As the owner of a business, it is very important for you to have a system that you follow to track your revenue and expenses. A routine system that through which every transaction flows. I like to call this the Financial Flow System™. This system should be followed consistently and done weekly or monthly to record and manage your business finances.
Your Financial Flow System™ is your step by step operating procedures for your bookkeeper or accountant. This system allows your bookkeeper or accountant to follow step-by-step and will essentially let them know how you run your business. Writing down and documenting these procedures will highlight for them areas that need improvement and tweaking and areas that are bringing you maximum operating efficiency.
Managing your books regularly does not need to be a complicated task. If you have a simple Financial Flow System™ in place it functions as a step-by-step instruction guide to track your income and expenses. Your system does not have to have a lot of accounting jargon and it can be a simple list that can followed easily every time.
Systems are the key to a successful business!
Systems are in every facet of your business, not just in your product or service line. Having a Financial Flow System™ in place in your accounting department will help you see where your business is thriving and where a breakdown might be occurring, so you can take the necessary actions to prevent financial stress or failure.
Let’s take McDonald’s for an example. Each franchise owner follows McDonald’s corporate Financial Flow System to run their specific store location. These operating procedures allow franchise owners to have instructions and procedures to effectively and efficiently run their store. They do not have to reinvent the wheel for every process, but they can follow the steps and easily tweak where needed for their individual location.