When you’ve got a business, keeping on top of your finances is a must. If not for the reason of affording outgoing expenses like wages, but so that if and when needed, you’re able to apply for things like loans. Why would you need to do that, I hear you ask? There are many reasons as to why you may want to apply for a flexible business loan, but one of the main reasons is to help expand your ever-growing small business. A well-thought-out cash injection can be the catalyst to grow your small business needs. Here are some tips on how you can improve your small business finance options. You can find a full set of business funding tips at Brand Stories.
Look at your credit report
You can also get ahead of the game by reviewing your own credit report before you begin the application process. Lenders use your private credit history to assist them to decide if you’re a risk or not, so it pays to understand what they’re going to discover. If there is an error in your report, you can contact the loan reporting agency and request a correction. If your credit report shows late payments or bankruptcies, you should include a letter explaining the situation and how It may have affected your score. This can ease the impact of these black marks against you and your business. Always be honest about your credit history and you’ll find it easier to get out of the black.
Keep expenses to a minimum
No matter whether your business has a small team or you’re running the enterprise by yourself, you’ll have expenses that will dip into your earnings. Keeping expenses to a minimum will help produce more money at the end of each month. Planning a year in advance for large expenses such as rent, payroll, taxes, interest, cost materials for goods and products, debts, utilities, and other operating expenses can help you in reducing the financial burden. They would also aid you in ensuring your cash flow position stays strong even in the tightest months.
Rent your business premises instead of buying
If, looking forward, you can see yourself wanting a business loan at some point or another, then you need to prepare sooner rather than later. Lenders need to see that you can be trusted with their money and that most importantly, they’re going to get their return. Think about how you handle your money and ask yourself whether you’d lend money to yourself. If the answer is no, then you need to take steps in improving your credit rating. Renting your business premises rather than buying helps build a credit report for your business because in the future, lenders will be able to access to payment records and decide whether you’re trustworthy enough.
Pay on time
Speaking of accessing records, lenders will be able to see if you pay on time or not, so it’s important to ensure that all of your outgoings (especially wages and utilities) are paid bang on time. Things like payroll, taxes, interest, cost materials for goods and products, and debts should be set up on a monthly payment too so that you can keep on top of your business finances.
Hire an accountant
If handling money really isn’t your forte, then you should consider hiring an accountant to do this for you. This way, building up a reputable finance report will be less of a worry on your part. Also, it gives you a chance to tend to other pressing matters.
Create a line between personal and business money
One of the biggest mistakes that business owners make is amalgamating their personal earnings and the business profit. This can make it difficult to establish a line between person and business money, meaning that that profits from the business are spent where they shouldn’t be. Open a commercial bank account for your business so that you’re able to easily differentiate what money is meant to go where. Not only that, having a dedicated bank account for your business helps when it comes to declaring taxes. Also, if you have numerous branches operating under the same parent company, it’s past time to set up a financial consolidation system (learn more about this on https://onestreamsoftware.com/solutions/financial-close-and-consolidation/).
Consider purchasing insurance
Finally, as an entrepreneur, insurance is one of the things you hate having to pay for your business entity, but ultimately you may need it. To establish a viable portfolio and manage small business finances, you need to spend some time investigating what’s correct for your company and your individual needs. Insurance gives you the much-needed monetary protection for your dependents, such as your kids or older relatives. Insurance also gives you financial security against your business should you run into any legal cases against you.