Financial Advice for Keeping Your Business Afloat
Sitting down and managing your finances and accounts is never going to be something you look forward to. However, it is essential for keeping your company afloat and keeping heaps of debt at bay. Here you will find advice on how to find fresh cash flow and the best ways of managing your business’s finance.
New Business Financial Issues
The majority of start-up businesses aren’t profitable for the first few years of trade, therefore it’s not uncommon to find yourself losing money if you’ve just got into the game. That said, you need to ensure that your business isn’t haemorrhaging money, as this is a one-way ticket to failure. Take some time every week to evaluate your businesses expenses and incomings and see if it is possible to make cut backs or introduce a price hike for some of your products or services.
Problems with Existing Business
If you’re not a new business then losing money is unacceptable. It may be time to completely re-evaluate the way in which you’re currently operating and assess whether or not the prices you are charging and paying need to be changed. Try to find out where all your money is escaping from and try to plug the hole before it sinks your company.
Understand Your Cash Flow
Hundreds of businesses have gone under as the result of poor cash flow. This problem occurs most often when you’re operating on a credit system and your clients are either slow to pay or they don’t pay at all. You can find fresh cash flow by using invoice factoring to provide you with the finance you need during the time in lieu of payment.
A huge benefit of invoice factoring is that the factoring company will often chase up the payments for you – ensuring you get the payment, while providing you with the vital funds you need to continue operating. These payments can also be scheduled for more regular times, allowing you to plan your finances.
Separate Personal and Business Money
If you’re a family business or sole proprietor then it can be tempting to simply keep all your money in one place – especially if this is your only income. This is a very bad idea for a number of reasons but primarily for tax purposes and figuring out exactly how much cash your business has in it.
You need to calculate your profit after you’ve paid your staff (even if that’s just you) as it should be considered an overhead just like the rent/ mortgage rates. This will give you a much clearer picture of how much money your company is making, as well as making tax returns a lot easier!
Keep Accurate Records
If you don’t maintain organised records of all your companies then it will be very difficult to keep track of your finances. Make sure that you’re refreshing your records at least once a week and have an evaluation of your expenses at least once a month – by doing this you can stop wasting money and are able to pinpoint which clients are the worst at paying, allowing you to make the necessary changes.
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