7 tips: How to manage small business finances

Small business owners are always faced with a variety of tasks. How do you take care of your finances?  This is an easy one to put off. And chaos ensues. Maintaining your small business finances and staying organized is easy with these seven tips.

 

1. Pay yourself.

It can be easy to try and fit everything into the day-to-day operations of a small business. A little extra capital can often go a long way in helping your business grow. Professor Alexander Lowry, director of the master of science in financial analysis program at Gordon College, said small business owners shouldn’t overlook their own role in the company and should compensate themselves accordingly. Your business and personal finances should be in good order.

2. Invest in growth.

You should set aside money and look for growth opportunities in addition to paying yourself. A healthy financial direction will allow your business to thrive. Edgar Collado, chief financial officer of Tobias Financial Advisors, said business owners should always keep an eye on the future.

“A small business that wants to continue to grow, innovate and attract the bestobiasfinancial.comt employees [should] demonstrate that they are willing to invest in the future,” he said. “Customers will appreciate the increased level of service. Employees will appreciate that you are investing in the company and in their careers. And ultimately you will create more value for your business than if you were just spending all your profits on personal matters.” 

3. Don’t be afraid of loans.

It can be scary to take out loans. Failure can lead to worrying about the financial consequences. In spite of this, you may face significant challenges if you want to purchase equipment or expand your team without the influx of capital from loans. You can also use loan proceeds to boost your cash flow so you can pay your employees and suppliers on time.

4. Keep good business credit.

You may need to acquire more commercial real estate, increase your insurance policies, and obtain more loans as your company expands. Getting approval for all these transactions and acquisitions can be difficult for businesses with poor credit. Pay off all your debt funding as soon as you can to maintain good credit. 

5. Have a good billing strategy.

Each business owner has a client who consistently does not pay its invoices and bills on time. Managing small business finances means managing cash flow to keep your company running at a healthy level on a day-to-day basis. If you’re struggling to collect from certain clients or customers, you may need to get creative with how you bill them.

6. Spread out tax payments. 

Make your quarterly estimated tax payment a monthly payment instead, suggested Michele Etzel of Bayside Accounting Services. This way, you can treat tax payments like any other monthly operating expense.

7. Monitor your books.

This is an obvious but very important practice. Even if you’re working with a bookkeeper, schedule time each day or month for reviewing and monitoring your books. Additionally, you will be able to become more familiar with the finances of your business, as well as gain insight into potential financial crimes.