No small business owner wants to be cash-strapped, but mishandling cash flow is quite common.
In fact, more than half (61%) of startups globally struggle with cash flow problems.
However, with a proper money management strategy, you can not only avoid spells of negative cash flow but also ensure that your company is on track to make profits.
Here are a few tips you should follow to always stay in control of your finances.
Monitor Spending
Every business owner should know how much money their company makes and spends daily, weekly, and monthly.
Without proper knowledge of your business’s spending, you might be accumulating bills that you do not even know about.
Many businesses have numerous accounts, such as savings accounts, credit card accounts, and checking accounts.
Ensure you have credible records on how much is spent or withdrawn from every account to stay in charge of account balances.
You can even outsource this role to an accounting company like Geekbooks so that you can focus on other business processes.
Be Aware of Deadlines
Without knowing when your business’s bills are overdue, such as credit card payments, account payables, or loan payments, you won’t have enough money on hand.
Furthermore, failing to be well-informed of deadlines will set your startup back with added interest or late fees and ruin vendor or lender relationships.
Therefore, make records of payments and set reminders when possible so you’ll never fall behind.
Separate Personal And Business Funds
Separating personal and business finances is essential for managing your finances.
Plus, company bank statements are beneficial for monitoring spending, reconciling the books, and tracking profitability.
Merging personal with business funds will result in muddled documents, leading to missed growth possibilities and overspending.
With your personal and business funds in a single account, you will be tempted to dip into your personal funds for business expenses and vice versa.
This will also make tracking outgoing and incoming money more challenging.
Develop A Budget
Setting time aside to develop and follow through with a budget can streamline how you manage your finances.
A well-planned budget aids you in setting revenue goals and expenses. With a budget, all the expenses you need to properly run your business are laid out before you.
With a knowledge of how much you should spend, you can manage your spending easier.
A budget will also predict the amount of profit your company will likely receive.
Manage Inventory
If you order excessive inventory, or run out of in-demand products regularly, causing customers to seek other alternatives, then improving how you manage your inventory can help your small business finances a lot.
Monitor your business’s inventory regularly to avoid traversing the thin line between not having adequate inventory and having too much.
Record every inventory sale and purchase in the company’s books and take time weekly to monitor how much inventory you have before purchasing more.
Create A Cash Reserve
Following these financial management tips will immensely improve your business’s cash flow.
However, we must also be prepared for the unexpected.
Therefore, keeping a cash reserve to aid you in managing money better when you are facing a slight hiccup.
To create a cash reserve, just open a company savings account.
An effective cash flow strategy is a key process that every startup owner must learn for long-term success financially.
With up-to-date and accurate accounting information, your business is better positioned to succeed.
Heck, I contributed to the sales by eating 8 myself.’ LMAO!