7 Quick Tips to Get Your Small Business Finances in Order

By Rashan Dixon

Starting a small business requires an entrepreneurial spirit. However, running a successful company involves more than just gumption; it also requires knowing your way around business accounting and bookkeeping.

Some business owners turn to outside help to navigate their business finances, but most try to go it alone. As research from payroll service provider OnPay shows, fewer than a third of smaller organizations use external accountants. That means the vast majority of small business owners handle money matters entirely in house.

If you’re one of these business owners, here are some best practices to make sure your business books are in good shape.

7 ways to get your small business finances in order

1. Work from a budget

Being in control of your money starts with having a well-considered business budget. Even if you only share your budget with your co-founders or investors, you still need one to stay on track. Without a budget, your company could easily fall into bad habits, such as unnecessary spending or overspending.

Over time, maintaining a budget will have other upshots. First, you’ll get the benefit of a historical baseline. That is, you can use your budget as a gauge of whether or not you’re on target year to year. Secondly, if you apply for loans, your legacy budgets can show lenders you’re not a credit risk.

Budgeting tip: If you’re new to making a budget, you can make your life easier by purchasing a subscription for budgeting software.

2. Stay on top of billing

Do you have a set billing cycle, or do you just send out bills whenever jobs are finished? When you’re a one-person operation, you may be able to bill at will. However, to establish and eventually scale your business, you’ll need to streamline your billing processes.

To begin, consider investing in a customer relationship management (CRM) system that can also automate billing. Having information about clients at your fingertips will allow you to initiate invoices consistently. That means you’ll have less trouble predicting cash flow.

Billing tip: Don’t be afraid to collect money owed to you. Stay true to your terms and enforce all late payment penalties. Being strict across the board tells your customers you won’t let them slide.

3. Organize business finances by ditching the paper

Most businesses have moved to paper-free operations, which makes sense for a number of reasons. Paper-free financials work well if your team works remotely—and it's anticipated 70% of workers will be working remotely by 2025. Being able to log into your spreadsheets and profit-loss statements from anywhere makes life easier.

Online accounting may help you improve accuracy and limit redundancy, too. When you’re submitting information into one robust platform, the numbers can automatically populate where appropriate.

Paperless finance tip: Do some research to find out which providers other business owners in your industry prefer for their online accounting, so you don't have to start from ground zero.

4. Automate all regular bills

Rent. Internet. Subscriptions. You pay these regular bills every month so consider automating those payments if you haven’t already. You’ll still want to look over invoices for discrepancies, of course, but you needn’t take it upon yourself to physically write a check for every bill that’s sent.

Once you get your small business finances in order by automating your bill payments, you’ll be rewarded with more time. Plus, you’ll avoid costly last-minute rushes to make payments, or the need to fork over late charges for missed bills.

Automated billing tip: Review your recurring bills yearly, or twice a year, to see if you can automate any additional payments. Also, ensure you always have enough money in your accounts to pay your automated bills.

More articles from AllBusiness.com:

• How to Choose and Set Up a Bookkeeping Software System for Your Small Business
• 5 Incredibly Simple Ways to Automate Your Small Business
• Strategies for Reducing Financial Stress and Improving Your Finances
• Maximize Your Efficiency by Automating Inventory
• What Factors Should I Consider When Choosing a Business Bank?

5. Prioritize money-making products and services

It’s fine to take risks as an entrepreneur; risk-taking is a big part of what makes entrepreneurs take the chance of launching new businesses in the first place. Nevertheless, you can’t afford to burn through your cash by ignoring your core products or services. Learn which of your offerings earn you the most profit and then grow that lineup. This will allow you to test and explore other ideas while you're still earning an income for your organization.

High-performance sales tip: Not sure which products are bringing in the most cash on a regular basis? Use financial spreadsheets and data analysis to figure out what’s hot, and what’s potentially causing a loss.

6. Stay on top of pricing

When you’re a small business, you want to remain nimble. Sometimes, adaptability can take the form of quoting different prices to different clients. When you only have a handful of clients, keeping track of variations isn’t too challenging. What happens, though, when your business begins to scale?

It’s fine to offer coupons and variable rates. In fact, your marketing department and salespeople may recommend this type of flexibility. Still, you want to keep strict records to make sure you appropriately bill every customer. The last thing you want is for clients to feel dissatisfied, or to undercut your cash flow.

Pricing pro tip: Whenever you try a new pricing mechanism, keep a close eye on the statistics. Many companies use regular seasonal variations in pricing to move products or encourage purchases. By manipulating your pricing based on cash flow data, you can better manage your sales pipeline and profits.

7. Hire thoughtfully

Part of getting your small business finances in order means paying attention to payroll costs. If you are considering to grow your team, think twice. You might be able to get the same results from working with independent contractors. The gig economy is over 57 million Americans strong, according to Statista. Lots of folks are just waiting to wow you—and you won’t have to worry about payroll taxes, just 1099s.

This doesn’t mean you shouldn’t bring on full timers or part-timers again. Nonetheless, hire with prudence. It might be better to rearrange the staffers you currently have and outsource one-off projects than to grow your team.

Hiring tip: Invest in talented employees from the start. Keep them committed and engaged by offering development opportunities and treating them well. They’ll become your core team of champions, making your financial life easier by limiting employee turnover.

Get your small business finances in order today

Hitting your financial books might not be your favorite part of business ownership. Yet it’s an essential element to staying afloat, especially during this period when so many small business are still struggling. Make life easier by managing your business finances well so you'll have more time to focus on new ideas and growing your company.

RELATED: Small Business Record Keeping: How Long Should You Keep Business Records?