The Finder app is here! 🥳

Get your savings sorted.

16 tips for managing your small business finances

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

Updated

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.

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.

small-business-finance-tips

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.

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

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Prospa Business Loan
$5,000
300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
Valiant Finance Business Loan Broker
$5,000
1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
OnDeck Business Loans
$10,000
250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
Max Funding Unsecured Business Loan
$2,000
300,000
1 month to 1 year
$0 application fee
An unsecured business loan from $2,000 that offers convenient pre-approval and no early repayment fees.
ANZ Secured Business Loan
$10,000
10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
Westpac Business Loan
$5,000
1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
ANZ Unsecured Business Loan
$10,000
1,000,000
Up to 15 years
$600
You can choose a fixed or variable interest rate
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
loading

Compare up to 4 providers

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.
Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
$10,000
100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
Scottish Pacific Invoice Finance
$200,000
100,000,000
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 $200,000 in invoices.
Key Factors Selective Invoice Finance
$0
3,000,000
From 1 day
$0
Get access to funds in 4 hours. Pay as you use with no minimum, up to 80% advance on invoices, no lock-in contract and transparent fees.
Note: Must have annual sales turnover between $500,000 and $30 million.
BCashflow Positive Invoice Finance
$100,000
3,000,000
From 1 year
$0
Get funded up to 90% of the invoice in 4 hours. No hidden fees, 1.8% of the invoice for the first 30 days, and 0.06% per day after. Note: Suitable for businesses with monthly turnover between $100,000 and $3,000,000.
Scottish Pacific Selective Invoice Finance
$10,000
1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
loading

Compare up to 4 providers

Picture: Shutterstock

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site