For small to medium business, one issue they struggle with the most is finance.
This can range from funding to get the business up from the ground to needing further capital in order to expand and get more opportunities.
It can also be how to properly keep track of finances.
The director of Sekgephe, Maila Makhafola attests to this.
Makhafola recounts how the company had once secured a contract to deliver diesel and water to a mining enterprise and the challenges that brought.
“I was having difficulty keeping proper track of my business finances. As a result, I missed payments on the business loan and struggled to effectively deliver on the contract,” he says.
However, he sought and received help through a business loan. “Through Zimele’s loan funding programme, I was assisted with understanding how to manage my business finances. I was able to secure an extension of the contract and grow my staff complement to 29 employees”.
Director at Malak Accounting Services, Alice Khanyile adds that good financial management is the lifeblood of every business since it measures the company’s performance.
Khanyile went on to say that it also helps identify financial risk and thus empowers the owners of the entity to take proactive actions to mitigate the risks.
“While the accounting function can be outsourced, it is imperative that the directors of the company understand what the financial statements and embedded tax consequences entail. Financial statements remain the responsibility of the directors,” says Khanyile.
Here are five financial strategies every successful business must have in place, according to Malak Accounting Services:
Purchase and use a good accounting package (not Excel)
There are excellent online platforms for small businesses that are user-friendly, save time and offer cost-effective bundles.
With the touch of a mouse, they can assist you in keeping track of the company’s financial success.
Maintain strict record-keeping and compliance
You can do this by maintaining and filing every invoice that comes in or out of the firm and ensuring that they are VAT compliant.
Create dates for tax submissions and create reminders to prepare ahead of time.
Keep track of your personal debt as well as any bad debt, and make sure your staff are enrolled for UIF and PAYE.
Keep track of your tax obligations
Calculate your tax and VAT obligations weekly and deposit the money in a separate account so it’s ready when Sars calls. Also, make sure to pay your taxes on or before the due date.
Manage your debt effectively
If you’re having trouble paying, don’t just quit! Make negotiations with creditors to restructure the loan instead. Also, avoid incurring so much debt that you are unable to service it.
Monitor business health with financial reports
Use your accounting product to generate cashflow estimates, review management accounts regularly, and have your accountant make annual financial statements. These are necessary for regulatory compliance, but they are also handy when applying for jobs.