Whilst running a business presents you with a number of hurdles and challenges, nothing is as big of a concern as money. No small business owner likes being strapped for cash, and keeping on top of your accounting is an integral part of a successful business module. If you’re struggling to control your business funds, this is the article for you. Today, we have a look at some incredibly simple ways for any business owner to manage their money. By following these practical and effective tips, you’ll find yourself being a lot more confident when it comes to your business finances. Read on to find out more!
Don’t Mix Personal Funds With Business Funds
One of the key rules to follow in small business accounting is to never mix your personal funds with business funds. Some of the reasons to avoid doing this include personal liability, tax issues and convoluted accounting records. Keeping your business and personal finances separate is essential when it comes to reviewing your bank records and figuring out if you qualify for certain write-offs. The last thing you’d want is to miss out on is a deduction because you weren’t able to organise your financial statements! Always adhere strictly to keeping personal funds and business funds separate from one another, and you’ll find that managing your money becomes that much easier.
Stay On Top Of Your Deadlines
If you’re unaware of the bills you have due, you run the risk of not having enough funds to pay it all off. This is why keeping on top of your deadlines is an absolute essential when it comes to managing your money wisely as an SME. Furthermore, failing to meet your deadlines can result in added interest of late fees, lower your business credit and tarnish the reputation of your business. It is important that you carefully keep track of all your accounts payable and pay them off in due time in order to stay on top of business finances.
Be Frugal With Spending
Just like you’d want to be frugal with your personal spending when trying to manage your own finances, it is important that you’re also just as frugal with your business funds. You needn’t go to extremes to save on business expenses, but you can take small steps such as buying second-hand furniture, refurbished computers and go green to save on money and utilities.
Do you have any idea how much money your business is spending each day? Keeping note of all your expenditures and then filtering through them to see what you could do without is a fantastic way to eliminate unwanted spending. Small expenses often add up at the end of the day, so curbing unnecessary purchases is a fantastic way for your business to stay on top of its finance game!
Negotiate, Negotiate, Negotiate!
Do you often purchase supplies or stock from vendors? If so, we urge you to try and negotiate before signing contracts or finalizing purchases. Sometimes, you have to try a little to get a good bargain or negotiate for a better deal. If you have a good relationship with your vendors, chances are you’ll be able to get a discount or come up with a deal that benefits both parties. Don’t forget to look into purchase terms like late payment penalties and cooling-off periods when making your decisions – sometimes being given an extra month to pay could save you up to a 10% discount.
Have A Cash Reserve
Last but not least, regardless of all the steps you take to stay on top of accounting, unexpected things happen. This is why we advise all SMEs to always keep a cash reserve aside. Keeping a small business cash reserve can truly help you out when you need last-minute funds, or if an unexpected bill creeps up on you. Make it a point to regularly deposit into your cash reserve to ensure that it is always at a healthy balance and ready for you to use should you need to at any point!