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5 Ways to Professionally Manage Your Financial Assets

Posted on October 28th, 2022
Manage Your Financial Assets

Your business is growing—that’s great news! It also means it’s time to triple-check that you’re protecting your assets and managing your finances in a scalable way. Here’s how.

As a business grows, leadership needs to ensure they manage financial assets and that equity within the company is well-managed and secure. No matter where your business and personal funds are invested, there are several things you can do to make sure your assets are protected as you scale.

5 Asset Management Best Practices

1. Use a cap table management software.

The capitalization table, or cap table, is an essential document for keeping track of your business’s equity—a scorecard of sorts.

Think of it as an organized spreadsheet that tracks how dividends are distributed among shareholders. Include how much your business is worth and financial projections for the future. Do this even if you don’t have public shareholders or you are a single-member LLC. To manage assets effectively, you need to track your ownership to keep investors in the know.

Your cap table will show all your company’s securities, all your shareholders, and valuation details.

As an organizational resource, It should be sortable and easy to keep up-to-date as your company goes through financing rounds. As a financial document, it can act as your best marketing tool for attracting new investors. This is the first document an investor will want to see before they decide whether to take a chance on your company.

You can create your first cap table using a spreadsheet when your business is small. However, it’s both risky and tedious to manage this data manually as you grow.

As you go through rounds of funding, your cap table will become more and more layered, with various events and provisions affecting data along the way. Ultimately, you’ll want to invest in a cap table management software just like you’ll want to invest in automation throughout your growing business.

Dedicated software from a reputable company, such as Astrella by Equiniti, provides intuitive data management that incorporates decades of compliance and security expertise. Astrella in particular uses blockchain technology—a growing trend in finance—so no one can go in and surreptitiously change a data entry.

This kind of protection against fraud and inaccuracies can help business owners sleep well at night.

2. Hire an accountant and a bookkeeper.

As Inherit Learning founder and CEO Nicole Walters says, it’s a business basic to have two different people in your bookkeeper and accountant seats.

Your bookkeeper is essential to your business’s daily functions. They’re the one who will reconcile your bank statements, process payroll, keep your general ledger, and put together financial reports for your review.

You may have handled your own books when you started your business. But as you grow and scale, you’ll want an expert who can take some of those tasks off your hands. They should be able to invest the necessary time to make sure all your accounts are in order and up-to-date.

An accountant can help you with tax planning and tax compliance (if that’s part of their scope of practice). They’re also the person who can provide audits to creditors when you’re seeking a loan.

They can also advise you on higher-level financial decisions. They’ll help you avoid tax penalties and interest, get the most on your refund if applicable, and make smart decisions about how to structure your business finances and manage assets. This crucial role can affect the financial health of your company long-term.

Be sure to vet the folks you choose to fill these roles. Word-of-mouth referrals help, as does understanding exactly what you’re looking for. If you’re working with an accounting firm, find out what services they offer to help manage assets. Sometimes they’ll have bookkeeping specialists on staff, too.

Look for a licensed CPA who practices GAAP compliance. Interview potential accountants or firms to make sure their ethics, professional values and priorities match your business’s. Call their references. Whether you’re hiring for a full-time employee or an external contractor, you’ll want to make sure they’re a culture fit for your growing business.

3. Get credit insurance.

If the majority of your revenue comes from a relatively small pool of clients or customers, consider investing in credit, or receivable, insurance.

It’s not a cheap option, but it provides peace of mind. It does this by covering a certain percentage of your receivables value, should one of your clients go bankrupt or out of business. It can also protect you if you rely on permits to import or export goods. If you transport goods as part of your business, you might also want transit insurance.

In order to decide how much insurance to purchase, you’ll need to crunch some numbers. Decide what size loss would seriously hurt your bottom line.

Keep in mind that having insurance on your receivables can also improve your borrowing power, since your business becomes less of a risk for the lender. Depending on your business plan and quarterly goals, that would factor into your cost-benefit analysis.

Do you have a membership-style good or service? If so, you might also hire a revenue recovery service to chase down failed recurring payments.

Your leadership role in your company may give you clout, but it also demands your strategic brain and your best energy. Rather than spending your time connecting with clients who have failed to complete their payments, outsource that task, and protect your projections.

This is all part of making sure your business is optimized to save money while making money.

4. Invest in your employees.

It’s harder than ever to attract and retain the kind of talent needed to make your business thrive.

Pew research shows that one in five employees are seriously considering searching for a new job in the next six months. But the quality of your talent impacts both the day-to-day operations of your business and how attractive your business is to investors.

With that in mind, there are a few ways to attract great employees and keep them around.

First, you can provide a healthy equity compensation plan.

This could look like employee stock options, employee stock purchase plans, restricted stock grants, and other options. No matter how you structure your equity compensation plan, it incentivizes employees to work hard for the company’s success. By providing more than a simple paycheck, it can attract entrepreneurial-minded employees who take ownership of their roles and bring creativity and enthusiasm to the team.

Second, you can offer growth opportunities for your employees within the company.

If your people feel a lack of job security, they’re more likely to move on. People who switch to a new company are also more likely to see an increase in their wages. (Both those stats are reflected in the Pew research.)

To combat this, consider offering professional development and opportunities for employees to grow into new roles in your company. They can increase their own value while you gain employee loyalty.

Invest in all employees, in-person and remote.

Third, you can offer perks such as remote work.

When possible, telecommuting is a smart financial move for employees. Other perks could include 401k matches, health club memberships, fully subsidized healthcare premiums, flexible leave policies, and even lunches at the office.

If you don’t have perk policies officially in place already, start codifying. As you do, you can standardize your onboarding process and ensure equal treatment of employees. (Side Note: this is also a good time to hire an external or internal HR professional, if you don’t already have one.)

Finally, you can invest in corporate recruiting to attract right-fit talent for your team.

Don’t have time to find someone who believes in your company’s mission? In that case, hire a contractor to spend the time needed. You want to hire those who align with your company’s values, fit your culture, and have the essential technical and soft skills to be an asset to your company.

It’s worth spending a little more up front to prevent an expensive training loss and HR nightmare in a few months.

5. Check the weather.

Finally, a quick gut check: Is it really the right time to grow?

It may seem silly to pause and reflect when you see an obvious opportunity for growth. But it’s always worth doing your due diligence.

Make sure that scaling right now is the best choice for the longevity of your business. If your industry is healthy, your customer base is growing and your clients want more, then yes, it may be time.

A 2020 report from Gallup and TrueSpace, titled The Five Conditions Assessment, looks at the conditions needed for a company to make the next leap after the startup phase. Study this report and the five conditions present in growing businesses. It can help you navigate the awkward middle school years of your business.

The questions asked by the Five Conditions Assessment are a good starting place for your own self-reflection.

Is your business capable of growth and scaling? Are you and your leadership team committed to continuous learning? Are your people—your investors and employees—on board with growth, knowing that it will come with bumps in the road?

Be honest as you answer these questions. As you do, you’ll get a clearer picture of what growth can look like for your business to manage its assets in the coming months and years. Then you can continue building a financially savvy foundation. Give yourself the best chance for years of financial success ahead.

Deanna Ritchie

Deanna Ritchie

Deanna Ritchie is a financial editor at Due. She has a degree in English Literature. She has written 1000+ articles on getting out of debt and mastering your finances. She has edited over 40,000 articles in her life. She has a passion for helping writers inspire others through their words. Deanna has also been an editor at Entrepreneur Magazine and ReadWrite.

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