When it comes to managing finances, many home care business owners only focus on their end of year accounts with their accountant. While this approach meets basic compliance, it often means missing out on three critical benefits:
- Tracking unexpected increases: Without regular financial monitoring, it’s hard to spot rising costs or unexpected expenses that can erode profitability.
- Budgeting effectively for the year ahead: Having up to date financial insights allows you to make informed decisions and allocate resources more efficiently.
- Preparing for a potential sale: If you’re considering selling your business, having at least 12 months of accurate, up to date monthly profit and loss statements puts you in a much stronger position. Buyers and lenders expect to review these and having them ready saves you time and adds credibility.
How to Start Tracking Your Finances
The easiest way to streamline your finances is by using accounting software. Tools like Xero, QuickBooks, or Sage can connect to your bank accounts and generate profit and loss reports for daily, weekly, monthly, quarterly, or annual periods. These systems also integrate with invoicing platforms, giving you a clear picture of your daily cash flow, both income and expenses. Be sure to choose cloud-based software.
If you prefer a more traditional approach, you can manually input your data into a monthly profit and loss Excel sheet. To make this easier, I’m offering a free template that I use, along with a video tutorial to guide you through the process. Get your free copy by filling out the contact form below, it’s completely free!
Why This Matters
It’s surprising how many businesses don’t use a system like this. Often, owners manage everything in their heads. While this might work for now, it’s risky. Let’s be logical: if only you know this information, what happens if you’re unavailable? Planning for the worst ensures your business and your team can carry on seamlessly.
By implementing a system, a bookkeeper, accountant, or senior management team member can step in and easily understand the business’s finances. It also makes filing end of year accounts much simpler; your accountant will thank you for having organised records that can be easily coded into accounting categories.
The Bottom Line (Excuse the pun)
Regular financial tracking is not just a “nice to have” – it’s essential for managing costs, making informed decisions, and preparing for the future. Whether you’re planning to grow, streamline operations, or sell your business, having a robust financial system in place is key.
Start today with a simple step: choose accounting software or request my free Excel template and tutorial. Your future self and any potential buyers or lenders will thank you.