The biggest barrier to innovation and business improvement for small to medium-sized businesses is the lack of cash reserves, low profitability and other financial pressures (58 per cent) according to a CCIQ study.
The study quotes a construction business owner: “We need assistance to free up cash flow. No money slows our company from expanding or becoming more innovative”
Here are “Five Important Money Smart Tips for Small Business Owners in Australia:
1. Invoicing – Be clever and rigorous!
I can hear your audible sighs when I mention invoicing, but trust me, doing it properly makes a huge difference. Getting smart with invoicing means getting smart with your money and that’s essentially the secret of successful business. A good starting point is to make your invoicing manageable by setting payment terms of 7 days maximum to ensure payments aren’t lost or forgotten. Get into the habit of sending invoices ASAP and always follow up! If it helps, set auto reminders for yourself to do this every 7, 14 and 30 days. When doing this, save on tedious typing time by creating templates for invoices, SMS’s and follow up emails. Finally, make recording and tracking as easy as possible by ensuring all customer payments and correspondence site the relevant invoice and reference numbers. You’ll be amazed at the difference it can make.
2. Accounting Software – Automatic bank reconciliation
Choosing an accounting software in the past could be a bit daunting, but there are some really fantastic and versatile solutions out there today that are perfect for small businesses. A software like MYOB is a really good, user friendly software. With MYOB you can seriously reduce admin and streamline processes by automatically reconciling any payments you receive into your bank account. The days of manually dealing with invoices are slowly disappearing in the distance, (thank goodness!) MYOB does all that for you, summarising incoming and outstanding invoices and automatically updating and marking invoices as paid as soon as the relevant cash comes in. Accounting software is the easiest way to take control of your finances, minimise the possibility of debt and maximise positive cash flow through responsible management and upkeep of incoming and outgoing funds.
3. Accept Credit and Debit Cards on the Spot
The modern world is all about being mobile, it pretty much defines the way we people communicate, consume, shop and importantly make their payments. The modern small business owner needs to step up to the plate and make payments truly mobile. Using a mobile eftpos machine will change the way you run your business, meaning customers can be charged on the spot, wherever and whenever. It also means no more writing out invoices and no need to follow up, because the payments are made then and there. It’s an absolute no-brainer for progressive business owners.
4. Accept Credit and Debit Cards over the phone
People seem to always be on the go these days, in fact it seems we’ve reached a point where it’s almost unreasonable to expect someone to be physically present for anything. . . And, of course, making and receiving payments are no different. For small business owners customer service is a key focus, so why not make customers’ lives easier by giving them the option of paying over the phone. Simply ask customers for their credit or debit card details and put the payment through a clever virtual online terminal. It’s a great way to secure payments are on time and made at the customer’s convenience.
5. Have Fun Managing your Payments – they are the lifeblood of your business
Uhm, fun and payments in the same sentence? Sounds like a ridiculous oxymoron doesn’t it? Well, it’s not. Truth is, dealing with your finances on a regular basis is not only important from an admin and business perspective, but it can be a superb personally rewarding process too. This final point is all about altering your attitude, changing financial admin from the thing you have to do the thing you want to do. Getting stuck into the numbers and managing your cash flow should be the best part of your day. Doesn’t sound like it, I know. . . But, if your business is the centre of your world, as is the case with most business owners, then managing payments is the best way to understand its ins and outs, strengths, weaknesses and potential. It’s also important to take pride in your finances, celebrate each paid invoice and paste them up on the wall alongside your goals. Money in the bank, particular that rare expendable kind (yes, it does exist…) is ultimately the goal here. Knowing the state of your financial affairs backwards is the sure most way to avoid unforeseen debt, keep that cash flow positive and use it to invest and grow your business instead of bailing it out! So, dive in, plot, review, forecast, crunch numbers, dream big and watch the rewards roll in.
Reference: Mint Payments