5 Ways To Manage Your Finances As A Business Owner

published on: November 30, 2022 last updated on: May 17, 2024
your Finances

Managing your business’s finances is one of the principal elements of running a successful business. Your business can only remain sustainable by expanding margins over time. If a business is not making profits for long, it is doomed to fail.

Efficient business finance management means optimizing fixed costs and expenses while enhancing sales and making a smart investment and expansion decisions feasible for the business. It also means using quality resources and tools that optimize business operations, resulting in high revenue turnover.

You may have to make tough decisions regarding revamping the business’s financial situation if you identify certain pitfalls. For example, you may have to pull resources or investments from one part of the business if you are still waiting for the desired results. Alternatively, you may have to increase your marketing and advertising budget if you experience falling sales.

It might get more difficult for a startup or an entrepreneur, as they usually have to keep investing in the beginning until they see positive results. However, lucky for you, we are here to help you with such problems.

Top 5 Ways To Manage Your Finances

Manage Your Finances

1. Enhance Your Business Financial Knowledge

To make informed financial decisions, you must be aware of technical and financial knowledge. Even if you hire the most qualified accountants and finance professionals, the ultimate business financial planning falls on you as a business owner. 

To make it easier, you can enroll in accelerated programs such as an online MBA in finance to learn how to make and analyze financial statements, budgeting, resource allocation, asset valuation, risk management, etc. 

Your financial advisor or business portfolio manager will only be there for your assistance. 

busieness finance

2. Plan Your Business Financials

Staying on top of your financial planning will help you assess your business needs. For example, if you are in financial debt, you should prioritize paying off your debts before hiring new resources. 

Keeping your books organized and updated can help you plan and create the right business model. For instance, you can plan to spend 50% of your income on operating expenses such as payrolls or supplies. You can allocate 30% of the revenue to expansion plans and recruiting costs. Similarly, the remaining 20% could go for new product and service development. 

However, with changing circumstances, you might have to change your model. Try to be flexible and realistic to make the right decision at the right time. Effective planning can help you with that.

Also, consider your tax planning and ensure proper tax reporting in the financial statements. It will help you apply for a tax rebate.

Business Financials

3. Manage Your Cash flows

Make your cash transactions easier by using accounting software to track cash inflows and outflows. Cash inflows relate to the sale of goods and services, while outflows depict account payables. Your cash inflows must exceed outflows to make a profit. However, the size of the difference may vary each day or month. Some days, your cash outflows may exceed inflows. But by the end of the quarter, it must reflect a positive change to cover for the negative flows.

Alternatively, if you expect an increase in cash outflows, your inflows must increase at a greater rate to strike a balance. See if your business is experiencing negative cash flows consistently. If so, try to find out the root cause of it and restructure some aspects to avoid such cash dips.

It is also important to have enough cash in hand, including bank balance and liquid assets in the form of bonds and stocks to last you a couple of quarters. It acts as a hedge against minor setbacks. Moreover, you can strategize effectively to keep your cash flows in check.

For example, consider setting specified payment dates with your supplier for steady cash flows. Moreover, reduce credit terms period to encourage customers to pay on time. It will help you manage your cash flows effectively.

Cash flows

4. Automate Your Payment Process

As your business expands, you will have to keep up with multiple payments simultaneously. Automating your payment process by using software and opting for automatic bank transfers is better.

For example, you can use payroll software with direct deposit, ensuring employee payments automatically and on the same monthly date.

You can also use other finance software to automate payments to your suppliers. Alternatively, also automate the payments that you receive from your customers. You can do that by encouraging them to subscribe to your service. Subscribed services enable automatic payment deduction from the customer’s account, eliminating the problem of delayed payments.

Moreover, introducing an ERP system will let you track each business transaction, record it and create audits automatically, eliminating receipt duplication and preventing unauthorized transactions.

Payment Process

5. Keep Your Business Credit Score in Check

Every business finances its operations with a debt and equity ratio. You must make sure to keep your debts lower than your equity.

You may need to take out a business loan more than once to purchase equipment or stabilize your cash flows. However, you should not pile up your debts and delay paying them. As you may receive a bad credit score, and then you will have to pay higher interest rates, or banks may refuse to lend with a bad credit score.

Make sure you only take the loan you can afford and pay it back in time. At the same time, ensure that you inject the loan amount into viable investments and in purchasing fixed assets, resulting in a steady income flow.

Credit Score


You must have enough technical business financial knowledge to take charge of your company’s financials. You may enroll in accelerated online programs and learn all about business finance.

Moreover, plan and forecast your business financials to assess your income and expenses and allocate resources accordingly. It is also important to manage your cash flows and keep cash inflows higher than outflows.

Automating your payment processes would be wise as your business expands. It includes making payments as well as receiving them from your customers.



Sumona is the publisher for Finance Team. In terms of professional commitments, she carries out publishing sentient blogs by maintaining top to toe on-page SEO aspects. Follow more of her contributions at SmartBusinessDaily and FollowtheFashion

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