Money Management for Small Businesses

As a small business owner, you have a lot to juggle — especially when it comes to finances. Although it’s easy to feel overwhelmed by these responsibilities, the good news is that you can take control of your company’s well-being through smart money management.

Here’s what that means, why it matters and tips to help you get started.

What is money management?

Money management can describe a lot of things, and it’s not just for small businesses. Individuals, families and even the biggest corporations all leverage money management solutions to help protect their finances.

 In simple terms, money management is anything you do to take care of your wealth. That includes:

• Tracking expenses
• Making smart investments.
• Reducing debt.
• Creating and sticking to budgets.
• Using credit wisely.
• Planning for the future.
• Choosing the best savings accounts.

You’re likely doing some or all of these things already. However, to continually do what’s best for your small business, you should always be learning new tips and tricks.

4 tips for small business money management

Ready to take your small business money management to the next level? Make sure you’re doing these things:

#1: Know where your money is

This one seems easy — but as your business grows, you may realize that you have money in all kinds of places. Keep records of what’s liquid, what’s in savings, what’s tied up investments and what the grand total should be. This doesn’t just give you a more accurate view of your finances; it also helps you notice any errors or red flags before they become big problems.

#2: Separate business and personal accounts

Try to keep business credit cards, bank accounts and lines of credit as separate from your personal life as possible. You won’t just help protect your own money; you’ll also make it easier to track expenses and deductions when tax season rolls around.

 #3: Track cash flow

Cash flow is a good indication of how your company is doing overall, but it’s also a must for managing loan payments and meeting other obligations. If your money isn’t moving, it may be time to review billing practices, boost sales, refine your ordering habits or make spending cuts where possible. On the other hand, if your cash flow is great, take this opportunity to learn what you’re doing right so you can keep doing it.

#4: Choose a consistent accounting method

If you’re juggling finances on your own, it might be tempting to skip formal accounting methods and do whatever works. However, it’s easier, smarter and sometimes even safer to stay consistent — that way, you won’t confuse yourself and end up missing something important. The U.S. Small Business Administration describes two main accounting methods:

• Accrual: You put transactions on the books as soon as you make a sale.
• Cash: You put transactions on the books only after payment is finalized.

Want more money management tips? Reach out to a Vectra Bank professional for all the help you need.