Lately one of my awesome mentorship clients has really got me thinking about financial systems and in particular, how they can be used traditionally and creatively to support clients. We started discussing the possibilities of financial management for clients, and how that could impact other VA services, and you know how these things snowball out - anyway, I digress!
There's one thing that's super clear though, no matter who you are - understanding the flow of money through your business and into your personal finances is essential for the health of your business and your financial stability. With the basic objective of earning more than you spend, you need to know what your most successful services or products are, as well as where you spend your money (this is something we review regularly for clients) - both in business and personally. Being aware of your figures each month will help you know where to improve, help you adjust your business aims and make sure you spend wisely.
Oftentimes, people have a block on actively managing their finances, and although it can be challenging, it’s not as complicated as it may sound. As with any job, you need the right tools, and personally I find online systems make managing finances so much easier. There's quite a few options available, but here are the top 3 financial tools I use in Virtual Miss Friday…
This is great as a dedicated invoice tool. It's incredibly easy to use for both you and your client, and enables you to send out professionally branded and clearly set out estimates and invoices. Added to this, Freshbooks makes receiving payments easier, as you're able to connect payment providers and create a payment link within your invoice; it also tells you if your invoice has been viewed.
This system gives your clients an improved experience as they're able to follow a link to open their invoice and then click through to pay it via one of your linked payment options. They can raise questions directly within the invoice by clicking a dispute button, and they also have the ability to view historical invoices.
Two other alternatives with similar invoicing functions are Quickbooks or Harvest.
I find that for my business accounting purposes I need something a little more robust than Freshbooks and so in VMF I use Xero.
It has a full range of accounting functions and for those with some bookkeeping experience this system is great to use and makes what was once a reasonably complex and prolonged set of processes into an almost (!) enjoyable experience :-)
Day-to-day accounting is made much easier through this system, basically you enter both your invoices and expenses (invoices can be created and sent in Xero too), and link your business bank accounts. All the transactions on linked accounts are then imported from your bank and automatically matched to invoices or expenses. Simple!
One of the key functions that makes Xero so incredibly valuable is the reporting. There's a range of reports available and at any point, with a few clicks you can generate reports showing your income and expenditure and run comparisons to previous months and years. This means you can be fully aware of your business figures at any time.
Your business finances feed into your personal finances, and your personal budgeting needs to be managed just as meticulously. I find Toshl to be a great tool for monitoring personal income and outgoings. It gives you the ability to set-up and track a budget, categorise and monitor your spending, record your income and shows you how much money you have left each month.
These tools are all you need to get on top of your finances, well this and the motivation of course :-)
So if you don't have a grip on the finances, you don't have a grip on your business, so take note, that today is the day to get organised, and on top of things, before they get on top of you ;-)