10 Tips for Stress-Free Financial Operations
1. Prepare a budget.
My favorite saying is “Hope is not a plan!” Just as you can’t build a house without a plan, you can’t build a profitable music retail operation without a roadmap. Learning to estimate revenues and expenses doesn’t have to be an overwhelming, complicated process, and it’s important in setting expectations for your staff, holding managers accountable and making sure you reach your financial goals.
2. Do a monthly, timely bank reconciliation.
Even if you don’t prepare them, having accurate and timely bank reconciliations is important for maintaining good financial controls. And make sure you review your reconciliations. Look for inconsistencies and irregularities, and make sure your staff knows you’re paying attention. Owner and manager awareness is a key deterrent in employee theft and embezzlement.
3. Prepare monthly financial statements.
Don’t wait until tax season to know your financial position. If you can’t swing monthly financial statements, quarterly statements will do at a minimum. Review them with your accountant, and compare them with last year’s statements and with your budget.
4. Practice good internal control procedures.
Separate out the duties of handling money, writing checks, posting payments and preparing the daily deposit as much as possible within the confines of our mostly small accounting or business offices. Cross-train responsibilities, and switch things up sometimes.
5. Delegate but don’t abdicate.
We can’t do everything ourselves, and it’s good to empower staff to make decisions, plan and execute projects, and become responsible for being part of a team. Still, when it comes to the financial operations of your business, eliminate opportunity for theft and embezzlement. A reasonable amount of vigilance is always wise.
6. Make good cash flow everybody’s responsibility, not just the controller’s.
Making sure your cash engine is pumping smoothly isn’t just an accounting problem—it’s everyone’s issue. Everyone on staff has to play a part in the business’ cash flow, from making sure employees are on the same page in extending credit to reducing ordering errors to negotiating vendor terms to keeping inventory turning. Educate staff on their function in turning working capital into cash.
7. Ask for help.
Do you have a go-to resource for your financial questions? It could be your accountant, your banker or even one of your peers, but finding someone you trust is critical. Find a mentor, and ask questions!
8. Arm yourself with knowledge.
I’m preaching to the choir here, but attending NAMM U sessions, NASMD and RPMDA is a great way to keep your skills up, learn new approaches and get prepared for the challenges ahead. I’m a big fan of lifelong learning and all of its rewards. Arm your employees with knowledge, too. The investment will pay off.
9. Communicate with your banker.
Bankers don’t like surprises. I make sure that my required periodic financial statements are accompanied by at least one good conversation, so he knows where we are financially for the year and why, how we’re addressing issues, and where we’re making progress. He appreciates the information, and it makes both your jobs easier when it comes time to ask for additional loans or adjustments to existing ones.
10. Maintain a good financial relationship with vendors.
Pay your bills in a timely manner. If you need to stretch things a bit, always communicate with them honestly. Most will work with you and appreciate a proactive approach. Such a relationship pays off when you need any (inevitable) special consideration in the form of products, clinics or better terms.