What's the one main factor that's limiting your business growth? For many small business owners, the answer is simple—your time. You know what you need to do to grow, but you're swamped managing the business you have today.
If paying bills, managing expenses, cutting checks, invoicing customers, accepting payments, and other accounting tasks are eating up your time, here's how successful business owners, CFOs, and controllers delegate financial responsibilities without giving up control.
What are some financial responsibilities in a business?
Being financially responsible for your business isn't that different from being financially responsible for your personal finances. It involves the following:
- Keeping good records
- Budgeting expenses
- Investing your money wisely
- Managing credit and debt
- Planning ahead
These same basic principles and personal finance strategies can lead to financial stability in your business, so you can enjoy your success (and your earnings) with a clear plan for the future.
6 tips for being financially responsible in business
The financial responsibilities listed below are all keys to a successful business, but that doesn't mean you have to be the one to do them alone. Still, it can be tough to delegate such important tasks.
First, let's run through the key financial responsibilities every business needs to cover. The rest of this post explains how successful business owners delegate financial responsibility effectively—without giving up fiscal control.
1. Keeping good records
One of the most important financial responsibilities in business is keeping good records. This means keeping track of your income and expenses as they happen and keeping your books up to date. Without good records, you might as well be flying blind when it comes to making financial decisions.
2. Tracking spending habits and budgeting your expenses
Two related financial responsibilities are tracking your spending and managing budgets. This includes monitoring cash flows and upcoming bills closely, so you always know where your account balances are now and how they're about to change. It also requires overseeing your business spending in real time to make sure every outflow is approved and nothing looks out of place.
3. Creating financial statements
Creating financial statements on a regular basis is another important financial responsibility. Profit and loss statements (P&Ls), balance sheets, and cash flow statements provide key insights into your company's financial health, helping you make solid financial decisions, plan your cash flow, and manage company growth in a sustainable way.
4. Managing debt
Knowing how to manage debt is a key financial responsibility that's too often overlooked. Companies can't grow without cash. In fact, they usually need some amount of cash before they can earn any income—for materials, tools, marketing, and so on.
Making sure you can borrow money when you need to, with access to lines of credit and business loans, means keeping an eye on your company's financial health and credit score.
5. Keeping an eye on your credit card balances
Like people, businesses have their own credit scores with their own credit report and metrics. Equifax and Experian are key players, but business owners should also claim their company's Dun & Bradstreet listing (or create one if needed).
When it comes to corporate credit scores, financial responsibilities include monitoring your credit report and credit history, tracking your percentage of on-time payments and credit utilization, among others.
6. Reporting taxes
Finally, business owners are financially responsible for their company's tax reporting. Some companies pay income tax directly as corporate entities. Others pay it through their business owners' personal income taxes. Either way, the business needs to report its income to the IRS.
If you hire contractors, you may also be responsible for reporting 1099s. If you have employees, you need to pay payroll taxes throughout the year and report W2s. Sales taxes are even more complicated.
For most business owners, tax responsibilities are among the first financial responsibilities they delegate out to automation tools and financial specialists.
Benefits of delegating business finances
Many small business owners have a hard time delegating financial responsibility to anyone else. It can feel risky, to say the least.
But today's financial tools help business owners reap the benefits of delegating financial responsibility while actually decreasing financial risks.
Save time
First and foremost, delegating financial responsibility saves time. Successful business owners delegate day-to-day operations so they can focus their efforts on leadership and growth.
Save money
Secondly, delegating your financial responsibilities can save your company money. After all, time is money—and your time is incredibly valuable to your business success. The less time you spend on daily tasks and the more you spend on strategy, the more of an ROI you're likely to see from delegating financial responsibilities to someone else.
Improve your bottom line
Finally, saving time and money improves your bottom line. Plus, when you delegate financial responsibilities to tools and teams that have specialized knowledge of business taxes, payroll requirements, financial analysis, credit management, and so on, you can leverage the key financial skills you need without having to become a CPA.
How do you delegate financial responsibilities effectively?
These five steps are often used by successful business owners to delegate financial responsibilities while increasing financial control.
1. Use smart financial tools
As micro businesses of 0–9 employees grow into businesses of 10–500+, delegating financial responsibility often starts with financial automation. In other words, today's business owners delegate their first financial tasks to tools, not people.
Why? Because financial tools are:
- Relatively inexpensive
- Designed to increase control and visibility
- Automated to speed up routine tasks
- Backed by hundreds or even thousands of experts who concentrate their considerable knowledge into specialized financial apps
Some of the first tools business owners turn to include:
- Accounting software—to digitize their books, sync with financial accounts, and automate financial reporting
- Payroll software—to automate payroll approval, writing and sending paychecks (often via direct deposit), payroll tax payments, W2 reporting and delivery, 1099 reporting, and even benefits like 401(k)s and health insurance
- Invoicing software—to automate the process of creating and sending invoices, setting up recurring invoices, sending payment reminders, and tracking payments (including late payments), plus access to short-term financing by receiving incoming payments early
- Expense management software—to automate spend and expense tracking with software that's tied to corporate credit cards, set and control pre-determined budgets, crowdsource the process of capturing receipts and categorizing expenses (in real time), and increase financial security through virtual cards
- Accounts payable (AP) automation software—to automate data entry for incoming bills and invoices, approving bills and invoices, paying bills and invoices, and syncing bills and invoices with accounting software
2. Outsource your tax-related responsibilities
With financial automation tools in place, outsourcing financial responsibilities like W2s, 1099s, and tax preparation is much less painful. In some cases, the tool can handle everything for you—you approve payroll every month, paychecks are sent or deposited automatically, and your end-of-year payroll responsibilities happen automatically too.
In other cases, you might want to hire a professional to make sure you're taking maximum advantage of your up-to-date, automated books. You can hire a professional accountant to do your business taxes each year for a relatively small amount. Just generate your financial statements in your accounting software automatically and hand them over. In many cases, a professional accountant's annual advice can save you more than they cost.
3. Hire or outsource bookkeeping services
Did you know you can hire a virtual bookkeeper? Rather than hiring a full-time employee, many business owners start by delegating financial responsibilities for bookkeeping to professionals who split their time among several different businesses, saving them money.
Financial automation tools make this even more advantageous. When a virtual bookkeeper uses a tool like BILL Accounts Payable to manage your expenses, you can set up the approval process however you like. Approve every bill personally to keep complete control over every payment, or let some go through automatically to save even more time. The choice is yours. You can even have approvals sent to your mobile phone, so you can manage them in a matter of moments.
4. Consider a fractional controller or CFO
If your team doesn’t have a dedicated CFO and you want to take your business to the next level through a major business loan or an influx of cash from investors, it might be time to consider a fractional controller or CFO.
These financial professionals also split their time among more than one company, offering their expert skills and advice on setting up your financials to attract new opportunities. This includes helping you set up internal controls that increase your financial security.
5. Build out your team as you grow
When internal financial controls are automatically applied by financial automation tools, delegating financial responsibilities to a broader team becomes far less risky.
Teams that use an integrated financial automation platform like BILL are set up well to work from anywhere, giving teams access to a much wider (and more technologically savvy) applicant pool. Permissions let you manage who can see or do what, and automatic audit trails make financial oversight far easier than it is under traditional, manual accounting processes.
Share financial responsibility and maintain control with automation
If you want to get more time back and grow your small business—delegating your financial responsibilities while increasing your financial control—start by seeing what BILL Accounts Payable can do for your business.
- Need HIPAA compliance? See why Peter Yu, Head of Accounting for Guardian Dental Partners, says, “Our dental partners know that their patient data is safe and secure with BILL.”
- Need to scale for massive growth? PolyStone Planters grew 12x over 4 years. See why Bert Stouffer, CEO and Managing Partner, says, “BILL solved our operational need to more effectively process payments.”
- Need to make international payments? See why Melissa Harris, Director of Accounting Operations for Bombas (yes, the Shark Tank Bombas), says “BILL Accounts Payable does it all in one shot, using the same process for both domestic and international payments.”
A total of 5.8 million network members pay or get paid with BILL (as of June 30, 2023). Think BILL might be a good fit for your business? Sign up for a free demo here.
