1. Keep business finances separate from personal finances

The number one small business money management tip is to keep your business finances separate from your personal finances. This is extremely important because otherwise, it can become difficult to keep track of what should be considered business expenses, revenue, business cash flow, and ultimately, profit.

Mixing business and personal accounts also puts you at risk of spending more money on personal items and expenses, which can put your business in danger if you're not extremely careful. Fortunately, this is one of the easiest money management problems to solve. Simply open business checking and savings accounts and be scrupulous about using them to deposit and disburse your company’s funds.

2. Create a budget forecast

Beyond keeping your finances separate, budgeting for your business is the most critical aspect of managing your money.

"The very first thing you should do is to create a budget. A business budget forecasts income versus the necessary expenses," says Ramsey Solutions founder and CEO Dave Ramsey.1 "Creating a budget in a brand-new endeavor for the first time will likely be an educated guess, so it doesn’t necessarily have to be accurate. However, the longer you run your business, the more precise your projections will become."

3. Don't fall behind on accounts receivable

Be sure to vigilantly keep up with accounts receivable. This will help tremendously with cash flow, and it will hold customers accountable for the money they owe you. Late payments are among the most common causes of cash flow issues. Use software to help you stay on top of things. Be clear about penalties for late payments in your invoices, and regularly follow up about payments until you've collected.

4. Always pay your own bills on time

Always pay your bills on time, because failure to do so will hurt your credit and may result in late fees. Simply pay your bills as soon as you receive them, or if you prefer to pay once a week or once a month, be sure to keep track of due dates and pay in a timely fashion. You can also set up auto-pay with your business online banking program to help you avoid late payments.

5. Build and maintain an emergency fund

Most businesses have slow periods where money becomes tighter. You should look for alternate sources of revenue for this reason, but if things become dire, you'll be thankful if you have an emergency fund for your business. This is a stash of money that can help you through the tougher times. Set up a business savings account and add to it regularly. Contribute to it just as if you were paying another bill. The difference is that you're really still keeping the money, and it can even earn you interest over time. It's not a bad idea to have a personal emergency fund, as well.

6. Don't be afraid to negotiate with vendors

Make a list of the vendors you deal with and the amounts that you are paying them. Then, look around at their competitors and see if you could get a better deal elsewhere. Before you jump ship, however, talk to your current vendors and attempt to negotiate lower prices. Some may be willing to offer you a better rate in order to keep you as a customer.

7. Improve your inventory management

Excess inventory is money spent that's not bringing in revenue, and inadequate inventory equals lost sales. Either way, your finances are taking a hit.

"Improving the way you manage inventory can help you manage money in your small business," says Rachel Blakely-Gray at Patriot Software.2 "Track how much inventory you have in your business to avoid crossing the fine line between having too much inventory and not having enough. Record inventory purchases and sales in your books and spend time monitoring how much you have on hand before ordering more."

8. Find ways to cut costs

This goes hand-in-hand with budgeting, but always look for ways to cut costs and save money. Negotiating with vendors is one aspect of this, but you should regularly review your bank and credit card statements and identify any frivolous spending plus less expensive alternatives. Figure out if you're paying for any products or services that you could do without, and be sure that you're maximizing productivity among your workforce. Wasted time is wasted money.

9. Learn more about accounting

Unless you have a background in accounting, you could probably stand to get more of an education in the subject. The more you understand about the ins and outs of finance, the better you'll be able to manage your own money and maximize it to help your business flourish. That doesn't mean you have to go back to school. There is plenty of free content online that can teach you what you need to know. It's just a matter of setting aside the time to view it and learn.

10. Use apps

Luckily, it's never been easier to manage your money, thanks to the technologies available to us today. There are numerous apps that can help you with just about every aspect of money management right from your computer, tablet, or smartphone. Research the ones that have the best reviews and experiment to find those that make your life easier.

1.  https://fitsmallbusiness.com/business-money-management-tips/

2. https://www.patriotsoftware.com/accounting/training/blog/small-business-money-management-tips/

 

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC