If you’re a small business owner, managing your business finances can be challenging, particularly if you don’t have much experience. Making small changes to your bookkeeping and taking advantage of a few handy tools can turn business accounting from a massive hassle to a walk in the park.
Are you ready to get smart about small business finance? Let’s do this.
1. Keep your personal and business accounts separate to organise your business finances
If you started your business as a sole trader you might not have separated your business and personal accounts. Get prepared for future growth by separating your finances now. Open a dedicated account for your business, and consider opening a business credit card account too.
Keeping all your expenses on your business credit card makes it much easier to keep track of your spending, but you’ll need to remember to pay it off on time to avoid interest. It will also help you if you need to access finance in the future and need to show a clear picture of your business expenses.
2. Use apps to easily log your expenses
There are many smart mobile apps which take all the hassle out of logging your expenses, no matter where you are or what you’re buying. Select and download an app (e.g. Xero Expenses), take a photo of your receipt, and the app will automatically convert it into a neatly formatted report.
Staying on top of your expenses helps you create a more accurate budget which will assist in making business tax time a breeze, meaning you can focus on what’s important – growing your business.
3. Sign up to an online tool for invoicing
Invoicing. Don’t you wish someone could just magically do it for you? Well, online invoicing tools can do most of the work for you. Signing up to an online tool lets you create one-off and recurring invoices quickly and easily, and issue them to clients online or via snail mail. Xero, for example, can offer integration for this with the expenses app.
You can save client details, payment terms, payment options, and late fees, meaning many parts of the process are automated after you’ve used them once. You will also be able to manage your accounts receivable.
If you have issues with late-payments, most tools will automatically follow up with clients for you. This encourages timely payments and creates a solid paper trail which you can use to pursue payments from difficult clients.
4. Create a cash flow forecast to control your business finances
Healthy cash flow means you’re able to invest in your business, deal with emergencies, and make plans for the future. Cash flow is the issue that causes 82% of business failures. On a more positive note, you’ll also be able to look for growth opportunities. To create a cash flow forecast, you’ll need to forecast your sales for the next year, then forecast your profit and loss, and then combine these forecasts.
PMG Finance can organise a loan and can help you take advantage of a growth opportunity if you’ve not got immediate access to the funds. We will assess your business cash flow quickly and viability for loan options which will allow you to take advantage of potential business growth opportunities.
5. Create a business plan
You’ve probably heard the saying ‘If you fail to plan, you plan to fail.’ This is especially true for small business. When you have limited resources and an unproven business, you need to have some type of plan that outlines what you’re doing, what your goals are and how you plan to get there. In a business plan, you describe your product or service and explain your financial management. When you are seeking finance, some lenders will want to see your business plan.
6. Compare types of debt and choose wisely
Debt isn’t always a bad thing when it comes to small business finances – it can actually help to kickstart your growth. This is where PMG Finance’s expertise comes into play.
For long-term growth, you’ll want to consider more long-term small business finance options like equipment finance loans. If you want to smooth out cash flow issues, invoice financing is worth considering to fund your business.
Before deciding to take on debt you should fully evaluate your finances, consider your plans for the future, and chat with one of the team at PMG Finance who will assist with your options and crunch the numbers.
7. Involve expertise in your business
Having regular check-ins with your accountant and finance broker is always a good idea. With your business goals in mind, they can be a part of achieving your business success.
Start organising your small business finance today and you’ll be on track for success.