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If you’re a business owner, you’ll find these ten money management tips helpful.
Review Your Books Regularly
Carve out time to look at your accounts. You may do this daily, weekly, or monthly. This enables you to keep tabs on the financial state of your business and know whether you’re improving on your past performance indices. And if things aren’t as you hoped they would be, you can find the gaps and work to fix them.Plan Expenses
Have a budget for your expenses, and do all you can to stick to it. Planning for future spending—whether it’s short, medium, or long term –will keep you in charge of your finances. Your budget should be realistic but also aim to attain broad bottom lines.Invest In The Future
If you want your business to keep growing, you’ll have to reinvest a decent amount of your profits into it. The actual percentages are up to you. Be deliberate about what aspects of your operations you choose to support with additional funds. Make sure they’re the ones that have the greatest growth potential and are yielding good returns.Track ROI From Spending
Run your business with a returns-oriented mindset. When setting out your list of expenses, ask yourself whether they’ll contribute to more returns for the business, and how much they’ll do so. By working this way, you’ll be able to spot unnecessary expenses and eliminate them from your budget.Separate Business And Personal Expenses
Sometimes you’ll be tempted to finance your business from your personal accounts. This could happen if things get tight with your business. But it’s almost always a bad idea to mix your personal and business finances. This could make records reconciliation difficult, and raise tax issues somewhere down the line. You may also run into problems with your personal finances too.Sign up to the Connect Nigeria daily newsletter
Collect Invoice Payments Faster
Come up with ways to collect payments faster. One strategy would be to get your invoices to clients more quickly. This could reduce the time between product or service purchases and payment for them. Another tactic would be to offer small discounts for early payment (if this doesn’t cost your business much).Negotiate Terms With Your Vendor
You may secure concessions from your vendors that allow you more leeway with your finances. For instance, you could get lines of credit with more favourable timespans to repay. There’s more on this in our article, How to Get Lines of Credit from Your Supplier.Stay Well Within Deadlines
Do what you can to pay your bills on time. This will keep your business creditworthy—something that will count in your favour when you eventually decide to take out a loan. It could also help the business stay within the zone of profitability at the end of an accounting period.Cut Costs
Examine your records for expenses that your business can do without, and eliminate them. Also look at other costs, from office supplies to power, and seek out ways to reduce them. Find out ways to do things more efficiently and cost-effectively. You’ll find tips here: Five Ways to Reduce Business Costs.Maintain A Cash Reserve
Set aside some money for the rainy day. This is good advice for personal finance; it’s also great for businesses. It may be challenging to achieve if you’re running on tight margins, but it’s always worth doing.Final Words
The simple tips we’ve explored here could transform your business’s finances. Implement them starting today, and watch the positive effects begin to unfold. Featured Image Source: NairametricsGot a suggestion? Contact us: editor@connectnigeria.com