North Perth Accountants – Tips on Proper Money Management

• Based on many business owners and tax accountants in Perth, most small businesses fail during the first five years. One of the reasons is due to lack of proper understanding of financial management. Improper planning and impulsive decisions also contribute to failures.

• • To help you become a responsible and successful business owner, here are the usual things to remember when managing your business’ finances, according to North Perth Accountants:• • Records management• • To effectively monitor your operations, regular updates on your finances is required. To learn the condition of your business, you need to keep your financial records. This will help you operate efficiently, control your cash flow and increase your profitability.• • Keeping your business’ financial records will help you do the following:• • Create profit and loss statement by identifying your income and expenses.• Create a balance sheet by knowing your assets and liabilities.• Compare your business to industry benchmarks.• Create an accurate business activity statement (BAS) and tax returns to pay the taxes properly.• • Understanding your accounts• • According to well-known business accountants in Perth, financial statements are important in creating decisions. This provides a snapshot of the business’ financial status. There are two kinds of financial statements commonly used in small businesses:• • Profit and loss statements: This summarizes the income, expenses and profits of a business, usually for the whole fiscal year.• Balance sheet: This includes the company’s assets, liabilities and net equity at a specific period of time. For a ‘balanced’ sheet to happen, assets must balance the liabilities and net equity.• • To create these statements, proper documentation of your finances is needed. These are essential in giving a bird’s-eye view of the business’ financial situation. Analysing the strengths and weaknesses of the business is also possible.• • After analyses comes the interpretation of financial data into ratios and percentages. This is to compare your business to other competitors. This allows you to rethink your strategies in case your business is heading in the wrong way.• • Money management• • According to a certified business accountant in Perth, business entities demand efficient money management to survive and succeed. Managing cash flows, costing, pricing and credit are vital for your business’ financial wellbeing.• • Creating financial forecast helps a business owner realise his business goals. Also called cash budget, cash flow or financial plan, this allows you to properly use and control your resources.• • To know the future projections of your balance sheets and profit and loss statements, financial forecasting aids you to have some clue about your business over the next year. This hindsight can help you adjust and create an action plan.• • Credit management• • This process deals with controlling and collecting your customers’ payments. To improve your cash flow, an efficient credit management is required. This allows you to minimise your obligations to your debtors and avoid or minimise the chances of incurring bad

debts. • • Promoting healthy credit management habits include the following: • • Establish written terms and conditions: This helps you establish rules regarding payments and the products or services that will be provided.• Issue invoices on time: Commonly known as a receipt, this includes the amount of the goods or services, and the date when the payment occurred. • Monitoring your debtors: This is done to identify due or overdue debts. A diligent and calm approach in credit management is advised to remind customers about their payments. • • Obtaining finance• • When your business suddenly suffers problems, or if you want to expand, you must know how and where to get funds. There are different avenues on obtaining funds. It can be from your savings, family or friends, creditors, bank loans, government assistance, and

venture capitalists.• • These processes are only the beginning. There are more things to consider when running a business, which can be difficult for a small business owner.• For proper advice and assistance on business finance and tax, there are accountants in Perth, Western Australia that can help you with this. North Perth Accountants has those small business accountants in Perth who offer help to entrepreneurs.