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Having a financially healthy business is relatively easy to achieve if you keep a close eye on your cash flow and commit to following a few simple techniques. Here are 5 key tips for managing your small business finances.
A recent study found that 82% of businesses fail due to cash flow mismanagement. You should always have enough cash on hand to cover several months of operating expenses in case of an emergency. In order to stay cash flow positive and keep your business thriving, be proactive by securing capital prior to encountering severe cash flow issues. One helpful option is a business line of credit which can help keep the business running smoothly without any gaps in cash flow. It’s an excellent option for business owners who want the peace of mind of knowing they have access to available funds at all times.
One of the major components of successfully managing your small business finances is staying on top of billing. This means doing your part to help your company receive prompt payments like sending out invoices in a timely manner. Ensure payment terms are clearly laid out and make it easy for your customers to pay by accepting digital payments. If you find that you’re waiting a long time to collect on unpaid invoices, consider implementing shorter payment terms. Having too much money tied up in unpaid invoices can lead to major cash flow problems, so it’s important not to fall too far behind. Invoice financing can help you get advance payments on outstanding invoices and make waiting on payments from customers a thing of the past.
As a small business owner, you’re likely strapped for time on a daily basis. But taking some time now to organize and categorize expenses and digitizing whatever paperwork you can, will save you time in the long run. In addition, try to commit to spending a few minutes every day reviewing your financials like expense receipts and sales. If you don’t stay organized and on top of bills, payroll, or sales reports, you can do long-term harm to the financial health of your business. Plus, not doing a daily finance check could cause you to lose sales receipts and other important documents that are vital to keeping accurate records.
When business is booming, it can be tempting to spend money haphazardly and without tracking your expenses. But expenses can add up quickly and without a good handle on what your expenditures are, you’ll struggle to remain profitable. It’s important to avoid making spur-of-the-moment purchases and to be diligent about creating a budget and sticking to it. You should have a system in place to track every single one of your business expenses.
An accountant can give you insights into when to grow, invest, and save. In addition to filing your tax returns, a CPA can maximize your business expense deductions helping you lower your taxable income. An accountant can also assist you with developing a financial strategy for your business and give you a clear picture of your company’s financial health. This information will enable you to make sound financial and business decisions, such as when to expand, hire additional employees, or invest in new equipment.
Too often, small business owners sacrifice growth and opportunity because they are shut out by big lending companies or are overwhelmed by where to start. Unlike typical lending institutions, SBG Funding is efficient in helping you access financing that is not limited by the same time-consuming, stringent regulations as traditional banks. For more information about how we can help your business grow, click here.
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