days, it is kind of out of the ordinary for companies not to use such solutions.
Below is a short yet concise list of three financial tools every small business should use.
1. Automated Accounting Software
When you start looking for what automated accounting software is best for you small or medium sized business, there are some things you should look for.
- It should do automated entries
- It should automate your invoicing
- It should have automatic bill payments
- It should automatically provide expense reports, financial reports, and reconciliations
More advanced software may go a step further by providing built-in financial reports and data syncing, such as point-of-sale (POS) system and bank accounts.
2. Automated Budgeting Tools
Creating and sticking to budgets are some of the most important mechanisms of any successful business. Following the old adage, "You have to spend money to make money," can set your business up for failure if you follow it too loosely.
Don't overextend yourself in startup costs before you have a solid customer base. This is why employing automated budgeting tools are wise. They can keep your spending in check while assisting you in maintaining your goals.
When you are shopping around for automated budgeting tools, you should try to find one that has the following qualities:
- Financial performance management
- Ad hoc planning and consolidation
- Actual budget plan variance reporting
- Revenue forecasting and analysis
- Profit and loss cash flow forecasts
- Budgeting and forecasting
- Disclosure management
- Capital management
3. Business Credit Card
Before you decide whether or not you want to apply for a business credit card, there are a few things you should ask yourself.
- What is the condition of my personal credit?
- Does my business really fit the bill for a business credit card?
- Do I have the ability to handle the risks if my business fails?
Not everyone who is running a micro-business should take the risk of having a business credit card. Credit card issuers can face government regulatory problems as well since these types of cards offer few protections and require slimmer disclosures.
Furthermore, just because your business is the one with the credit card doesn’t mean you are not personally responsible for it if your business goes down.
For those who feel that their SMB could benefit from a business credit card, these are some things to look for:
- It offers good reporting. You want your business credit line to increase. This only happens if the issuer is good at reporting your positive credit activities.
- Being able to add more users at no extra cost.
- It auto-imports transactions into your accounting software.
- Offers tools that allow you to itemize and organize your expenses.
- Allows you to categorize expenses, making sure they are applied to whatever department you want them to go to.
- Offers great rewards.
- Offers plenty of offers and promotions.
Many business advisers will tell you that a business credit card can actually be seen as a tool. They have morphed into more than just a source of credit to become an extension of other business management tools you use. If used wisely, using a business credit card can be a winning move for the long term.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2019 Sarah Draper