Financial Planning

Critical Business Financing Errors You Need to Avoid

»Posted by on Feb 28, 2019 in Financial Planning | 0 comments

business finance is very important for every company whether it’s short-term finance (days, weeks and months) or long-term finance (five years to thirty years). Money as well as financing is basically a limited source that is the main matter to all fluctuation and irregularities because of the fundamental principles of supply and demand. As a matter of fact, finance can be depreciated or can get excess for any business concerns. The shortage of finance can increase price for the resource and on the other hand, the excess finance will decrease the price. 

The availability will increase and the price will reduce when the resource demand is decreased. The excess resources will actually be easy for the receiver or buyer to achieve comparatively low cost. During this time, the purchaser does some errors which can lead to loss finance for the purchaser without enough business policy. 

Common Errors Committed Under Business Financing 

  1. Not Enough Working Capital 

When you’re not updated with your records, this may significantly affect your business working capital. This will decrease your working capital for proper business operation and then it affects your whole trading business activity. That is also the reason why you have to keep your records accurate which will forecast cash flow for further business expansion. 

  1. No Projected Cash Flow

A not accurate book keeping will definitely create several business problems. If you’re not projected with your cash flow, then you cannot know where your resources are going. When you’re not doing a correct book keeping score, it tends to stay away from your goals. Then, you will need to wait for several months to come in order to recover from unnecessary loss. 

  1. No Monthly Bookkeeping

Regardless of the size and scale of every needs in the business, business finance needs the factor to have correct and accurate bookkeeping. Improper bookkeeping will create all sorts of problems in business cash flow, planning as well as decisions. These problems will reduce the value of profit and decrease the resource flow. So, it is very important to maintain an accurate bookkeeping in order to achieve correct details about the trade. 

  1. No Recorded Profitability

It is better to have a possible and fast profit in financing point since the lenders require at least one year of profitable financial statement for new business enterprises. This only shows the business stability and strength to the lenders. In addition to that, it is also very essential for the current business or company to keep accurate profitable record to achieve additional financing facility. Furthermore, the measurement of the consistency to repay the amount will depend on the profit which influences lenders to lend finance. Nevertheless, a lot of companies and businesses lack in showing their proper profit statement. 

  1. Poor Payment Management

Forecasting in perfect place and working capital, unless you have correct bookkeeping and right financial planning Sutherland Shire, you are most likely going to have problems in managing your business relating to cash. This is why it’s best that you consult a professional financial planner. 

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