5 financial management mistakes that business actors should avoid.
Do not separate personal and business assetsThis mistake is commonly made by small and medium business actors who are still beginners. When sales decline and they cannot cover their expenses, they take out their personal savings to cover it. As a result, personal assets are reduced. It's best to set aside business profits for emergency costs so that they can be needed at critical times like this. On the other hand, excessive spending of a business budget for personal needs is also not justified. In the end, you will be confused about where your business profits will go and you will not be able to develop your business in a further direction.
Time is moneyInstill this principle when managing your finances. For example, when you need additional loans to grow your business. If you borrow it from a bank, it will take about two months for the funds to be disbursed. Within these two months, you should be able to make more money than having to wait for approval and loan disbursement from the bank. Switch to another lender who can give you a loan as quickly as possible without a complicated process. This is a form of time efficiency in managing finances. That way, you can immediately develop your products and services. Remember the saying, time is money.
Borrowing More Money Than NeededBetter not do this. The more money you borrow, the more cost you have to pay. Besides having to pay interest per month, the origination fee you have to pay is also higher. The origination fee is the fee required to process your loan which includes preparing documents, verifying the borrower's debt history, and so on. This origination fee is taken from the amount of your loan, usually three to four percent, so the more amount you borrow, the more origination fees will be.
Lazy to Record Business TransactionsThe basic step of managing finances is to diligently record sales and purchase transactions. Sometimes because you are very busy or just feel lazy, you delay recording the transactions that you have done. If this habit is carried out continuously, then you will forget what transactions you have done. As a result, when compiling financial statements, the amounts do not match and you are confused about where to spend the money. For that, immediately record transactions that occur in a special journal to avoid forgetting.
Easy to Borrow MoneyIt is normal to experience a lack of funds in managing a business. It's okay to borrow money, but don't become a habit. You have to think how to make your business grow. If sales have decreased, find out the cause and immediately find a solution to the problem. Do not easily borrow money from many parties because this will hurt you. Not to mention the amount of interest you have to pay.
The mistakes above are commonly made by business people who are still beginners. Because they are not used to managing finances and lack of experience, they are not careful in seeking loans and managing expenses.