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How to manage your small business finances and keep costs down

How to manage your small business finances and keep costs down

What is a small business?

Small businesses are privately owned corporations that have fewer employees than a regular sized business. This business also has less annual revenue than a normal sized business. Small businesses recuperate many exemptions by the government because they don’t pass a certain threshold, they also might be eligible for a government grant to help them grow. There are many different types small businesses such as hairdressers, recruitment companies, bakeries and convenience stores.

Money management within a small business is very important to keep it running and for it to prosper. Getting paid is the most important part which needs to be in check as well as the cash flow. Getting paid on time is a big priority that the finance team need to take into consideration, for this you may hire an accountant or a bookkeeper to manage your books. The company directors still need to familiarize themselves with basic bookkeeping and money management activities to ensure that that they can understand credit, read bank statements and understand tax forms. Finance courses should be offered to finance staff to ensure they are up to date on the process.

To keep the costs down you will need to give careful consideration to the way you allow your customers to purchase the goods. If you allow people to pay via invoices on a 30-day term then you need to ensure that you factor this into your cash flow and chase the customer to ensure payment on time. It is better to have cash, debit card and credit card options to ensure you can get your money as soon as possible.

Here are some other ways you can manage your small business finances and keep costs down:

  • To keep on top of your finances you need hire a good bookkeeper, it is crucial that you keep accurate track of the income coming in and the costs involved. The business expenses can add up very quickly so daily reviews can let you know where your money goes to keep track of it.
  • A clear financial projection is important, always keep your main business plan updated as this will help you tackle any future obstacles. The finance team need to always keep on track with the invoices and ensure that they send them out as soon as possible. The payment terms should be set at 7 days to ensure the invoices are not forgotten or lost. The invoices should be followed up on via email to ensure you get paid on time.
  • Business and finance courses can help staff to be more productive in the finance team and can help the business flourish. London TFE offers business finance courses that can be completed over 2 days and is available all over the world.
  • In a small business, you need to keep records of what you loan to the business because when the business starts to make money, the directors loan is the first thing to be paid back before any taxes are paid.

Can't manage your business finances? Find out more about our business finance courses.