8 Best Practices for New Business Financial Growth Besides Choosing the Right Accounting Software

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Starting a business is easy. People do it every day. Maintaining a business, keeping it strong, and making wise financial decisions is quite a bit more difficult. According to some research, 50 percent of new businesses will fail within their first five years of operation, and 70 percent will flop within 10 years. There are many reasons for these failures, but one area that most businesses desperately need to consider is following best practices for financial growth. To if you want to do this, purchasing a solid, reputable financial management software, such as Microsoft Dynamics GP is key. You knew I was going to say that. But what else is important? Here are eight fundamentals, the basic principles that all new businesses should know.

1. Keep track of sales-to-expense ratios on a monthly basis so that you know when to adjust your spending.

2. Formulate a long-term capitalization strategy to consolidate earnings with short and long-term debt.

3. Consider hiring outside help, such as an accounting consultant.

4. Report routine quarterly financial statements with a balance sheet and profit/loss reports. (the kind of reports that come out of a strong ERP/accounting software system).

5. Calculate accounts receivable and accounts payable days and their effect on working capital and cash flow.

6. Know the difference between cash and accounting, and determine a 12-month projection of cash flow.

7. Know the top three financial indicators that stand in the way of your company’s profitability.

8. Monitor levels of inventory as they relate to projected sales, receivables, and cash.

Choosing the right accounting software solution will make the tips much easier to accomplish and help your business expand fluidly rather than remaining stagnant.

By CAL Business Solutions, Microsoft Dynamics GP Partner Serving Connecticut

8 Best Practices for New Business Financial Growth Besides Choosing the Right Accounting Software is a post from: ERP Software Blog