Experienced business managers will always share with you how much time the spend dealing with problems. Regardless of how well you have planned there are always going to be problems that occur at the worst possible time. Spotting serious problems in the most well run of businesses is often quite difficult. There is no place in a management team for a manager who is not adept at problem resolution.
Good financial controls are critical to the successful management of any business. Financial controls are like sensors that sound the alarm when problems start to unfold. Financial controls go hand in hand with the reports produced by small business accounting software. It is critical that you can create reports using small business accounting software that let you examine the differences between planned and actuals in focus areas such as cash flow, expenses and revenue. The safest way to commence with this exercise and keep it simple is to highlight a group of the key numbers you need to track and creating just a few reports that present them in a simple format.
Vigilantly keep an eye on the margin on sales and don’t hesitate to investigate any changes regardless how insignificant they might be. I cannot stress enough to those of you in volumes sales businesses how important it is to closely track changes in margins or volumes as the effects can very rapidly cause issues. Never take your eye of the fixed expenses of the business in the early part of the year and make sure they follow the budget. Monitor the collection of payments and pay special attention to the average number days it takes for you to receive the money, this is easily done using the debtors reports to be found in most small business accounting software.
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.
