Business finance mistakes that can be damaging to your business

Every business owners needs to be aware of the importance of managing the financial side of their business. However, the reality is that most business owners go into business not to run the financial side of their business but rather because they love what they sell or do. This often leaves some business owners with a gap of knowledge when it comes to financial matters. This can be a serious problem. Studies have clearly shown that the number one reason most businesses fail is due to poor financial management. This is true even for businesses that have a healthy rate of sales. This makes it crucial that every business owner learns what to do and even more importantly what not to do when it comes to managing the finances of his or her business. Here are some business finance mistakes that can be damaging to your business-

- Failing to keep the books balanced-The number one reason that most businesses have difficulty with their finances is that the books of the business are not balanced. It is crucial that the books of any business are always kept up to date and current. This is the only way that the business owner and other key personnel will know the true condition of the finances of the business. If you are business owner and feel that you don't have time to do this then you should consider hiring a bookkeeper to take care of this task for you.
- Borrowing to much money-Far to often new business owners will borrow extensively in order to get their business up and running. This is a serious mistake that can ultimately be fatal for your business. You should have a clear idea of how much everything will cost and then only borrow the amount of money that you absolutely have to. Carrying to much debt can keep your business from thriving and growing and should be avoided at all costs.
- Not having an accounts receivable procedure-When you have accounts receivables that you have not collected on then you have money that you could be using but can't access. This is simply ineffective for maintaining healthy business finances. Savvy business owners know that they must have a clear procedure for collecting on their accounts receivables. Keep in mind that studies show that the longer your customers go without paying you the less priority it has for them which only make it harder for you to collect. Insist on full and prompt payment from all customers that you extend credit to.
- Paying for ineffective marketing or not marketing at all-Many business owners overlook the connection between marketing and business finances. It is extremely important to understand that if your customers don't know what you have to offer them or where to find you, how will they know to buy from you? You will need to make sure that you have the most effective marketing in place in order to get the highest possible returns. However, many business owners either get in a rut with their marketing or feel that because their product or service is so great they don't need to pay for marketing at all. The bottom line is that if your marketing is not bringing in the highest possible return you are seriously damaging your business finances and may not even know it.
- Late payment of vendors-The number one way to damage your business credit is to pay your vendors late. Keep in mind that most likely your vendors are reporting your payment history to the appropriate credit bureaus. If you are habitually late on your payments you may find that your business credit is so damaged you may not be able to get the financing that you need when you need it.