Money Management Tips for Business Owners
Small business owners face many different challenges everyday, but undoubtedly, at the top of the list is money concerns.
Here are a few of the many tips to help you manage your business money more efficiently and effectively. These are practical tips that are easy to put in place no matter what type of business you operate.
Negotiate before signing a contract
Always negotiate before signing a contract! Trying to negotiate on a price with suppliers before signing the contact can often pay off in your favour, resulting in a better deal for your business. Examining purchase terms such as late payment penalties and grace periods when making your decision is always a sensible idea.
Pay your bills on time
You should treat your business bills in the same way you treat your personal bills, paying them all on time!
Not making the payment at the correct time can result in a devastating impact on your business finances. Late credit card and loan payments, for example, often attract large amounts of interest. Small late fees to suppliers and utility providers consistently adds up too. Tax is also a factor to not be overlooked. Paying late can result in serious and costly penalties.
A simple solution is to create reminders. This will not only help prevent missed bills, but it will also provide you with the opportunity to plan ahead.
Don’t mix business and personal expenses
There is a long list of reasons why mixing your personal and business finances is not a good idea – including tax issues, personal liability, and messy account records. Separating your finances also makes it easier to track business progress and report income. If things become tight, resist the urge
to mix your personal and business funds, as it is guaranteed to create a mess that you will have to deal with at a later date.
The best and easiest way to separate funds is to open a bank account exclusively for business transactions. This way you will always know how much cash your business has and be able to avoid wasting time with budgets, overspending, and making errors on your tax return.
Although separating funds seems daunting, it doesn’t have to be, and the end result is worth the hassle.
Create an emergency fund
Never underestimate the power of saving. It is highly likely that at some point unexpected expenses will come up, if they haven’t already. It is important to consider all the options and where an unexpected cost could come from. Some examples would include vehicle break down, equipment maintenance and supplier price increases. If a piece of equipment is vital for your business to function every day, what is your plan if it suddenly needs repairing?
By depositing a percentage of your earnings into a business account regularly, you will be able to build a nice sum of money that you can fall back on in an emergency, preventing the need of reaching for the credit card.
Riley Moss offer free consultations with an accountant to discuss how we can help you with financial budgeting and forecasting. As business consultants, we offer independent input to implement best practice that will free up management time and provide you with accurate timely financial management information for better decision making.
The more you understand your business finances and cash flow, the better prepared you’ll be when making day-to-day money management decisions.