Finance management in small businesses is a critical process that can cause the difference between success and failure. You need to keep track of the inflow and outflow of cash to make sure the business never runs out of capital. Thus, the finance department should have modern tools for the accurate and faster creation of reports and balance sheets.
However, it is not easy for leaders to find the right tools with the essential features. Some of the businesses don’t have an accountant to help them in the search for the ideal tool. For them, it is easier to take the help of promoted articles to get whatever tool they can afford or tops the list.
Here, you will find the 8 major features in a balance sheet application for your business to manage the finances effectively.
1. Account Integration
You need to integrate different bank accounts in one application to eliminate the manual input of transactions. The credit and debit from the bank accounts will directly reflect in the company balance sheet. The process will save you time because there is no need to access the individual balance sheet of each account.
Thus, the first feature to check in the application is the account integration. It will also help you to find a transaction with a simple search from the centralised tool. You can keep an eye on the activity of your business accounts in one place.
3. Payment Tracker
A business includes inflow and outflow of cash where the suppliers are paid from payment by customers. You will get into a cash flow problem if the customers are not paying on time. It is okay to send them reminders if they are running late.
Thus, the finance management tool should have profiles of your customers with a payment tracker. You can use it to keep track of the payment to the suppliers and from the buyers. Moreover, it will help create a detailed report to create strategies based on your payment history.
3. Goal Tracker
Many organisations measure their growth in a period based on some financial goals. You can set a sales number or profit amount to check the efficiency of the current strategies. To keep track of these goals, you can use the same application with visual representation based on the performance.
Your financial goals will help motivate the employees to put extra efforts into their work. You should offer some incentive to them if they successfully manage to achieve those goals. The efforts will align with the timeline once the tracker is activated.
4. Credit History and Rating
Your business is a separate entity from its owner. Thus, it has a different credit profile, history, and ratings for the financial institutions. You need it to be near perfect for getting the best interest rates and easy approvals for a loan.
Thus, a tool with a credit rating feature is helpful to maintain a healthy score. You will remain extra cautious if the score takes a hit because of unavoidable situations. Thus, the rating is now a part of your financial decisions and priorities.
For the loan, a bad credit rating is not the end of the road for your business. You can take out instalment loans for bad credit from direct lenders only based on your current financial condition. Most importantly, these loans have a faster approval rate and flexible repayment options than the banks.
A single notification from the payment of some major client can cause a complete change in your schedule. Similarly, many notification types are important for small business owners. It is not wise to frequently contact the customer or banks for this information.
Moreover, the alerts will notify you of any suspicious transactions from your business accounts. It will minimise the damage if someone has access to the banking credentials with malicious intent. You can instantly contact the authorities to cancel the transaction or put the account on hold.
Also, it is important to keep track of your budget for certain expenses. It is time for cost-cutting or searches for capital if the allocated amount is not enough for the project or initiative. You must receive a notification about the possible budget failure in advance.
6. Categorised Transactions
Transactions can create a mess if they are not categorised based on different attributes. It will take forever to find the required transactions for a purpose such as tax filing or strategizing. Imagine the trouble when the list has 100s of transactions in it.
Thus, a finance management tool should provide the option to categorise the transactions automatically. It will create a clear space to ease the process of searching and creating reports. More importantly, you will not miss the important details in the clutter once the transactions are categorised.
7. Debt Manager
Your business may have some liabilities, mainly the business loans from banks or direct lenders. They need timely payment to ensure the credit rating is intact and no additional fee is charged. A debt manager is a recommended feature in financial management applications.
It will remind you about the payment of each instalment before the due date. The onscreen data will help you strategize for debt repayment. Your business may require additional funds for growth, but the lender may refuse if you are already under a pile of debts.
8. Safety & Security
A balance sheet alone is a confidential document of the businesses with critical information about their business. It can cause some serious damage to their reputation if they are out in front. Similarly, some hacker or your competitors can use the other information in your finance application, and none of it is good for your business.
Thus, you must check the safety and security features of these tools. Cloud computing, along with two-factor authentication, is the minimum-security requirement for the data. Take help from the IT experts in your business to measure each tool based on the layers of security.
To sum up, a financial tool is more than a simple application in the smartphone to create a balance sheet. You need a complete solution for a variety of purpose to stay ahead of the competition. Almost every major strategy will have a financial aspect that can use these tools for data and reports.