To what extent are you confident with the system or method of managing business finances that you currently use?

This question is important for us to ask ourselves, whether we are starting the journey to develop a business or already in the middle of running it. In this modern era, more and more people are becoming independent and running their own businesses, either as a main or side source of income. Especially with the presence of the pandemic, many people have turned to starting small businesses. Even so, the MSME sector in Indonesia in general is still not developing optimally, which is often related to daily challenges in maintaining business performance and sustainability. One of them is related to financial management, which will influence decision making for business stability.

A clear picture of the lack of understanding of MSMEs regarding financial management is the lack of financial recording that is carried out. In fact, every transaction that takes place in a business really needs to be recorded because it can be used for various further steps. For example, with neat bookkeeping, entrepreneurs can know whether their financial condition is healthy or not, so they can determine the right improvement strategy. Another example, when a business has complete financial records and tax reports, it will be much easier for the owner to get access to the capital needed to develop the business further.

If you have used POS Qasir, congratulations. This is a sign that you are one step ahead. For those of you who don't record regularly due to inconvenience and are confused about where to start, you can start by download the Qasir application with your Android device (minimum OS 5.0 Lillipop) here.

Many sources of information state that the ability of MSMEs to recognize and access financial resources will have an impact on the growth rate of MSMEs. Unfortunately, even MSMEs are often confused about where to start. It seems simple, but actually this is fundamental and determines the success of MSMEs later.

A case study of a small group of MSMEs in Depok shows that the low level of financial literacy of business owners affects their ability to manage finances (Anggraeni, 2015). Entrepreneurs only record business financial income and expenses, without storing supporting documents such as receipts. Entrepreneurs also have not used budgets as material for business evaluation, so it can be said that their business financial management has not been optimal.

Do you do this too? Don't worry, here we learn together. It's a shame, right, if you already have a running business but it turns out there are still a lot of "holes" in terms of finances?

Pay attention to 6 important financial aspects of business

Well, if we slowly want to improve our business financial management strategy, some of these basic aspects can serve as a reference and we need to pay close attention.

Cash Flow (Cash Flow)

This cash flow can be said to be the lifeblood of MSMEs, so it is important to understand and pay attention to it from the start. The cash in question is the money we have that is available for immediate use. It is liquid in nature, not tied to goods, property or product stock in the business. This cash flow is calculated by subtracting the money on hand at the beginning of the month from the amount on hand at the end of the month. If it turns out that the income generated is greater than what is spent on expenses, this could be an indication that we have healthy finances. This also indicates that we as entrepreneurs have enough money to pay suppliers, bills or ongoing loans. Imagine the danger if the opposite happened. Never mind making a profit and being able to grow, even meeting basic business needs can be disrupted.

Income & Expenses

Surely our business cannot be separated from income and expenses, right? From all customer purchases of the products we offer, we have income or what is usually referred to as turnover. On the other hand, our business will also not be separated from product stock costs, rent and operations, employee salaries, or even marketing. When we subtract expenses from income, we can know the exact amount of profit generated through business. This is the goal that every business needs to achieve. There is no point in generating high income if expenses are equal to or more than earned. This means that the business has financial losses and will not survive in the long term. Therefore, the condition of both needs to continue to be monitored carefully.

Inventory

Inventory refers to the stock amount of products sold, for example clothing or certain types of food. Why is this included in the financial management aspect? Because often a lot of business cash is tied up in it. Often business actors are not aware that these products are money, just another form. Before reselling it, we buy it with the money we have in cash. Therefore, if we have too much stock, cash flow will be affected and there is a high possibility that we will not be able to pay our bills. Too little stock is also risky because we may not be able to meet customer demand and not generate enough income. It is important to regularly monitor inventory levels as well as purchasing trends to be able to estimate needs and prepare appropriate amounts of stock.

To monitor inventory easily and for FREE, use the Qasir app.

Employee Wages

Every business definitely needs to think about the employee salaries that need to be paid. Entrepreneurs are also responsible for arranging the payment of taxes and other appropriate benefits. It is important to calculate all requirements for employee benefits, especially when hiring someone for the first time, because this is a long-term commitment. Pay attention to our need for additional employees and our ability to pay their wages. What if you still run your own business? Pay yourself a "salary", because business finances need to be separated from personal finances so that both are well monitored and maintained. Three ways that can be done are paying salaries, honoraria or commissions for roles as workers; payment of rent or subsidies for electricity, water and telephone for the role of property owner; and payment of profit sharing or dividends for the role as financier.

To make it easier to calculate employee salaries based on their performance and absences, use the Manage Employees and Absence from the Qasir application.

Accounts Payable

Payables and receivables are one of the most important aspects of MSME finance. Receivables refer to the amount of money we receive from customers. In certain types of business, entrepreneurs may not always receive cash payments immediately. For example, our business has just sold 50 reams of HVS A4 paper to a buyer, but the money will only be paid at the end of the month. This means that the money that will be paid at the end of the month is what is called receivables belonging to our business. Therefore, it is important to track every receivable and chase it if it is past the deadline. Meanwhile, debt refers to what we owe to other parties, for example supplier costs or business loan payments. Both need to be considered and completed completely on time, so that the business's financial books remain balanced and stable.

To record customer receivables safely, use the Kasbon feature on the Qasir application.

Taxes

This is the financial aspect that business people are probably most reluctant to touch because it is considered complicated and time consuming. Even so, tax is the obligation of every business actor. Reviewed by Jurnal, in Indonesia there are four criteria for MSMEs: large businesses, medium businesses, small businesses and micro businesses. Each category has its own requirements that we need to pay attention to, so that we can know the taxes we need to pay and carry out our responsibilities appropriately. Also make sure to keep records, receipts and invoices so that we always have proof of business financial activities.

Cultivating Good Habits in Business Financial Management

If we already know the important aspects related to financial management in business, of course it will be easier to organize how to manage finances appropriately. Every business definitely has a different strategy, depending on its individual conditions and needs, but by building good basic habits, business finances will be much better maintained. Here are some habits you can try.

1. Establish Proper Protocols and Habits in Business

Even though it's as simple as recording every transaction and setting a time for periodic financial evaluations, these controls really help protect the financial health of the business. Strict monitoring can prevent the risk of loss and also reduce fraud in business.

2. Know Every Obligation and Risk in Business

Every business will have obligations, which if not fulfilled can cause problems with trust, business continuity, and even law. Every business decision will also have various risks that may be scary but necessary. Understand the ins and outs of every obligation and risk that has the potential to occur in business, so that we as entrepreneurs are able to manage every existing risk and create a good resolution strategy.

3. Understand and Monitor Cash Flow Dynamics

Don't fall into the illusion that everything is going well. Always pay attention to the real numbers. Make sure that cash flow is positive and sufficient to cover expenses as long as necessary, until profits slowly come in. Use your bookkeeping records carefully to find out your monthly income and ensure the availability of funds that can be used.

4. Pay attention to, reduce and prioritize business expenses

Be careful, don't let the discharge leak! Especially at the start of your business, keep expenses as low as possible. As an MSME player, always ask yourself: to what extent do I need this? Of course you can shop, but don't regret it. Always prioritize spending, so you can avoid unhealthy spending habits. Money is a tool that needs to be used wisely in business. Therefore, it is a good idea to create a budget plan for one year for major and basic expenses to help reduce the financial burden of unnecessary things.

5. Periodic Financial Report Analysis

Periodic analysis of business financial reports is a basic practice that must be carried out to review the overall picture of business conditions. It is important not only to know that the business is running well, but also to compare business performance with performance in the previous year or quarter as well as with the performance of competitors' businesses.

6. Prepare Emergency Funds and Flexible Funds for Business

Prepare these two funds in case something big, unexpected and beyond our control occurs. The size of the emergency fund can vary between businesses depending on the activity and size of the business, but is usually equivalent to 3-6 months of operational costs. For times when you can generate excess income, also set aside unused money into a flexible fund. At first it may seem unnecessary, but this is what will save you from failures that could occur in the future.

7. Have the courage to apply for loans and capital

Applying for a capital loan is permissible, as long as we have complete and orderly financial records. Some people may be afraid to apply for a loan because it is considered detrimental. In fact, of course you can apply for a loan when you need to extend cash flow and business financing. Even so, avoid getting into debt like this at the start of your business and when you're not sure you'll be able to make the money to pay it off. Loans are obligations that we have to pay, not free money.

8. Discipline

Discipline in what? Everything! Discipline in saving money, making financial plans, recording transactions, spending according to budget, settling debts and receivables, and paying mandatory taxes. Discipline shows our commitment as entrepreneurs to maintain the continuity of our business as best as possible, including in the financial aspect. This is our hard work, don't let our own negligence ruin it. Think about the feeling of satisfaction later when our business succeeds in stabilizing and growing.

Are you more confident in planning how to manage finances for your business? The journey may not be easy, but as long as you try, there will definitely be results! Moreover, in this modern era, everyone can use technology. For example Qasir application, which can also be used for recording transactions, stock of goods in inventory, even tax. Good luck! Hopefully after this your business finances will be healthier!

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