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16 tips for managing your small business finances

How to get back in control of your small business cash flow.

As a small business owner, you know cash flow can be tricky. Between chasing invoices and paying employees, making your small business finance work can often feel like balancing on a tightrope. In this guide, hopefully, you'll find a few tips that will ease the cash flow crunch.

hand with pen

Tips on where to start

  • Review and upgrade your accounting

Review your current accounting measures and consider how well they are working for you. If you haven't already, hire a good bookkeeper or purchase DIY accounting software – even if you're a small business, a spreadsheet just isn't going to cut it. It is crucial that you keep accurate track of your income and costs.

  • Review your costs

This could be an obvious one but when things get busy, it's easy to lose track. So, make sure you're keeping track of all of your small business expenses. These can add up quickly, but reviewing them allows you to fine-tune where your money goes.

  • Make financial projections

Having clear financial projections is important. If you don't know where you want to get to, how do you know how you will get there? And more importantly, how much you need to spend along the way? Your main business plan will help you to anticipate and address possible future obstacles.

  • Don't get slack on invoicing

Send out invoices as soon as possible after providing goods or services.
Set payment terms of seven days to make sure that payments are not forgotten or lost in the process.
Always follow up on sent invoices. You can make this easy by creating set templates for email or SMS follow-ups.
Reference invoice numbers and cross-reference these with payments.

Tips for separating business and personal

  • Keep a separate business bank account

Mixing business money with your personal finances is a recipe for unexplained losses and tax-headaches. Keeping your business's money separate will make gauging profitability easier and help you to keep proper track of your expenses.

  • Keep track of what you put into your business

Keep accurate records of what you loan to your business. When your business starts making money, you can easily pay back the director's loan first before paying tax on the remaining profit.

  • Pay yourself first

This doesn't mean taking away all of the business' profits – start with 10% of the earnings. This is a good way to set aside money consistently and to test the profitability of your business. It also provides a safety net for unexpected expenses.

  • Remain frugal

Even though you pay yourself, don't get sucked up in the benefits of business ownership even if you can afford it. Set your salary as low as you are comfortable with and offer government-mandated benefits only. What you save now will give you more flexibility in future lean months.

  • Keep travelling costs to a minimum

Travel can be a great investment for your business – if it's done right. Don't overspend on luxurious travel and accommodation. This sets a bad precedent for employees and can be an unnecessarily large cost with little return. Plan your business trips as if you were paying for them yourself.

Finder survey: If you were going to start a small business, where would you get the money?

A business loan44.98%
I have savings37.47%
Government grants5.94%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023

Tips to take care of the bigger business issues

Don't let legal fees get out of hand. Look into reasonable costs for legal fees and consider whether your business can afford it. When engaging with legal services:
Make your expectations clear to your lawyer when procuring their services.
Choose the billing option that is the most cost-effective for your business, for example, hourly or per project.
Ask whether it is possible to defer payment until the project is funded.

  • For the more simple necessities, consider DIY legal documents

There are various kinds available online – why spend more than you need to?

  • Take care when expanding

Make sure expansion is done steadily and wisely. Pushing large amounts of money into expansions that are too quick and too drastic can be disastrous.

  • Hire a consultant for marketing and PR

If you have the capacity to complete marketing and PR efforts yourself but don't have the expertise, hire a consultant. You can gain the benefits of their expertise without paying for their services long-term. You just need to be willing to put in the work yourself.

  • Consider renting instead of buying

Leasing equipment instead of buying helps you avoid maintenance costs and can also prevent you from overpaying on equipment only needed for a specific period of time. You could also consider looking into other cost-saving measures, such as shared workspaces or renting out your own office space to others.

  • Don't wait too long before seeking a loan

An easy mistake to make is waiting until your business is in financial trouble before applying for loans or other credit. This is exactly when you will be least likely to receive financing. Apply when your financials are still in a good state. This way the loan can be used for expansion or as an emergency line of credit when you need it.

  • Make sure you have enough capital

Small businesses often do not have enough capital to get themselves through the startup phase. To prevent this, have three months' living expenses saved plus the amount you are expecting to need for the first three months' business expenses. Plan as if you expect to receive no business revenue.

  • Don't spend prematurely

Don't go big on business cards, sign writing, marketing materials, cars or inventory before any actual revenue comes in. This can create a cash flow blockage.

Compare business loan options

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Lumi Unsecured Business Loan
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
Valiant Finance Business Loan Broker
3 months to 7 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 80 lenders. Loans between $5,000 and $20 million are available. Request a call – your loan can be funded in 1 business day.
ebroker Business Loan
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
ScotPac Boost Business Loan
3 months to 3 years
$0 application fee
A business loan for any industry. Borrow between $10,000 and $500,000, with approved loans funded within 24 hours. Minimum monthly turnover of $10,000 and 1 year of trading history required.
Max Funding Unsecured Business Loan
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
Prospa Business Loan
3 months to 3 years
3.5% origination fee
Small business loans are available from $5,000 - $500,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $5,000 is necessary.
As a small business owner, if you're struggling to get your invoices paid on time, invoice financing could be an option to consider. It's a type of business loan that is secured by the unpaid invoices and comes with reduced risk, no asset requirements or interest payments.
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
ScotPac Invoice Finance
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
1 to 3 months
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.

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