The blogging team at Rachel’s came across this very good article by Propell on dealing with financial stress in your business and they have consented to us republishing it for our readers. We hope you enjoy it as we did!
Financial stress can have a significant impact on your mental health as a small business owner. If you find yourself regularly worrying about your business cash flow or debt level, there are strategies you can put in place to help.
Here are our top tips to help you minimise any financial stress in your business.
Tip 1: Get organised
Step 1 in getting organised financially involves keeping your personal and business finances separate. The best way to do this is to ensure you have separate bank accounts.
It’s a legal requirement to have a separate bank account if your business has a partnership, company or trust structure, but it’s not compulsory if you’re a sole trader. However, if you’re a sole trader, setting up a separate business account allows you to track and manage your business expenses more easily.
Step 2 in getting organised involves setting up systems to keep track of all your financial transactions. This will enable you to keep up-to-date financial records to help with your business decision-making. If you don’t already have these systems in place, it’s a good idea to seek professional financial help.
Tip 2: Get professional financial help
You don’t have to go it alone in business. There are a range of financial professionals who can help, including bookkeepers, accountants and financial planners.
Definitely consider at least finding a good Bookkeepers who can help you set up automated systems to record your transactions, so you always have the latest financial information available for your business.
Accountants can help you prepare your financial statements and ensure your legal compliance with Australian Taxation Office requirements.
A financial planner can help you put strategies in place to achieve your short, medium and long-term financial goals.
Tip 3: Regularly monitor your business numbers
Regularly monitoring your financial numbers is vital when you’re in business. Don’t put your head in the sand and hope that your numbers will take care of themselves. Good financial management in business requires budgeting (forecasting your revenue and expenses) and then regularly monitoring your actual numbers to highlight any major discrepancies.
The earlier you identify a potential financial problem, the quicker you can take corrective action to help solve it. Regularly monitoring your numbers involves paying close attention to your cash flow to ensure you can always pay your bills on time. If you find that you’re struggling to pay your bills, you may be able to implement strategies to boost your cash flow, such as:
- increasing your sales,
- collecting money owing to your business faster,
- reducing or delaying your expenses, and
- Negotiate extended credit terms with your suppliers.
In other words, don’t let them get out of control. Don’t be tempted to increase your debt level if you’re already struggling to make your repayments. If you are struggling to repay your debts, seek professional financial help as soon as possible.
You should also talk to your creditors to try and find a solution. It’s in their best interests to work out a repayment plan that you can manage, rather than not getting paid in full (or at all).
If you have multiple business debts, it may be easier to refinance them all into a single loan with a single repayment to make your overall debt level easier to manage. Ideally, you should refinance this debt at the lowest possible interest rate.
Financial stress can be debilitating, but there’s help available for you if you need it.
These organisations can help you get back on top of your debt:
- the National Debt Helpline
- the Australian Taxation Office — supporting your small business
- Government business grants & programs.
If you’re looking for a way to reduce pressure by managing your cash flow, reach out, and we’ll be more than happy to help.
Propell is an Australian based fintech, helping SME’s to run and grow their business with payments, lending and cash flow products. They are different to other SME finance businesses because we aim to help small businesses take a holistic approach to their cash flow and finances.
Propell help small businesses understand their financial position a little better, and help them make the right choices for financial products that suite them.
You can learn more about Propell and Business Pulse by visiting their website here: http://propellme.com.au