7 Ways Successful Businesses Keep Track of Their Finances

Have you ever checked your bank account balance and wondered where the leak is from? Statistics show that about 65% of people do not keep track of their finances.

Hypothetically, say half of them live from hand-to-mouth this leaves about 32% of people who mindlessly spend their money.

There is proof of a direct correlation between a person’s success and how well they can manage their finances. 

This is to mean that a business success highly dependant on how well their accounts are maintained. 

Here are seven tips on how successful businesses keep track of their expenses;

1. Accounting system 

An accounting system is a very broad term, in short, it represents a businesses track of all financial transactions.

A good accounting system encompasses a thorough account on the following;

• Assets
• Sales 
• Liabilities 
• Balances 
• Expenses 
• Payrolls 
• Capital 
• Investment 
• Revenue

For your startup to be successful in maintaining good accounts, you may want to outsource some services including accounting services 

Take your time and read UK business services reviews before hiring a team of experts in your business.

Reading reviews will save you tons of money and time in the long run as you’ll be getting high-quality services by deciphering between the right services. 

2. Categorise expenses

Expense categorisation is one way to keep track of your finances.

Categorising your expenses will direct you to areas where you spend a lot of money and areas where you need to invest more. 

You can periodically make expense reports to understand your financial position in each category.

A good example of how you can categorise your expenses is into the following subsects;

• Utilities 
• Advertisement and marketing 
• Mortgages 
• Office space
• Furniture and equipment 
• Entertainment
• Taxes
• Insurance
• Payroll and employee benefits, etc.

3. Strong procurement system

Every business must be founded upon a procurement system. Anything that needs to be purchased should be well thought, budgeted for, procured at a reasonable price, and accounted for.

It is very easy to purchase things and not account for them.

A strong procurement system ensures that everything that has been purchased by the business does directly or indirectly contribute to an increase in revenue. 

Purchasing things for the sake of having them is not a good reason to channel money on something. 

Having a good procurement system is vital especially for any large-scale business.

4. Budgeting 

Merely having a budget does not mean you’re doing good with your finances.

The key important thing about budgeting you must know is that budgeting starts with income or revenue. 

If you know how much income or revenue you have then what you are going to spend it on should follow next and not the other way around.

Take a step back and look at how people manage their finances. Whenever you’re making a grocery list, many people write down what they want first, and then appropriate the funds later. This is wrong. 

What comes first is doing how much money you have at hand and you intend to spend and then appropriate the funds regulating yourselves to what is important. 

In a business setting, the revenue or capital should be at hand before any budget is made. 

5. Making changes if need be 

Sometimes even after intense work, it becomes difficult to achieve financial goals. Successful people look back and identify the challenges encountered giving to it the necessary plans for change. 

Even when you choose to track all your expenses it does not prevent you from mindlessly spending. Tracking your expenses is done for accountability but it does not necessarily prevent or limit you to certain spending. 

6. Having financial goals

It is almost impossible to progress financially when you have no financial goals, to begin with. 

Go to give you a drive on why you want to see your financial situation over time. It helps you look back to see where you were and where you want to be. It is the driving force to work. 

7. Saving to invest 

For many people and business persons, the end goal is always to save money. On the face of it, it looks right because then you will have money to spend with emergencies arise.

You may have heard this concept from many public finance advisors that saving is not the right thing to do.

You don’t hoard money in the bank expecting growth in interest because each year there is inflation. 

What to do instead is to save for investment. Get a vision of your investment, make a financial plan, save the money, and invest no sooner as it reaches the amount needed.