“A small leak will sink a ship” – Ben Franklin
You work hard to make money in your company, but what do you do to keep track of it all? Most small business owners don’t pay enough attention to their cash. Many times, it’s just an afterthought behind all the other daily operational issues. For others, it’s a mysterious black hole where they hope the money will be when they actually need it!
It is critical for every small business owner to have a process to keep track of the money flowing through their company. Owners also need to be able to check where that money is at every phase. The dangers of not diligently doing these are:
- Leaks: Money is wasted through unnecessary expenses or paying too much of it. This includes cash not getting collected in a timely fashion from customers or from paying bills before they are due.
- Theft: When money is not tracked, employees may be tempted to steal it. This typically happens by writing checks for phony vendors that get cashed by a dishonest employee. When bank statements are not reconciled, it’s easy for employees to write themselves a check from the company account.
- Profit, but no cash: The company seems to be making money, but there is never much in the bank account when it is needed. The business owner can be overheard saying, “but where is all my money?”
These are problems you don’t want to have at all, and the last thing you need is to open yourself up to any unnecessary risk. Being able to track your money gives you important information that can be used to mitigate and perhaps even eliminate that risk.
Here is what every small business needs to track to safeguard its money and future.