7 Ways to Improve Your Business Finances
Discover how to streamline your invoicing, manage cashflow effectively and set financial goals in this guide to small business finance
Small and mid-sized business bosses have to consider everything from how to cut carbon emissions to making the most of social media marketing; but keeping a close eye on financial matters should remain a very high priority and a cornerstone of how you build for the future.
Here are some tips on how to improve your financial processes as a small business owner:
Speed up your invoicing process
Few small businesses can afford to see their invoices going unpaid for lengthy periods of time. The best and most reliable way of ensuring that you receive payments from clients in a shorter timeframe is by speeding up the process at your end of the equation.
By systematically and routinely sending out invoices at the earliest opportunity, you will very likely see significant benefits in terms of how soon your invoices are paid in full. In fact, there is often a disproportionate tendency for companies to pay their invoices quickly when they are received shortly after the relevant work has been completed.
Be clear about your terms
When a small business starts to experience problems in being paid by its clients and customers, financial concerns can quickly mount up. Therefore, from the perspective of directors and business leaders, it is essential that terms of service are agreed early and adhered to at all times – and you need to be certain that all relevant parties agree payment terms in advance of any work being undertaken.
Map out plans for cash coming in
In an ideal scenario, a company would see the cash it brings in piling up nicely and waiting to be spent on new projects, equipment, ideas and bonuses. In reality, most small businesses will need to reallocate funds they bring in to creditors, service providers, employees etc. To streamline and to optimise the way these processes work, plan as closely as possible where your cash will be used when it is received. As with so much else in the context of running and building a business, leaving as little to chance as possible is eminently preferable when it comes to managing money.
Set business and financial goals
It would be difficult to overstate the importance of setting clear goals when it comes to small business finances. Sketching out exactly where you want to be financially at various intervals in the future provides focus and contextualise any progress made in the business.
Play to your strengths
Small businesses or any organisation that is looking to grow and achieve sustainability in future should always focus on its key strengths. In the context of small business finance this means doing more of what is delivering profits and less of whatever activities are proving costly. The best route forward might not always be the one you had in mind but financial figures and simple maths can always be relied upon to illuminate the details the options you have at hand.
Don’t borrow more than you need
There can often be a temptation for small businesses to borrow more money than they need simply because the opportunity to do so presents itself. Finding the right funding can be vital to a small company’s early progress but borrowing too much money can become an unbearable burden later down the line.
There is always scope for small business leaders and company directors to keep learning about how to manage financial issues and practices more effectively. It helps to have access to relevant support and specialist advice as the more you’re able to learn about managing money, the better equipped you will be to build your business for the future.
When you’re running a small business of any sort it can be easy to overlook a whole range of finance-related issues in favour of other operational aspects you might find more engaging but it’s essential to your company’s success that finance remains at the forefront of your business strategy.
Emily Trant is Managing Director of Check Busines.