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Any business can be hit by the occasional unexpected expense, from a surprise bill or an office mishap that needs a pricey fix. If you’re prepared, you can wriggle out of a tricky financial situation, with some savings, a good credit rating and some savvy budgeting. Don’t be hit with a surprise bill, and get your finances in order with this guide.
Build A Safety Net With An Emergency Fund
A safety net of savings can save you in an emergency. You should aim to have a few months of expenses saved up. If something disastrous occurs, you’ll be able to keep business afloat even if you aren’t earning.
Having money set aside can be useful in many different circumstances. If you have some money set aside, you can avoid having to borrow money at a high interest rate. You’ll also have some funds ready if a surprise business opportunity comes your way, like buying out another company.
Plan Ahead With A Budget
A smart budget is an essential for any savvy business owner. Plan ahead for events that can happen to any business, such as repairs to company cars, or an IT incident. If you have a fund for such things set aside, it won’t come as a surprise. A great way to save some cash as on a common business expense is your to use fleet fuel cards. If your business runs a fleet of vehicles, for deliveries or otherwise, a fuel card from Watchcard can work out a lot cheaper than always forking out for fuel.
Stay On Top Of Your Credit Rating
A good credit score is a very important thing for a business to have. Most businesses have to borrow money at some point, whether as a start-up fund or in order to grow the business. A high credit score shows any lender that your company is good with money and can be trusted with a loan. You can secure a lower interest rate with a high credit score too. If you take out loans for your business, stay away from interest and expensive lines of credit to keep your finances looking healthy.
Keep A Hard Line Between Personal and Business Finances
If you’re a business owner, the lines between your own money and company money can easily become blurred, especially if you run a small business. To avoid this, keep your personal and business bank accounts separate so you can tell at a glance what money goes where.
Keeping the accounts separate will make your life much easier when it comes time for your tax return. It also stops you from ending up out of pocket personally if you’re patching up holes in the company finances. The business can also take a hit if personal spending is happening on the company account. Be strict with the company credit card, and protect your finances.
Invest In Technology
Online software can be a very useful tool for managing your business finances in a practical way. Bookkeeping software can be used to manage everything from your taxes to your budget and your payroll. With these programs, anyone can master a basic knowledge of handling the money. With an accountant, you can really make the most of these tools to keep your records in good order, and keep your bank account flush.
Get The Hang Of Negotiating
If you can manage to negotiate with your vendors before you sign a contract with them, you can end up with a really good bargain. Before you start trying to haggle, know what you want to achieve with the negotiation. Do you want to change purchase terms like penalties for late payments, or grace periods for arranging a deal? Do you want an extra few days on your payment terms or just a lower price? Think what will be most helpful for your business. Is a discount out right more valuable than having an extra month before you need to pay up?
Make Debt Reduction A Priority
If you’ve had to borrow money, whether with a small business loan to get started or a loan later on to cover unexpected costs, you should prioritize paying your debt down as soon as you can. Debts can damage your credit rating, leaving you struggling to manage payments and in bad shape for any borrowing in the future. Try not to carry debts into different financial years. If you’ve borrowed, aim to pay it off before the new financial year starts, so you can start fresh.