Reset and clarify financial expectations
The new year is always a good time to hit the refresh, reset or clarify button on financial expectations. Doing this goes hand-in-hand with your financial new year resolutions, so it makes sense to reset and communicate your expectations at the same time – see NY Resolutions article here.
Consistency and communication are key to sage money management for any business. And, no doubt, one of the rewards of having clear financial expectations – whether with clients, employees or suppliers – is increased trust, which helps your business relationships flourish.
When someone’s expectations about money change, and this hasn’t been communicated, it can quickly turn into a big, ugly mess. Unarguably, when it comes to finance that can have a big impact on your business’s success. So, don’t let a change in expectations slide.
Here’s some thought-starters to help you think about your financial expectations as we get into 2021.
For your clients
- Make invoice scheduling and payment timelines
Communication is key and doing it upfront is always best. With clients, clearly state in a service agreement your expectations on invoicing and payment and be sure to point these out in person. This includes how and how often invoicing will occur, the consequences/fees for late payment, and if you offer a discount for early payment. Setting auto reminders for invoices will help clear up an ambiguity.
- What happens when payments are late
Once again here, communication is key. Ensure your clients know if there’s a penalty for late payments, or even better still if they get a benefit for paying early. Make sure this is clearly communicated on all invoices.
For your employees
- Management of company funds
The credit card and petty cash rules need to be firm and clear. Important information to communicate includes what it can be used for, price limits, receipting and if any approvals are necessary beforehand. We’ve all been there before when the receipt has been thrown away and no one can remember what the $36.79 credit card purchase was for!
- Management of financial documentation
Having a clear filing system for saving financial information is crucial. By communicating rules around how often files and information is updated and who is responsible for managing and tracking expenditure, things won’t get lost and the information will remain in the right hands. It’s also easier to get to the bottom of an issue when you know who is responsible and where you can find information.
- Monthly reconciliation
Diarise that monthly reconciliation! Enforcing it strictly with limited exceptions is a must for everyone responsible for budgets in an organisation. Keeping up-to-date with statements means you are constantly reviewing what you are paying for. How often do people find they are still paying for a cancelled subscription/membership 6-months after ‘cancelling’?
Remember, setting and communicating your financial processes will help with both the immediate and longer-term management of your business, and ensuring it can be successful. Talk with your bookkeeper or accountant if you are not sure about what processes and systems you should have in place.