Money makes the world go ’round. At the very least, it keeps your business afloat. Whether it’s paying your employees, buying new inventory, or recording a healthy bottom line for the business, you can’t underestimate the importance of having the right funds available.
That’s why managing business money carefully is so important. It isn’t always easy though. In fact, plenty of business owners make missteps with their business funds.
These seven common business money mistakes can help you learn. With this knowledge, you can manage money more effectively and grow your business.
1. Mixing Business and Personal Cash
One of the most common business money mistakes an owner can make is mixing business and personal cash. If your business is small, you may not see an issue with having the store float help you keep up with your personal bills. Business owners will sometimes use personal savings or take on personal loans to keep their doors open.
Mixing personal and business funds can cause confusion in the accounting record. It could make it more difficult to see problems in the business, or even to keep track of profits and losses.
2. Lackadaisical Recordkeeping
Speaking of records, what do your books look like? Many business owners struggle to keep up with the accounting. Keep better records, and you’ll have a much easier time handling your cash. You’ll be able to spot issues, resolve them, and even track your cash with more precision.
3. Easy Access to Your Cash
It’s midnight, and do you know who’s handling your cash? Some business owners may not, because they trust everyone in the business to handle cash, prepare deposits, and open the safe.
Experts stress the importance of creating a chain of custody for their cash. That means only certain people, such as managers and owners, have access to cash. Only those whose designated duty it is to handle deposits or count cash should be doing so.
By limiting who is handling your cash, it’s easier to isolate issues and hold employees responsible.
4. The Case of the Invisible Cash
You’ve created a chain of custody for your cash, but you still don’t have a good idea of where it is at any given time.
Many business owners struggle with the issue of “invisible” cash. Money might be sitting in the safe, but owners aren’t not sure how much is there. What’s in the registers? You may not know until closing time. This situation makes it easier for cash to disappear, sometimes without being recorded.
Better monitoring and upgraded cash management technology can help you see the big picture and keep better track of your cash.
5. Where’s the Written Version?
Do your employees know how to tender coupons or void a transaction? Some types of transactions are rare, so even if your team passed the training examples, they might forget by the time they encounter the situation.
A written policy is key. It also helps you as the employer, since it makes it easier for you to direct attention to policies and hold the team accountable. Identifying issues is smoother when you can refer to the written document.
6. Bespoke Procedures
Even if you write your cash handling policies and procedures down, you still have to teach your team how to handle money. Otherwise, you may end up with a situation where everyone handles cash a little differently.
That makes it harder to spot issues and hold people accountable for their actions. Train your team, and you’ll have an easier time keeping track of your cash.
7. Relying on Your Hands
What cash management technology are you using to help you with tasks like counting, sorting, and even security? If the answer is “none,” it’s time to make a change.
Your team may be great mathematicians, but even they can miscount. The right technology will help you keep track of your cash and avoid some of the most common mistakes.