According to the Bureau of Labor Statistics, approximately 45% of new businesses fail within the first five years, and only 25% make it to the fifteenth year. While there are many reasons why small businesses fail, poor financial management is a major factor.
Some small business owners lack the necessary skills and tools to ensure proper financial management of their companies–deep financial management knowledge is vital in understanding profit margins, determining if there is sufficient cash flow to sustain operations, and making decisions on buying important assets.
This article will dive into some of the best tips to improve financial management services in small businesses.
Financial Management Challenges for Small Businesses
Some of the problems you may encounter when managing your company’s finances include:
Controlling Debt
Regardless of how strong you may be financially, at some point, you’ll likely need to borrow money from banks to grow your business. However, taking on too much debt can hurt your business in the long term regarding higher interests; you can avoid getting into such a situation with proper financial management skills and tools.
On-Time Bill Payments
Due to various challenges, small business owners may struggle to pay their bills on time. If you have strong financial management skills, you’ll know how to acquire the necessary cash to meet your obligations on time. The best ERP system for small businesses can help you solve this problem effectively by keeping financial information organized in one place.
Creating a Budget
Most small businesses end up in a tight place economically when they don’t efficiently create and monitor budgets. Budgets should prepare a business for unforeseen circumstances such as inflation and pandemics, and should guide business owners when making strategic decisions such as hiring new employees or working toward expansion.
How ERP Software Can Improve Financial Management Services
An ERP system is a software that integrates all functional areas of an organization into a singular system. These functional areas include: finances, accounting, inventory management, customer relationship management, and human resources. An ERP software will help your company achieve greater visibility into its finances–the result is a better decision-making process that drives overall business growth.
Additionally, ERP software can increase throughput of a small business. Other benefits of ERP software in financial management services include:
Better Workflow
ERP systems automate tasks like asset tracking, making it easier to streamline your internal processes. Integrating accounting functions into new and existing systems makes your financial management processes more accurate and efficient.
Increased Business Performance
ERP software boosts the productivity of businesses by automating redundant tasks like lead management. By doing so, your employees will get enough time to focus on more important aspects of the business, such as customer service.
Accurate Financial Forecasts
Financial management involves tracking and reporting all transactions and other financial information, such as payroll. With an ERP system, you can transform complex data into accurate financial forecasts, including revenue and cash flow reports.
Choosing an ERP for Financial Management Services
Even though there are many ERPs out there, it may be difficult to determine the best ERP software for a small business if you’re new to the field. It’s important to make the right choice that is flexible enough to fit your unique needs–Navigator has everything necessary to help you avoid problems with open-source software and easily implement the best ERP system possible for your small business.
