How to Manage Small Business Finances |  Monthly Money guide Workflow

Are you that person a week before taxes were due sorting through receipts and trying to get records up to date?

I know from experience that if you don’t make room to stay on top of your finances consistently, it’s a task that inevitably ends up on the back burner. Which is why I’m sharing on the blog the money guide go-to workflow for how to manage small business finances.

Step One: Duplicate Your Workflow Task & Assign to the Upcoming Month

It is advisable to create a workflow once, writing it down and re-use it time and again.

If you do not use a project management software you can simply print off the workflow and keep it with your planner, whatever system works best for you is the best system!
Managing finances can be exhaustive but once you keep a regular check of your finance you are more informed about the correct status of the business and the exercise will leave you feel confident about your money.


Step Two: Categorize Spending (Expenses)

Numbers don’t lie! Start by categorizing spending (also known as expenses). If you are using an accounting software make sure that your transactions are automatically added from your bank accounts/credit cards/and or payment processors. If you don’t use a bookkeeping software (or if your software doesn’t automatically pull in transactions) you can manually enter transactions in a spreadsheet like excel or google sheets.


For those of you who outsource bookkeeping, your bookkeeper will do this for you.

When it comes to categorizing your spending, I always say you want to be detailed enough that it means something to you, but not so detailed that you won’t do it. For example: you want an office supplies category, but not necessarily a paper clips category!

Step three: Input Income (Revenue)

Invoice your customers / clients. Ensure that every sales is captured. Do not wait until it is tool late, capture as it happens.

Step Four: Send Invoices and Payment Reminders


As far as payment reminders, any invoices that have not been paid by the clients, have someone in your team to email a reminder directly. Same with any online payments that have been declined, email for updated payment information. Have a workflow for declined payments as well that gets put into motion after a payment has been declined twice. Simple systems and workflows like this help make how to manage small business finances so much easier.

Step Five: Pay Bills

Setup as many bills as possible via debit order including all software subscriptions, internet and telephone, and even the credit card is paid in full automatically each month. If you work with a lot of contractors, pay their bills during your money date or setup automated payments if that option is available.


Step Six: Pay Yourself as a Business Owner

As the owner of the business, you are equally an employee in the business thus you should be under  the business payroll.
Your salary and bonuses are classified as an expense line item on your profit and loss statement.


Step Seven: Reconcile Business Accounts

This is one that is often forgotten but will make your life so much easier come tax time as a small business owner. You want to make sure all the income and expenses transactions that show in the bookkeeping software match the income and expenses transactions in your bank account.

Even if you don’t use a bookkeeping software, you want to go back and double check that everything you’ve entered into your spreadsheet match what your bank account says. I recommend printing off your bank statements, it makes life so much easier! Or if you have a big screen, pull up your system records and your bank statement side by side so you can double check them.

Technically, for your business to be ready to file taxes, your accounts should all be reconciled. This ensures that your profit & loss statement is actually correct.

Step Eight: Prepare Cash Flow Plan for Upcoming Month

A cash flow plan is just a fancy way of answering “do you have enough?”

Input your starting bank balance in your business checking account (the main account), all your anticipated income and expected expenses (including your business credit card balance which you pay in full each month) and then calculate your ending balance. Is there enough? If not, you need to come up with something to sell or work to book another client! This practice gives you peace of mind and helps to ensure there is always enough.

Step Nine : Review P&L for Year Against Annual Money Plan

An important step is comparing your actual income and expenses (using your profit and loss statement) against the money plan you would have created at the beginning of the year. This is the actual benefit of bookkeeping as a business owner, it’s the strategy part! How are you tracking towards your sales goal? Are you staying within your spending parameters in each of your expense categories?

We don’t want to create a plan and then never look at it. As I teach my students, we make the plan and then work the plan! That’s how I ensure I always have enough to pay myself.


This ensures you don’t get to the end of the year with a completely busted budget or unreached sales goal. It allows you to make small adjustments along the way so you can ensure you hit the numbers you need to hit to pay yourself, your team, and keep your business going without sweating bullets.

Also, this is the time to make sure you have enough saved for taxes. Have a look at your overall profit for the year and ensure you have 30% of that number set aside for taxes. Keep a separate tax savings account to use for this.

Step Ten: Scan, File and shred paperwork

Last but not least, scan, file and shred paperwork!  Luckily, most things now are just done online so you can attach the pdf bill directly to your software transaction. From there any paper you don’t need the physical copy for, you shred. 

So there you have it! I hope this guide helps.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

A budget tells us what we can’t afford, but it doesn’t keep us from buying it.

William Feather

Company Formation – what you need to know, in order to get started.

It is no doubt that in South Africa it has become so much easier to formalise your business. I am writing this blog with a purpose of highlighting the steps necessary to take in order to start operating and building a reputable brand.

Step 1. Company registration must take place, so you can have an identity for your business.
The company registration documents will have the business name, registration number, financial year end, business registration date, business address, the directors, etc. With the legal entities I have just mentioned there is two that I want you to know by heart. That is the business Financial year end and the company registration date. Why? The Financial year end = the month that you have chosen when you register your business that you will submit your tax returns. Company registration date = Anniversary of the business, you must submit the CIPC AR every anniversary of your business. What happens if you fail to submit the returns within these periods?
Tax will have your business as non – complaint and impose additional penalties for non / late submissions.
With CIPC – The commissioner can at anytime deregister the company or add penalties for late or non submission.

Step 2. Tax number
Once the company is registered at the CIPC, information get sent to SARS to generate the new company tax number. Thus no need to visit Sars to obtain the company tax number, it automatically get registered as two government systems communicate with one another.

Step 3. Open a business bank account
When you formalise your business you need to understand that a business on its own is a juristic person. What does that mean? It means that it is recognized as an entity with rights and obligations similar to those of a natural person. A company can own property, enter into contracts, and be held liable for its actions, all distinct from its shareholders. Thus even the business finances must be separate from that of the founder.

Step 4. Create your business logo
You will need to have a graphic designer to professionally create a logo for your business. Though a logo is not a legal entity you must have it in order to enhance the business ‘s identity for customers to recognize your business in a form of graphics. The logo design you will have it on all your advertising materials and company documentations such as the tax invoice, billing statements and letterheads.

Step 5. Tax invoice
Please do not overlook the importance of creating source documents for your business. You might not have resources to subscribe for an invoice or accounting software but that is never an excuse for not having a tax invoice for your customers. An invoice is a proof that a sale / transaction has occurred. Use your device to download an invoice template from the internet. Choose the one that is user friendly for you and populate your business details on. Your bank account, payment terms can also be detailed on your invoice.
N. B. Prior you send them to your customers please convert it into a PDF so it can be a professional document.
There are graphic designers that can assist with these templates by the way. Just ensure that the template has all the required details that form a valid tax invoice by Sars. The format must be the one that is recognized by the South African Receiver of Revenue. Please check their website to learn more on this.

Step 6. Email adress for the business
It is a given that you might not be financially ready to create a website for the business but you can at least create the business domain so you can have a professional email adress for the company. Find a company that can assist with this at a very reasonable price. They will assist maintain an host the domain until you are ready to have the website designed for you. Have a dedicated business contact details for the business. This include the telephone number and the email addresses. Give your business a trustworthy and professional look.

Step 7. Create Social Media platforms and a website
Customers would like to authenticate the validity of the business thus social media platforms can assist with that especially if you are still starting and does not yet have funds to have the business website designed. It gives the customer a sense of relief when they can be able to trace your business. Your social media platforms will be utilused to advertise your work, and give exposure to clients all over the world. Customers need to know about you, and most will find you on social media platforms.

Step 8. Start advertising your business
Every business need a customer to exist. Find them and sell to them. You can use designing app on your device such as canva to create the not so complicated designs to assist advertise your business. Put your brand out there. But equally, be mindful that not all of us are equipped with creating beautiful designs. Have a graphic designer that will help you build a reputable business. You don’t want to have untidy and clumsy designs exposed to your customers. Take it as packaging. The customers must be attracted to the packaging first so they can be interested in the product or services. Explore various ways of marketing. Do not overlook the traditional methods of marketing because you are easily accessible on the internet. Old traditional ways of marketing your business still works. Create awareness for your brand. Things like pamphlets distributions, word of mouth, networking, etc.

Step 9. Build systems and create organizational culture
You need to have a unique way of running your business especially when you are still alone in the business. This way you are building an organizational culture so tomorrow when you have extra hands Ina form employee, the inherit the same culture. Things like no sale happens in your business without an invoice issued to a customer. Giving customers a great service, simple and soft skills such as mannerisms plays a big role in building an organizational culture. Creating strict communication platforms as well.

Step 10. Create a blog
WordPress has free templates you can utilise to build a blog. Whether you are selling products or rendering services,  use a blog to teach customers about your business in more broader words. You can share your blog address and posts across your social media platforms, and your contacts. It is a more cheaper and efficient way of talking about your business.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Start where you are. Use what you have. Do what you can.”

– Arthur Ashe

Best Accounting Tips for your Business

Secrets of Best Accounting Practices for Small Business

Hire a Bookkeeper

The need for an accountant or bookkeeper grows as your business finances get more complicated.

Bookkeepers and accountants perform similar tasks but have a different set of skills.

Accountants provide consultation and analysis and are qualified to provide advice on your taxes.

These financial advisors can help you with any business decision about finances.

A bookkeeper’s main role is to keep you financially organized and record transactions.

Whichever you choose, verify the bookkeeper’s training and qualifications and that you choose a certified public accountant if you go that route.

The right bookkeeping system also makes it easier to file taxes so that you get the most deductions and pay less in South African taxes.

Tax regulations and laws change and are notoriously complicated. If not followed explicitly, you could end up paying more in fees and taxes.

A bookkeeper can help you track expenses and annual revenue and pull your monthly financial statements, such as your income statement, reports for your bank accounts, statements for your credit cards, and your balance sheet.

An accountant or bookkeeper can prove an invaluable resource and make financial management much easier.

Determine Which Accounting Method to Use

There are two standard accounting methods you can use for your finances – accrual and cash basis accounting.

Both methods have their own advantages and disadvantages, so it’s important to understand how they work in order to determine which one is best for your business.

Cash-Basis Accounting

Cash-basis accounting is the simplest method and records transactions only when cash actually changes hands.

This means that revenue is recorded when it is received and expenses are recorded when they are paid.

Advantages

Easy to understand and implement.

Gives an accurate representation of cash flow.

Requires less record keeping compared to accrual accounting.

Disadvantages

Does not provide an accurate picture of a business’s financial health.

May result in incorrect reporting of income and expenses, especially when transactions are recorded at varying times.

Not suitable for businesses that extend credit to their customers or take on debt.

Accrual Accounting

Accrual accounting records transactions when they occur, regardless of whether cash has been exchanged.

This means that revenue is recognized when it is earned and expenses are recognized when they are incurred.


Advantages

Provides a more accurate representation of a business’s financial health.

Allows for better tracking of revenues and expenses over time.

Required by law for businesses that exceed a certain threshold.

Disadvantages

Can be more complex and time-consuming to implement and maintain.

May not accurately reflect cash flow, as revenue can be recognized before payment is received.

Requires careful tracking of accounts payable and accounts receivable.

Deciding the Best Accounting Method

When deciding which accounting method to use, you should consider your business’s size, industry, and financial goals.

If you are a small business with simple transactions and want an easy way to track cash flow, then cash-basis accounting may be a better option.

However, if you have a larger business with more complex transactions and want a more accurate picture of your financial health, then accrual accounting may be the way to go.

Start a Budget

One of the best accounting practices for any business is to start a budget.

The smartest business owners create a budget each year.

To budget efficiently, you must proactively address challenges in your budgeting process and manage your money well.

No business or company can operate without enough money coming in each month and year.

The key accounts to pay attention to are inventory management, expenses or debt payments, and monthly cash inflows.

If you do nothing else, make sure you manage these accounts so you can determine how much money you need to bring in to cover your expenses and make profits.

It’s also helpful to understand sales of your product income.

Keep Your Personal and Business Finances Separate

That way, you can separate your personal accounts from your business expenses and income.

Separating your accounts also proves to tax authorities that you have a legitimate business rather than a hobby.

Separate banking allows for proper business financial accounting without mixing up personal and business expenses and revenue.

It simplifies things and clearly shows what you earn and spend in your business.


Following these best accounting practices will make the whole accounting process less complicated.

Update Your Chart of Accounts

The accounting process starts with updating your chart of accounts, which lists and describes all your accounts.

The key is creating meaningful account categories for more accurate financial records.

When you set these up, you want to define accounts that align with financial reactions, such as expenses, revenue, assets, equity, etc.

You also want to review and optimize your chart of accounts regularly to keep track of how much you spend on customer acquisition, your break-even point, and ROI.

Even if you’re a solopreneur, a good record keeping is encouraged do you can stay up to date with your taxes.

Regularly Download Your Banking Transactions and Reconcile Your Financial Statements

To make managing your finances easier, download your business transactions (bank statements) and reconcile financial and bank statements regularly.

The longer you wait, the more financial errors and discrepancies go unchecked.

Things like unauthorized withdrawals and disbursements can take a huge toll on your finances.

Pay Your Taxes on time.

Self-employment taxes add up over time, so I recommend paying your taxes provisionally or throughout the year.

If you don’t, you’ll have a large payment to make when you file your tax returns. Plus you’ll end up owing a penalty too.

Paying provisional tax eases the tax burden a little.

Also, keep accurate tax records of all the payments you make so your accountant won’t get any surprises.

Some of the tasks in reconciling accounts includes: checking for errors, and reviewing your income and outgoing money to verify if you are on track to achieve your weekly, monthly, and yearly financial goals.


Evaluate Your Financial Data Monthly to Stay on Track

This includes a monthly report, to understand your key financial performance indicators (KPIs) and the primary drivers of income in your business.

Your accountant can do this for you, as an accurate analysis requires several techniques, including trend and cash flow analysis and financial forecasting based on historical data.

Track Contractor or Employee Time to Understand Profitability

If you have independent contractors or employees, have them track their work time with a tool.

This will show you where employees may need more support and see how much employee time and project-related expenses cost you.

Sometimes, employees are simply inefficient, and other times, they may struggle with specific tasks.

If your project or job costs are high, you can find ways to reduce expenses, such as finding less expensive tools, promoting more of your offers or services, or finding other solutions to reduce costs.

Keep Accurate Records

Most importantly, to have a successful business, keep thorough records.

Your record-keeping practices can make or break you.


It can also help during tax time if you get audited.

A tax audit is no joke, and not having detailed finance records can make this a nightmare.

It can cost you a lot of money if you need to hire an accountant, not to mention the incredible amount of time you will waste going through financial statements, bank records, tax write-offs, and other documents.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Accounting greatness is not just about what you calculate; it’s about the financial stories you unfold.”

– Christopher Miller

Happy New Tax Year 🎉

What does a new tax year mean?

Well, it can mean multiple things.

1. Are you an employer and responsible for employees tax deductions as a results of PAYE, UIF, SDL and other taxes?
– February is the end of individual tax year. The ITR12 tax periods range from March to February the following year. This sum up the 12 months individual tax contribution to the state. You must have all your monthly EMP201 declarations complete, as well as the employer reconciliation done i.e. EMP501
If you also contribute the employee UIF via SARS please ensure that all your employees are equally listed under the company at the UIF. The company must obtain the unique UIF reference number. As you pay both your PAYE and UIF via SARS, note that every 6 months SARS send the UIF monies to them. It is important that after obtaining the PAYE no. you get it linked to that of UIF. If these procedures are not followed accordingly you will have the declarations only reflecting on the SARS portal and not on the UIF, thus you will experience some difficulties with employees claims, etc.

Please make sure that you have paid all the funds to relevant institutions as well. You should not be deducting monies from the employees yet you are not paying them. If you make your payments late you will also be charged late submissions penalties and interests. These additional fees also accumulate monthly. It is important that you close off your month on time and accurately.

The individual tax season opening and closing dates are always announced by the receiver of revenue. As an employer please make sure that you have provided your employees with the Tax certificates, also known as IRP5s

2. Do you run a company and the business financial year end is February?

What is the Financial year end?
It is the last day of a company’s accounting period. The accounting period is the time frame used to complete a business’s accounting cycle.

In simple terms, it is the month that you would have chosen when you register your company that you will account for the company taxes to the receiver of revenue. Which means it can be any month period in the year, not only February even though many businesses have Feb as their year end. If you are still not sure about your company financial year end, please check your company registration certificate – CK.

– If you have an active / operating business you need to make sure that you have prepared your Annual Financial Statements and ready for the submission. In the case of tax submissions the Income Statement and Balance Sheet are the important reports to submit. Only after the submission of the AFS you will know how much tax is payable. Few factors plays an important role in determining the tax value the company must pay. Information such as the company size i.e. the revenue, nature of business, etc. SARS looks at the net profit and decide the figure from there. The Net profit is called the taxable income.

While some companies may have a different financial year end, the administration and procedures remains the same across all companies.

It is important to note that in a case where the business was not trading you are still required to submit the nil returns. This is to communicate with the commissioner that though your company is still a legal entity it did not have any economic activities. If you do not submit, the return will remain outstanding. Failure to submit will have payable penalties added on your company.

3. Are you a sole proprietor or employee receiving an additional Income?
– some individuals are full-time employed by company X but that does not stop them to earn an extra income. It could be by selling products, affiliation with network marketing companies, offering skills, rental income, etc. This is the beauty of our democracy. It might be important that you disclose these commercial activities to your employer’s. Check your company policy and regulations with regards to this.

Though it is not illegal to have an extra economical activities in your spare time, do remember to comply. Every income need to be declared with the receiver of revenue. Additional incomes are treated differently as you are not contributing towards your taxes on a monthly basis in a form of a PAYE. Additional calculations must take place. You need to capture all the earnings derived from additional activities, less your expenses. You clearly need to indicate the figure correctly. You might have made a profit or a loss, either way you still need to declare. That is the right thing to do. The calculation will be treated as your “secondary IRP5” the primary being that of your employer.

It is your responsibility as a citizen of the country to make sure you understand the state ‘s expectations and comply. Non compliance is an offence and “I did not know” is not a valid excuse.

Be in the know and cover your back!


Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

The hardest thing in the world to understand is the income tax.

– Albert Einstein

Small Daily Actions that helps increase your productivity


I wanted to take a break from sharing finance content today and rather share a bit of what helps me to be productive. I gather the tips may help other business owners/ even professionals too.

1. Don’t Make It Too Complicated

Making money is not complicated.
Almost anyone can do it. Sadly, so many people make it complicated, including myself
Even though it’s nice having awesome technology to help you get things done, it’s not required. Just use what you have.
You don’t need special landing page software, or to worry about complicated algorithms to be successful. Neither worry about having all the resources in place for you to be productive.
Focus and spend much time on what matters. As they say – focus on what pays the bill or influence your earnings.

2. Do Your Money-Making Activities First

Your business cannot exist if you don’t earn money.
Therefore, make a list of activities you do in your business that can directly be credited with earning something.
Making offers is the fastest way to make money. Always selling your products / services will always attract potential clients. That’s the only way to get customers. If you serve them well and happy with your offerings they will then recommend your work to others. Free marketing right there.

3. Keeping Up with Your Data

The other daily activity that is important to do is to keep up with your data.

If you have an administrator that help with capturing the daily activities, and based on something you can measure – make sure you are measuring.

If you don’t track and measure, you’re only working on assumption, and that’s not going to work long term.

4. Always Be Marketing

You’ve probably heard this before, but you should spend more time marketing than doing anything else in your business.

Of course, thankfully, you can outsource a lot of tasks to help you with your marketing and visibility.

But there isn’t a day that goes by where you shouldn’t be getting out there.

That may consist of publishing a new article, a blog, expanding on your online presence or even using your old traditional marketing methods. As long as the word is out there.

5. Schedule Everything

To ensure that you do the things you need to do to grow your business and get smarter about marketing, it’s a good idea to use your calendar to schedule everything you are going to do.

That way, when you go to work, you simply open your calendar and get started on those tasks.

To do list is extremely important. Draft, mark all your completed tasks. This is how you hold yourself accountable.

Consistency is the key to success.

Specific habits help you develop consistent action which helps you grow your business, your income, and your bottom line.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

A goal is a dream with a deadline.

– Napoleon Hill

Steps on how to Organize Your Business Finances


Starting your own business is overwhelming to say the least. There’s always something new to learn and a mile-long to-do list that you’ll probably never finish. 

Even though it can feel really intimidating, ignoring your business finances isn’t an option. If you want to avoid getting in trouble with the tax institutions / government, and possibly paying big interest or fines, you’ve got to organize your business finances

9 Steps to Organize Your Business Finances

1. Separate Your Personal and Business Finances

Most business entities, (Pty) Ltd, are required to separate their business and personal finances. If you’re a sole proprietor, it’s not required but it is a good idea to get into the habit as soon as possible.

Keeping your finances separate actually makes your life much easier when it comes to documentation and taxes. Please open a business bank account for your business.

You are able to set aside money for taxes, my paycheck, big purchases like website hosting, or anything else I want to save for in advance.

2. Create a Business Budget

Having a budget, for yourself or your business, helps you make a plan, stop overspending, and achieve your goals. After all, you started a business to make money not to spend it.

Keep a list of all your recurring expenses like software or memberships, subscriptions, you pay for each month or year. This will help you become more aware of what you’re spending to run your business. It also helps you keep track of when you’re going to be billed again in case you want to cancel or upgrade.

There are wonderful softwares that comes on handy in this regards however you could also use a spreadsheet to track your expenses.

3. Set Up Finance Software or a Spreadsheet

All of your financial transactions should be recorded in the same place. Most people use software for this like QuickBooks, FreshBooks, or Wave. You can also use a spreadsheet, especially if you are just starting out. 

Get the Business Finance Tracker Google Sheet!

4. Track Your Income

Anytime you collect money from a client, affiliate program, digital sale, or other income stream you need to make sure that transaction is recorded. If you don’t have a record of it, you won’t be able to prove it for your taxes.

5. Track Your Expenses

Record every purchase as soon as possible including the date, description, amount, and expense category. Organizing your expenses by category as you go will save you time during tax season.

Some of the most common expense categories for online businesses are:
Ads + Marketing, Charity, Contractors,
Education, Gifts, Insurance, Internet,
license + Permit, Meals, Office Supplies,
Professional Fees, Software, Telephone,
Travel, utilities, Website, etc.

6. Save for and Pay Your Taxes

Set aside 20-30% of your taxable income each month in order to cover your tax payments. You may want to talk with an accountant to determine the exact amount you’ll need to pay.

Don’t forget that you may need to pay business income taxes every 6 months, payroll taxes on a monthly basis, labour and other and local or industrial governing taxes.

7. Stay Organized with Apps

Even though most financial records for online businesses will be digital, there are times when you might need to keep track of something outside of your computer. When you need to digitize something, try an app!

Apps are great for tracking things like meal receipts and mileage driven for business purposes.

8. Reconcile, Review, and Archive

At the end of each month, check your numbers. Make sure that all of your income and expenses have been recorded accurately and completely.

Review your income and expenses to see how you did for the month. Don’t beat yourself if it wasn’t what you hoped it would be. Just resolve to do better next month.

Also, take a look through your expenses. Were they worth the money you spent on them? Did you really need to spend that money? Keep this in mind as you make decisions for your business in the future.

Export files from your payment processors or other software and archive them. Check your paygate platforms or any other program you’re using for financial transactions. Update the file name to something searchable like “Google Sheet Transactions [Month Year]” and save them in a folder in Google Drive.

9. Set Up Recurring Tasks on Your Calendar

Monthly Reconciliation – During the first week of the month, you need to reconcile, review, and archive your transactions for the previous month.

Quarterly Estimated Taxes – create one task for each due date in a single year. Then set each of those 4 due dates to recur yearly.

Annual Taxes – Create 1 task to prepare your taxes in advance and one task as a reminder for the due date.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin

34

Benefits of Bookkeeping for Small Business Owners


1. Improved Financial Management
Bookkeeping can help you improve your financial management!
When you track your financial transactions, you’ll be able to create accurate financial statements.

That means you’ll finally have a good handle on your income, expenses, and cash flow.

With bookkeeping, you can finally gain control over your finances and make informed decisions that will lead to long-term success.

When you start a business, there is so much to keep up with, and many business owners do let the bookkeeping fall by the wayside. But, once you finally take the time to organize your financial records, it will completely change the game.

For example, once you start by accurately tracking your income and expenses, you will realize that your operating costs were too high compared to your revenue. With that knowledge, you are able to make some tweaks that will ultimately makes you much more profit.

2. Better Decision Making

Make informed, data-driven decisions. Especially when it comes to your business.

One most part is checking your financial reports. They can help you:

identify areas of financial strength and weakness

make informed investment decisions

prepare for tax season

And having access to that data means you’ll be able to make smart, strategic decisions that will help take your business to the next level.

You’ll gain a better understanding of where your money is going.

And you’ll be able to spot trends. Like income streams that you should lean in to because they are working so well. Or business expenses you should cut back on.

That’s why I’m such an advocate for bookkeeping. It will give you the information you need to make better decisions and ensure that your business always runs at its best.

3. Easier Tax Preparation

Taxes, taxes, taxes. No one likes them, but we all have to deal with them.

But when you stay on top of your bookkeeping tasks, tax preparation is a breeze.

With bookkeeping, you’ll have access to financial reporting showing how much your business has earned and spent. This is a lifesaver when it comes time to file your tax return.

No more digging through shoeboxes filled with receipts! And no more last-minute filing. You’ll have all your records organized and ready to go when it’s time to file your income taxes.

Plus, it’s easier to ensure you don’t miss out on any tax deductions when you’re organized.

And you can stay on top of your quarterly estimated tax payments.

So, make sure you take advantage of this awesome benefit!

4. Increased Business Efficiency

Time is the most valuable resource especially as an entrepreneur/ business owner? And let’s face it, we can always use more of it.

That’s another way that bookkeeping comes in to save the day. It helps us streamline our financial processes, reduce errors, and improve our overall workflow.

Think about it. When you have accurate records, you can make the informed decisions we talked about earlier – and make them faster.

You won’t have to waste valuable time sorting through stacks of paperwork or trying to figure out where your money went. Instead, you can focus on growing your business and doing what you love.

So, if you want to work smarter, not harder, making sure that your bookkeeping is handled is the way to go. It will help you keep things organized and save precious time and resources.

Since I’m all about efficiency, this is one of the main reasons bookkeeping is a must-do in any business.

5. Improved Cash Flow Management

As a small business owner, I’m sure you know that keeping a close eye on your cash flow is essential to running a successful business.

But when you have accurate information about your expenses and income, it’s much easier to manage cash flow.

Which is why bookkeeping can be such a lifesaver! 

It helps you more accurately predict future cash flow and plan for the long-term stability of your business.

Bookkeeping can help you:

– make sure that payments are made on time

– identify any areas where you’re overspending

– and create a plan to manage cash reserves

You’ll be able to take back control of your business finances and focus on growth!

6. Better Planning and Budgeting

I know that a lot of people think that planning and business budgeting are a headache.

But I do understand that it can feel overwhelming to create a budget, keep track of expenses, and figure out how to allocate resources effectively. However, it doesn’t have to be that way if you stay on top of your books.

After you implement a bookkeeping process:

– you can create realistic budgets

– track progress toward your financial goals

– make informed projections for the future.

It’s like having a crystal ball that tells you what your future money situation will look like.

When you have a clear plan, you’ll feel empowered to make informed financial decisions that will help you grow your business.

You’ll know exactly how much money you have to work with, where it’s going, and where you need to cut back. And that leads to peace of mind.

7. Easy Access to Data

One of the best things about bookkeeping is how easy it can make accessing your financial data.

By organizing your accounting records and generating financial reports with just a few clicks, you can quickly get an overview of your business’s financial health.

You’ll always have the information you need at your fingertips.

No more guesswork. No more wasting time sifting through piles of paper. Just clear, concise data whenever you need it.

Whether you decide to tackle this yourself or hire a service, I think you’ll agree that keeping up with your books is super important.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

In the balance of life, accounting is the equilibrium that keeps everything in check

Dear Business Owner – Happy New year 🎊 – Bookkeeping Processes

What is your plan to change or improve how you do things in your business as far as compliance is concerned?

The mistake that many business owners make is only focusing on the yearly records but the truth is those are a build up from daily transactions to weekly, monthly, quarterly then yearly.

I have decided to compile this specific blog to elaborate clearly the process of recording our transactions and keep records towards the yearly built up.

1. Daily
– Deal with emails and queries
Attend to customer queries timeously is very important so that their problems are sorted in real time. N.B. Your job is to solve your customer problems.
– Check your bank account
– Clear all receipts, file them and any paperwork digitally
– Prepare and send customer invoices
– Record your time worked or those of your employees
The reason for this is to control your performance, and also to make sure that employees are not being over paid for the hours not worked for as that will eat on the business profit.
– Record your mileage
If you are receiving travel allowance from the business, Keep track of all the business kilometres by keeping a log book and update it on a daily basis. Your travel log must indicate the start km and end km on a daily. Separate business and private km.

2. Weekly
– Bank your cash
In my teachings I always encourage that you do not use the cash received from customers until it is banked. That way it assures clarity on the correct declared income of the business.
– Process supplier invoices and pay them
Do not ruin the great working relationship that you have built with your suppliers by not paying them on time. Please keep records of the receipts, statements and the recon.
– Credit Control: Send customer invoices and reminders
Issue invoices to your your customers and follow up on the payments to ensure that you are paid on time. The unpaid invoices have a tendency of blocking the cashflow. It is extremely important to make sure that monies owed to the business are paid on time. For effective run of the business.
– Track your business expenses
No business operate effectively without incurring expenses. It is a norm. But they need to be captured and controlled so that they do not create a loss to the business unnecessary.
– Track your business Income
Equally it is important to set your sales target daily thus monthly. That’s how you grow the business.
– Update and reconcile the petty cash
Set aside the lump sum of money for those miscellaneous expenses. And clearly record the transactions to be able to reconcile the petty cash at the end of each period as you use the cash. Every cent in the business must be accounted for!

3. Monthly
– Reconcile Bank and all accounts
– Produce profit and loss statement and compare it versus last month and versus the budget
A profit and loss report is the one that reflects the financial performance of the business. We must compare that against the budget that was set apart to run the business. This is a control measure and you will be able to track those miscellaneous expenses on time.
– Calculate and save money for your taxes
Calculating the projected taxes you get an opportunity to put those funds aside so that when the tax season approaches the money is available to be paid to the taxman.
– Pay yourself
A business owner need to earn a salary from the business as he is equally an employee in the business. It is imperative that they do this so they can cater for their individual expenses. A clear discipline must exist between the owner and the business.
– Perform stock take
Get used to be making a frequent exercise of stock taking. To minimize shrinkage and losses in the business.

4. Quarterly
– Perform and review profit and loss statement for a quarter
As a provisional tax payer (Business) you are obligated to file your taxes twice a year. That is Provisional tax and the Income Tax which means every six months.
– Process VAT Payments
If you are registered for VAT please make sure that you are complying with the legislative tax laws in place. Every two months you must file the VAT returns so that you are compliant at all times.

5. Yearly
– Perform Profit and loss statement for the year and check it versus the budget.
– Prepare the Tax returns
– Close your books for the year
– Prepare annual self assessment tax return/ annual accounts

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

And now we welcome the new year. Full of things that have never been.

  • Unknown

Basic Bookkeeping Principles for a Small Business

We just had our last webinar with our sister company Bookkeeping Academy (Pty) Ltd under the topic Basic Bookkeeping principles for a small business…
This blog post is a detailed summary of the discussion we had with the attendants.

What is bookkeeping and why is it important?

Bookkeeping is the process of recording your company’s financial transactions into organized accounts on a daily basis. It can also refer to the different recording techniques businesses can use. Bookkeeping is an essential part of your accounting process for a few reasons. When you keep transaction records updated, you can generate accurate financial reports that help measure business performance. Detailed records will also be handy in the event of a tax audit.

Methods of bookkeeping

Before you begin bookkeeping, your business must decide what method you are going to follow. When choosing, consider the volume of daily transactions your business has and the amount of revenue you earn. If you are a small business, a complex bookkeeping method designed for enterprises may cause unnecessary complications. Conversely, less robust methods of bookkeeping will not suffice for large corporations.

With this in mind, let’s break these methods down so you can find the right one for your business.

Single-entry bookkeeping

Single-entry bookkeeping is a straightforward method where one entry is made for each transaction in your books. These transactions are usually maintained in a cash book to track incoming revenue and outgoing expenses. You do not need formal accounting training for the single-entry system. The single-entry method will suit small private companies and sole proprietorships that do not buy or sell on credit, own little to no physical assets, and hold small amounts of inventory.

Double-entry bookkeeping

Double-entry bookkeeping is more robust. It follows the principle that every transaction affects at least two accounts, and they are recorded as debits and credits. For example, if you make a sale for R10, your cash account will be debited for R10 and your sales account will be credited by the same amount. In the double-entry system, the total credits must always equal the total debits. When this happens, your books are “balanced.”

Using the double-entry method for bookkeeping makes more sense if your business is large, public, or buys and sells on credit. Enterprises often choose the double-entry system because it leaves less room for error. In a way, it ‘double-checks’ your books because each transaction is recorded as two matching but offsetting accounts.

Cash-based or accrual-based

The next step is choosing between a cash or accrual basis for your bookkeeping. This decision will depend on when your business recognizes its revenue and expenses.

In cash-based, you recognize revenue when you receive cash into your business. Expenses are recognized when they are paid for. In other words, any time cash enters or exits your accounts, they are recognized in the books. This means that purchases or sales made on credit will not go into your books until the cash exchanges.

In the accrual method, revenue is recognized when it is earned. Similarly, expenses are recorded when they are incurred, usually along with corresponding revenues. The actual cash does not have to enter or exit for the transaction to be recorded. You can mark your sales and purchases made on credit right away.

Both a cash and accrual basis can work with single- or double-entry bookkeeping. In general however, the single-entry method is the foundation for cash-based bookkeeping. Transactions are recorded as single entries which are either cash coming in or going out. The accrual basis works better with the double-entry system.

How to record entries in bookkeeping

Generating financial statements like balance sheets, income statements, and cash flow statements helps you understand where your business stands and gauge its performance. For these reports to portray your business accurately, you must have properly documented records of your transactions. Keeping these records as current as possible is also helpful when reconciling your accounts.

Recording transactions begins with source documents like purchase and sales orders, bills, invoices, and cash register tapes. Once you gather these documents, you can record the transactions using journals, ledgers, and the trial balance. If you are a very small company, you may only need a cash register. The information can then be consolidated and turned into financial statements.

Cash registers

A cash register is an electronic machine that is used to calculate and register transactions. Usually, cash registers are used to record cash flow in stores. The cashier collects the cash for a sale and returns a balance amount to the customer. Both the collected cash and balance returned are recorded in the register as single-entry cash accounts. Cash registers also store transaction receipts, so you can easily record them in your sales journal.

Cash registers are commonly found in businesses of all sizes. However, they aren’t usually the primary method of recording transactions because they use the single-entry, cash-based system of bookkeeping. This makes them convenient for very small businesses but too simplistic for enterprises.

The journal

The journal is called the book of original entry. It is the place where a business chronologically records its transactions for the first time. A journal can be either physical (in the form of a book or diary), or digital (stored as spreadsheets, or data in accounting software). It specifies the date of each transaction, the accounts credited or debited, and the amount involved. While the journal is not usually checked for balance at the end of the fiscal year, each journal entry affects the ledger. As we’ll learn, it is imperative that the ledger is balanced, so keeping an accurate journal is a good habit to keep. This form is useful for double-entry bookkeeping.

The ledger

A ledger is a book or a compilation of accounts. It is also called the book of second entry. After you enter transactions in a journal, they are classified into separate accounts and then transferred into the ledger. These records are transcribed by accounts in the order: assets, liabilities, equity, income, and expenses. Like the journal, the ledger can also be physical or electronic spreadsheets.

A ledger contains a chart of accounts, which is a list of all the names and number of accounts in the ledger. The chart usually occurs in the same order of accounts as the transcribed records.

Unlike the journal, ledgers are investigated by auditors, so they must always be balanced at the end of the fiscal year. If the total debits are more than the total credits, it’s called a debit balance. If the total credits outweigh the total debits, there is a credit balance. The ledger is important in double-entry bookkeeping where each transaction changes at least two sub-ledger accounts.

Trial balance

The trial balance is produced from the compiled and summarized ledger entries. The trial balance is like a test to see if your books are balanced. It lists the accounts exactly in the following order: assets, liabilities, equity, income, and expenses with the ending account balance.

An accountant usually generates the trial balance to see where your business stands and how well your books are balanced. This can then be cross-checked against ledgers and journals. Imbalances between debits and credits are easy to spot on the trial balance. It is not always error-free, though. Any miscalculated or wrongly-transcribed journal entry in the ledger can cause an incorrect trial balance. It is best to look out for errors early, and correct them on the ledger instead of waiting for the trial balance at the end of the fiscal year.

Financial statements

The next, and probably the most important, step in bookkeeping is to generate financial statements. These statements are prepared by consolidating information from the entries you have recorded on a day-to-day basis. They provide insight into your company’s performance over time, revealing the areas you need to improve on. The three major financial reports that every business must know and understand are the cash flow statement, balance sheet, and income statement.

The cash flow statement

The cash flow statement is exactly what its name suggests. It is a financial report that tracks incoming and outgoing cash in your business. It allows you (and investors) to understand how well your company handles debt and expenses. By summarizing this data, you can see if you are making enough cash to run a sustainable, profitable business.

The balance sheet

The balance sheet reports a business’ assets, liabilities, and shareholder’s equity at a given point in time. In simple words, it tells you what your business owns, owes, and the amount invested by shareholders. However, the balance sheet is only a snapshot of a business’ financial position for a particular date. It must be compared with balance sheets of other periods as well. The balance sheet allows you to understand the liquidity and financial structure of your business through analytics like current ratio, asset turnover ratio, inventory turnover ratio, and debt-to-equity ratio.

The income statement

The income statement, also called the profit and loss statement, focuses on the revenue gained and expenses incurred by a business over time. There are two parts in a typical income statement. The upper half lists operating income while the lower half lists expenditures. The statement tracks these over a period, such as the last quarter of the fiscal year. It shows how the net revenue of your business is converted into net earnings which result in either profit or loss. The income statement does not focus on receipts or cash details.

Bank reconciliation

Bank reconciliation is the process of finding congruence between the transactions in your bank account and the transactions in your bookkeeping records. Reconciling your bank accounts is an imperative step in bookkeeping because, after everything else is logged, it is the last step to finding discrepancies in your books. Bank reconciliation helps you ensure that there is nothing amiss when it comes to your money.

Why is it mandatory?

Bank reconciliation is a must because it:

Provides the exact financial situation of your company

Tracks cash flow accurately

Helps detect fraud or bank errors

Stay on top of your bookkeeping

Proper bookkeeping drives your company to success. It is a foundational accounting process, and developing strategies to improve core areas of your business would be nearly impossible without it. Yet as important as bookkeeping is, implementing the wrong system for your company can cause challenges. Some companies can still use manual methods with physical diaries and paper journals. However, with the understanding that as a small business your core function is to build and grow your business thus focus on it’s operations. Outsourcing your bookkeeping can save you time so you can focus on what matters most – growing the business!

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

Accounting greatness is not just about what you calculate; it’s about the financial stories you unfold

– Christopher

UNDERSTANDING ASSET MANAGEMENT

What are asset management objectives?

An asset management objective lists a company’s goals for allocating its assets. The primary objectives are maximizing return and ensuring that liabilities are not too high in relation to the value of assets an organization owns.
If there is a difference between two asset management strategies-one with lower returns but higher risk; the other with higher return but more risk-then it is usually best to choose the goal that has lower returns, because this will have less of a negative impact on liabilities than higher-return strategy would have.


What are the functions of financial management?

In order to turn a profit, every company needs to have a plan for generating income and spending that money. Without proper planning, it’s easy to go bust- even if you have the most profitable business idea in history. Proper financial management involves thinking responsibly about these five areas of finance:

– Fixed Assets

– Financial Resources

– Cash Flow

– Capital Budgeting

– Risk Management (balanced)

– Lending Decisions (with collateral)

Every type of decision made by your organization will likely affect at least one of these different areas; it is up to the company’s leaders to be informed so they can make sound decisions.

What are the objectives of financial management?

Financial management is an area of business that includes monitoring and managing all sorts of financial matters for a company. The scope can include everything from funds utilization to decision-making on investments to the management or disposal of excess cash flow, and more.

Additionally, firms use accounting techniques like budgeting and cost containment in regards to their own flows of cash. These ensure their day-to-day operations continue running smoothly while staying profitable in the long run.

A good professional – regardless if they’re working as an accountant or developer – should have strong managerial skills when it comes to finance as well as expertise with numbers! Every company needs someone devoted exclusively towards these duties.

What are the types of management reports?

The balance sheet is a snapshot of a company’s assets, liabilities, and equity at a specific point in time.
The cash flow statement goes one step further to detail from where the cash came and went during that period.
Finally, the income statement itemizes revenue or fees received along with expenses incurred for the same period. These reports are typically prepared once per quarter by many types of organizations including for-profit companies, non-profit organizations like hospitals and schools, government agencies like school districts or other municipalities such as cities or counties.

A management reporting package also often includes measurements that quantify performance beyond financial outcomes but may include key drivers behind financial results such as customer satisfaction alongside employee engagement metrics to provide more complete insights into organizational readiness for future success.

What does balance sheet management mean?
A business balance sheet provides a snapshot of the financial health and solvency of that company. It will show assets, liabilities and owners’ equity, but also breaks those down into certain categories. The column headings are: Assets (including cash), Liabilities (including long term liabilities) and Owners Equity.

Long-term assets are property such as buildings or machinery that the business owns outright for more than one year. Intangible assets could include items like patents or trademarks – something intangible to all intents and purposes but which has value because it may offer an opportunity for future income generation. Long-term liabilities would be debts which cannot be repaid within a duration of one year; these need not only include the big-ticket debts, but also less obvious annual expenses such as rent or lease payments.

What is a balance sheet?
A balance sheet is an accounting statement that shows what a person owns, owes, and how much they own as compared to what they owe. The top numbers show assets and the bottom line shows liabilities and equity.

What is the scope and nature of financial management?
The scope and nature of financial management is wide and varied. Fundamentally, it involves the raising of funds for an organization to invest in its purpose because finances give organizations access to needed resources through the financing mix, without which they may not be able to fulfill their missions. Financial managers are responsible for assessing needs, interpreting data, generating plans, implementing those plans through projects managed by project leaders, evaluating success based on pre-determined measures of success such as timeframes or benchmarks and initiating corrective action when necessary. A core principle behind all these activities is that increased efficiencies will produce profits that can be reinvested back into the organization’s work so that it fulfills its mission more effectively in the future.

Assets are things such as cash in hand or investments that have value. Liabilities refer to obligations which must be met in order to maintain organizational solvency- these are things like wages on payrolls or any outstanding loans extended by a company’s creditors . Equity is the value of assets minus the value of liabilities.

3) Customers To Pay Cash Flow– This is relevant when you have inventory coming due where payments come due on credit payable terms to suppliers and vendors.


What is Supply Chain Management?
Supply Chain Management is the chain of activities that link a company’s suppliers, their goods and services, and its customers. The Supply Chain Management process starts with raw materials liberation which can be either sources of inputs used to produce a product or manufacturing equipment. Organizations from many industries must coordinate by focusing on every part of the supply chain to satisfy customer demands such as price optimization, inventory management as well as ensuring quality products from start to finish.

What is cash management?
Cash management is the coordination and control of an organization’s cash inflows, outflows, investments and debts in order to satisfy its short-term obligations.

What is meant by strategic financial planning?
Strategic financial planning is the process of developing a specific goal for an individual and then assessing his or her current resources in order to figure out how to get from point A to point B. It means asking what you want, figuring out what your financial goals are, and then figuring out how to get there. The three major parts of this process would be financial resources (what you have now), the strategic planning process (how much you need today given your future goals), and the specific goal (your perfect life). Understanding these three things will help guide you through this maze so that at the end, regardless of where on the map we started, we’ll have developed a clear plan for getting exactly where we want to go.

Cash management is often used by corporations to systematically measure just how close they are to meeting their short term debt as well as measuring more long-term positions that can include financial stability.

A cash flow statement usually involves different classifications for each type of money flowing into or out of an organization or venture. A source may be something like “customers” while a classification may be “sales”. This information then helps people study what has happened with any given amount of collected funds both before – and after – they were spent on items such as operations, fixed assets , cash payments or anything else.

Why is cash flow so important for any business?
Cash flow is everything to a business. It determines whether or not you can maintain your business, pay the bills, pay yourself, and satisfy customers. There are three types of cash flows:

What makes a healthy balance sheet?
A healthy balance sheet has a low debt to equity ratio, positive net worth, positive cash flows, and total assets are greater than total liabilities. The figures below illustrate the math for this statement.

In order to calculate a company’s net worth it is necessary first to identify the difference between its assets and its liabilities by taking its inventory of who owes it money as well as all the other wealth at their disposal such as accounts receivable or income in advance. You then subtract these debts from the available funds to see if there is an overall negative or a positive residual value of current assets remaining once you have paid off all creditors involved in your business dealings. If there is enough capital left over after settling your bills and obligations then congratulations!

What is management accounting?
Management accounting is the process of providing financial intelligence to managers so that they can make better decisions by understanding how their business operates.

Management accounting enables companies to analyse how effectively they are functioning as well as forecast future results. Management accounts provide information about, for instance costs of products or services, product costing, rate of return, and cash flow. These two perspectives are fundamental for making strategic decisions in general and for planning investment strategies in particular. The strategic perspective focuses on the company’s environment and competitive position while the operational perspective concentrates on management’s control over its own organization including strategy formation and implementation processes.

Product costing uses cost-based information such as labour hours worked or material quantities used to determine total manufacturing cost at a product level taking product mix into account. This product costing information is then used to determine product pricing, product profitability or product contribution margin. It can also be used for product design decisions such as product mix (combining different product types in a product portfolio) and product development decisions such as product cost reduction measures based on the analysis of manufacturing costs at a product level.

What is the importance of financial management?
Financial management is important because it allows for a more precise decision-making that can lead to the efficiency of your company’s use of resources. Proper analysis and evaluation will allow you to gauge long term performance, which means that you’ll have the capacity for careful financial decisions such as the sources of capital, how much debt the company should incur, or whether a new project makes sense in this business climate. Exercising proper financial control comes down to understanding your cash flow and being able to analyse both short-term trends as well as long-term trends.

What is the cash flow system?
Cash flow is the process by which money moves within a business, including money coming in and going out. Cash is vital to every business because it provides an organization with important information regarding its current financial status, such as whether it has enough capital to finance its operations or if there’s a need for additional funds.

Operating cash flow represents the net change in cash on hand from one period of time to another. It includes any investment or financing activities that involve changes of ownership interest in the entity and it may be positive (resulting when more cash comes into the company than leaves) or negative (such as when expenditures exceed sales). Operating cash flows report how much “cash” an organization has at its disposal including coins and currency, accounts receivable and inventory (all assets that can be easily converted to cash). Operating cash flow also includes any business transactions that reduce or increase its current assets. For example, a business may take out a loan or issue additional shares of stock through an offering in the business sector as part of its business activities.

1) Business Cash Flow – This looks at the overall revenues and expenses of a company. After deducting expenses from revenue for each month this tells how much cash produced by the business in terms of profit or loss. The other two kinds are

2) Pay Your Bills Cash Flow – Enough cash must be freed up in order to go out into the world and buy everything that needs in order to function (cash on hand) and

A business’s cash position is also dependent on the status of customer accounts. If a business has the right inventory in stock, it makes more money. When a business has excess inventory, its cash flow slows down because of holding costs associated with having that inventory on hand: storage, insurance, obsolescence potential etc .

Cash flow is important for business because it determines business longevity, profitability and business survival. If you do not have cash flow within a business, then you risk the business going bankrupt and closing down.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

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