Running a business is hard work.
Entrepreneurs struggling with money is frankly alarming. Did you know that 82% of small businesses fail due to mismanaged cash flow? Crazy, right?
The good news?
Financial tools can make managing your finances much easier. This blog covers what financial tools you should be using as an entrepreneur.
Let’s jump in!
Here’s what’s inside:
- Why Every Entrepreneur Needs Financial Tools
- The 6x Best Financial Tools For Entrepreneurs
- How To Pick The Right Tools For Your Business
Why Every Entrepreneur Needs Financial Tools
Managing money is one of the biggest headaches of running a business.
Between Expense tracking, invoice chasing, tax planning and working out cash flow… Spending time wondering where all your money is going can be easy. When you lose track of your money, bad things occur.
Here’s the thing:
The right financial tools save you a ton of:
- Time
- Money
- Stress
Financial tools help you make better decisions with your money. Fewer money mistakes mean more opportunity to grow your business. With financial tools you can see what’s going on with your business at a glance.
When you have the right tools in place, you can:
- See exactly where your money is going
- Plan for slow months in advance
- Access funding when you actually need it
- Pay your team and suppliers on time
Pretty cool, right?
Let’s see these 6 financial tools every entrepreneur should be using…
Flexible Repayment Loans
Cash flow is one of the biggest challenges every entrepreneur faces.
Some months are good months. Then again, some months… aren’t. That’s where flexible repayment loans come into play. They provide you with working capital when you need it without committing you to a strict repayment schedule.
Regular bank loans come with stringent terms. Default and you’re in serious trouble. Flexible repayment loans differ because they allow payment adjustments according to your business’ actual performance.
West Coast entrepreneurs have options such as installment loans California to provide your business with the working capital it deserves. Funds can be used for:
- Buying inventory
- Hiring new staff
- Marketing campaigns
- Covering slow months
Rates may vary greatly from lender to lender. Comparison shop before agreeing to any loan. A fraction of a percent in interest can mean thousands saved.
Accounting Software
All businesses should be able to manage their finances. And accounting software makes it the simplest way to do so.
With good accounting software you can:
- Track income and expenses
- Send invoices to customers
- Prepare for tax season
- See reports on how your business is doing
Currently, the most popular choices are QuickBooks, Xero, and FreshBooks. They each offer varying functionalities, so choose what works best for your company.
Tip: Sign up for a free trial before deciding on a paid plan. You’ll want to try the tool out to see if it truly meets your business needs.
Most accounting apps sync directly to your bank account. This automatically imports all of your transactions. Say goodbye to manually entering expenses.
Payment Processing Tools
Getting paid is kind of the whole point of running a business.
However, if your customers take weeks (or months) to pay you invoices, your cash flow will seriously suffer. That is why it is critical that all entrepreneurs have a reliable payment processing solution from day one.
The most popular payment processing tools include:
- Stripe
- PayPal
- Square
- Shopify Payments
The easier you make it for customers to pay you, the quicker you get paid. Seriously, it’s that simple.
Look for a tool that:
- Accepts multiple payment methods
- Has low transaction fees
- Works well on mobile
- Connects with your accounting software
Budgeting and Cash Flow Tools
Curious where the heck all your money disappears to every month?
Budgeting allows you to plan for spending and know exactly where your money is being spent. Paired with a cash flow tool you can also forecast slow months in advance.
Some popular ones are Float, Pulse, and Fathom. These plug into your accounting software and automatically import your data. Afterwards, they display for you:
- Where your money is actually going
- How much cash you’ll have next month
- Which expenses are eating your profit
That is significant because 59% of small businesses say their financial state is fair or poor. Most of these financial issues can be prevented with a simple budget.
Business Credit Cards
Business credit cards don’t just help you pay for purchases.
It’s also a great tool to:
- Build your business credit score
- Earn rewards and cashback
- Separate business expenses from personal ones
- Get short-term financing for emergencies
Always pay off your balance monthly. If not, the high interest rates will eventually devour your profits.
Look for cards that offer:
- No annual fee (or a very low one)
- Good rewards for your spending habits
- A generous sign-up bonus
- Free employee cards
Invoicing Tools
Late payments can honestly kill a business.
That’s why every entrepreneur should have a reliable invoicing tool in their stack. The best invoicing tool will allow you to:
- Send professional invoices to clients
- Set up automatic payment reminders
- Accept online payments
- Track which invoices are paid and which aren’t
Many accounting programs include invoicing functionality. If you are looking for a dedicated invoicing app, Bonsai, Wave and Zoho Invoice are all great choices.
Bringing It All Together
Financial tools are essential for every entrepreneur.
Choosing the right set of tools can help you save time, money and headaches. Not to mention prevent you from running into the financial issues that cause many businesses to fail.
To quickly recap:
- Use accounting software to track your money
- Consider flexible repayment loans when you need working capital
- Get a solid payment processing tool to speed up payments
- Use budgeting tools to see where your money goes
- Get a business credit card to build credit and earn rewards
- Set up invoicing tools to get paid faster
You will not have to implement all the tools listed here from the start. Pick one or two to begin with and go from there. You can always implement more tools as your business expands.
Start. Just start somewhere. Any budgeting app will be better than doing it all in Excel.
Frequently Asked Questions
1. Which financial reports should entrepreneurs review regularly?
At minimum, business owners should review their profit and loss statement, balance sheet and cash flow statement. Together, these reports show whether the business is profitable, what it owns and owes, and how much usable cash is available. A monthly review can reveal rising expenses, shrinking margins or growing debt before they become serious problems.
2. How long should financial records be kept?
For businesses operating in the United States, the IRS generally recommends keeping supporting tax records for at least three years. However, some documents must be retained longer. Employment tax records, for example, should generally be kept for at least four years.
3. Can financial software replace an accountant?
Financial software can automate transaction imports, calculations, reports and routine bookkeeping. It cannot evaluate every tax issue, identify every compliance risk or make strategic decisions for your business.
4. How can entrepreneurs protect financial tools from cybercrime?
Choose platforms that support multi-factor authentication, automatic security updates and individual user permissions. Employees should receive only the level of access required for their responsibilities.
Avoid sharing one administrator password across the entire team. Remove access when an employee or contractor leaves, and regularly review which third-party applications can connect to financial accounts.
5. What should you do before switching financial platforms?
Export and securely store copies of invoices, receipts, transaction histories, customer balances, payroll records and financial reports before closing the old account. Confirm that opening balances in the new system match the closing balances in the previous one.