Tips For Better Business Finance
For all entrepreneurs, the financial stakes are critical. This is especially true for start-ups or growing businesses, which too often lack dedicated accounting staff and don’t know where to turn when it comes to financial management. Which invoices should be paid first? How to manage the bank account optimally? How to plan and organize the company’s budget? Without sound financial management, an SME risks having to deprive itself of the employees necessary for its growth, to stop developing its products, to leave business development initiatives in the air or to be unable to obtain the equipment. It needs to be profitable. This is a major risk for any SME. You must look at what you may have to pay out, such as wages, taxes and more. You should speak to an accountant or tax advisor to get better advice.
Make every dollar count
How to avoid losing the north when it comes to budget planning and management? Using a good cash flow management framework. These correspond to the inflows and outflows of money in your business: they are the basis of your budget planning. Managing them effectively will ensure that every dollar in your company is used as efficiently as possible. In particular, you will be able to:
- Assess your liquidity, forecast your expenses, analyze your needs;
- optimize the use of your cash and ensure your ability to honor your short-term commitments;
Calculate your capital burn rate;
- Find new sources of financing by facilitating the engagement of lenders;
- Assess whether your projections are accurate or not, validating your forecasts on a regular basis.
Tips for managing your cash flow
Since you are looking to maximize the use of every dollar, you must structure your cash flow in such a way as to accelerate the inflows of money (income and capital), decrease or delay the outflows (salaries, suppliers, equipment, etc) and constantly monitor your finances. Here are some tips to make it happen:
- Use a credit card to pay off your liabilities. You save a month to pay off the balance and accumulate reward points that you can then redeem.
- Make sure you keep only the inventory needed to serve your customers. Unnecessary inventory can become a burden on your business, in addition to incurring management and warehousing costs.
- Delay the payment of your creditors: Many providers allow payment within 30 days, sometimes longer. Take advantage of this option when it exists and negotiate with suppliers who do not offer it.
- Structure your employees’ compensation to link it to cash flow. It’s about offering a lower salary, along with short-term bonuses tied to your goals. Several options are available to you, such as giving the opportunity to acquire shares in the company or paying bonuses linked to obtaining new contracts or a certain volume of sales.
- Rent non-essential equipment: By choosing to lease rather than buy, you will limit the significant expenses that can burden your business. Several financial institutions offer finance leases, which will allow you to become the owner of the property after a certain period of time.