You want your managed IT services business to grow and thrive well into the future. Chances are that you spend a lot of time thinking about how you can improve your bottom line. Keeping good track of your books can give you better insight into the health of your company. It also shows areas for improvement and potential growth.
It can be a challenge to keep up with your bookkeeping, but these seven tips will help you learn to be more effective with your time spent on this financial chore:
Create an Accurate Chart of Accounts
Your chart of accounts is an important aspect of your bookkeeping that you won’t want to ignore for long. It allows you to see all of the financial accounts in one convenient location. This is crucial for organizing your expenses and your income. It includes categories such as your assets, equity, liability, revenue, and expenses.
Why is a chart of accounts so important to your managed services business? Simply put, this part of your bookkeeping helps you get a clear picture of where the money is flowing from and to in your business. Having every transaction properly coded to the right account will help you measure your income and expenses more accurately.
Check in Monthly
Whether you do your own bookkeeping or send it out for someone else to handle, you need to keep your finger on the pulse of your financial health. Make sure that you’re setting some time aside each month to review where your money is coming from and where it’s going. This allows you to pinpoint cash flow issues and spot any errors that may have been inputted over the course of the month.
A regular review of your finances and bookkeeping allows you to see how profitable the business really is. It can also give you a good idea of where you need to focus your time and energy, as well as where you can slash expenses.
Keep a Close Eye on Expenses
How much does your managed IT services business really make? It can be hard to pinpoint your profit margins if you aren’t keeping track of your expenses properly. On each and every job, you should have a good idea of what you’re spending to get the work done. You’ll never have a good idea of how the bottom line of your business is doing without this key metric.
If you have a hard time keeping track of all the money that flows out of your business, it might be time to look into separate software that can help. Alternatively, you could outsource your bookkeeping to a third-party professional who might have more time to dedicate to tracking and categorizing your expenses.
Send Invoices on Time
Surprisingly, one area where many managed services businesses fall into trouble is when it comes time to invoice their customers. Some bookkeepers are hesitant to reach out to clients for the money that is owed to them. Others simply do not make it a priority which can have devastating effects on your bottom line. Consider inquiring with your bookkeeper whether they can help you to set up recurring invoices for repeat clients.
The truth is that you can get paid sooner when you send an invoice sooner. This simple act can improve cash flow.
Collect Money on a Recurring Basis
Chances are that most of your clients are repeat customers. They pay for managed IT services on a monthly basis, for the most part. If sending out timely invoices continues to be a struggle for you or your bookkeeper, then you might want to investigate how the possibility of doing a pre-authorized debit could help.
This ensures that you automatically get your payment at the end of the month without dealing with the headache of following up on unpaid invoices. In the end, automatic payments handled this way can minimize the amount of money you have to spend on a bookkeeper who must follow up with delinquent accounts for collections purposes.
Check for Unpaid Invoices
Every week, your bookkeeper should be paying close attention to which outstanding invoices have yet to be paid. This is a great time to follow up with clients who haven’t promptly sent over their payments. If your bookkeeper is too busy to keep track of outstanding invoices, this is also a system that you can automate.
Invoice payment reminders can be sent before the payment is due as well. This prompts your customers to make their payments on time without worrying about how reliably your bookkeeper is able to keep up with these collections.
Hire a Professional Bookkeeper
As a small business owner or manager, you likely already have a lot on your plate. Outsourcing some of your most important work, such as bookkeeping, frees up your time to focus on income generation, advertising, and all of the other important metrics that keep your business running smoothly.
If you are ready to bring on a bookkeeper or need any accounting for tech companies in Winnipeg, then you should contact Compass Accounting. We can help you develop the systems and processes that your managed IT services business needs to thrive and increase your cash flow. Give us a call today to see how we can help you!