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5 ways to manage unexpected business expenses


Plant store owner checking finances on laptop while on the phone.

You don't have to blow your budget when your company is faced with unanticipated costs.

Unexpected expenses can make a serious dent in your finances. A good budget helps, but it pays to be proactive if you want to stay cash flow positive. Here we offer five simple tips to keep your business in the black.


Finder's Smarter Small Business series is presented by American Express. Reward your business spending with 150,000 bonus Membership Rewards points when you apply for the American Express Platinum Business card by 11 March 2020 and spend $5,000 on your new card within 3 months. New Card members only. T&Cs apply.

1. Have a charge card with no pre-set spending limit

A business charge card in your back pocket can give you some breathing room to cover unpredicted costs. These cards don't have a pre-set spending limit, providing more flexibility if your expenses increase unexpectedly.

You may be able to charge large amounts but remember that you'll need to pay off the balance in full by the statement due date to avoid fees. Charge cards work differently to business credit cards, which offer a set credit limit and attract interest when you roll a balance over from month to month.

Most business charge cards can be linked with accounting software like MYOB, Quicken and Microsoft Excel to simplify how you manage your expenses. Some cards like the American Express Platinum Business card are linked with rewards programs, boasting big bonus points offers and allowing you to earn points as you spend. This card also comes with a personal account manager, who can answer questions regarding expenses, working capital and financing requirements.

2. Insure your critical assets

You don't want to be caught out by a massive bill if a crucial piece of equipment breaks. This is why it's so important to insure your critical assets.

Physical assets can include commercial property, business vehicles and equipment. Relevant insurance cover types to compare and consider include commercial property, business equipment, business interruption, commercial vehicle and marine transportation insurance.

Your business may also want to consider key person insurance. This cover can be taken out against someone who is critical to the business and can cover revenue or capital. Similar to life insurance, it covers death, disability and illness. It's paid for by the company and the benefit is paid to the business.

There are also business insurance policies that can cover intangible assets including future profits and the business's reputation. You can compare the different types of business insurance and the potential costs on Finder.

3. Stay on top of your tax responsibilities

Track your finances and know what you can claim so you're not hit with a huge bill at the end of the financial year.

Your taxable income is based on your assessable income minus any deductions that you claim come tax time. As you're spending throughout the year, keep records to prove said deductions at the end of the financial year. This includes any purchases that are directly related to your assessable income-generation and are being used solely for business.

Another way to reduce your tax bill is through the ATO pay-as-you-go scheme. If you're not already entered automatically into the pay-as-you-go scheme, you can voluntarily enter it to avoid a large bill after you file your taxes.

You can see Finder's guide to lodging a business tax return for some tips. If you're unsure of what you can claim or you want to put it in a professional's hands, consider enlisting the help of a tax and financial specialist to manage your finances and deductions. Not only will it save you time, but it'll save you money in the long run.

4. Account for shrinkage

Shrinkage refers to the difference between recorded inventory and actual inventory, which can result in a loss of profits. It can occur as a result of an administrative error or loss of inventory due to theft, for example. Other potential causes include vendor fraud or damage to products while in transit.

Shrinkage damages the business's bottom line in terms of profit and other subsequent costs. For example, the company may need to increase its investment in security or lift prices, which could decrease customer demand. Whatever the cause and consequence, shrinkage is almost bound to happen and it's important to set aside a buffer in your budget to account for these losses.

5. Ask for help

If you're facing unexpected costs and are unsure what steps to take next, you can get free financial counselling available through ASIC. Depending on your needs, a financial counsellor can suggest ways to improve your financial situation, create a budget and negotiate repayment arrangements with creditors.

Disclaimer: This advice is general and does not take into account your objectives, financial situation or needs. Before applying for any of the products mentioned, please read the product terms and conditions and consider whether that product is right for you.

American Express cards offered, issued and administered by American Express Australia Limited (ABN 92 108 952 085).


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