Money management is not simple for individuals, and it doesn’t get any easier as a business owner either. Entrepreneurs have a tough time managing the company as it is with too little time available. Nevertheless, when the finances of the business aren’t organised and planned well, it can lead to confusion and a financial cash crunch down the line.
Here are 5 ways to manage business finances better.
1. Be More Frugal as a Business Owner
Being frugal doesn’t mean switching from a spendthrift to someone who won’t part with a dollar. However, what it does mean is looking at where the money is going and not spending automatically.
It’s also beneficial to begin to cast a critical eye across all spending to look for cuts that will save money but won’t affect the operational viability of the business. Reductions in spending shouldn’t be visible to customers who may wonder why and slow down their orders.
2. Take Advantage of Discounted Payment Terms
Discounts are sometimes offered when paying an invoice early. While the reduction in the bill won’t be huge, there’s often 5 percent up for grabs when paying quickly.
If you’re not strapped for immediate cash so that you can pay invoices in a timely manner, then future savings are possible to the negotiated sales price.
3. Expand Carefully
The pursuit of rapid expansion has been the end of many Australian businesses. Certainly, trying to get into too many markets at once becomes very expensive with sales revenues often trailing expenses creating a cash flow issue with rapidly growing companies.
It may seem counterintuitive, but not expanding too quickly is safer for a newer company. Growing studiously and with each step weighed up carefully is the best approach to avoid setbacks.
4. Use Business Finance for Specific Purposes
Just like with personal finance, borrowing should be for a specific purpose. This might be to purchase essential equipment or to cover an unexpected series of expenses.
Using business loan broker services in Melbourne, Australia is useful because it’s possible to find more competitive deals. Companies like ONYX Finance understand what small businesses require and put their best people to work locating the most applicable loan possible.
5. Ensure Staff are Multi-Skilled
With staff who are trained to be multi-skilled, they’re able to cover other staff absences by stepping into another person’s role with ease. This not only covers holiday periods but maternity leave and other situations too.
The smaller the company, the more flexibility is required from the staff. Because the business doesn’t have the money to employ a huge workforce, everyone has to muck in. With the finance department, this means that the Bought Ledger Clerk must able to handle the Sales Ledger Clerk’s duties in their absence. Ditto, the receptionist should answer calls, handle mail and more.
When managing the company’s finances with an eye to prudence and getting value from every dollar spent, financial waste is avoided. This bodes well for future profitability but also surviving the lean times too.