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How to make your money work for your business

If you're just starting out in business or even if you've been going for a good while, you may find that you struggle to maintain a healthy bank balance at times. Whether this is bad planning, or slow paying customers, there are several factors you need to consider to ensure your business can tick along without any issues.

So, how can you make your money go further and ensure it's working for the business?

1. Plan and Budget

There's one thing that many small businesses fail to do, and that's budget. You probably know your own business like the back of your hand, but failing to account for limits on spending can lead to some serious cashflow issues.

Think of a situation where someone offers you advertising in a magazine for £500. You may have already spent £9,000 on advertising this year so far, so an extra £500 may not do much harm. However, if you fail to account for large one-off costs within this year (new machinery or new premises for example), the £500 may do more harm than good - especially when you can really only afford £9,000 for the year on advertising.


Setting a reasonable budget alongside a cashflow forecast will allow you to see how the year should pan out and help you make any adjustments needed.

2. Paying in advance

You may think that paying in advance for some services is a bit hard on your business - why pay a full year up front when you can pay monthly installments? There's 2 main reasons you may wish to do this.

  1. Once the money has been spent - that's it. Take insurance for example, if you pay out the full 12 months in one go, then you don't need to pay additional charges (such as interest) in normal circumstances. Of course, you may need to make some changes as you go along and pay for these as they happen, but the bulk would be paid out at once.
  2. You may save money from the interest charged, and if included, any admin fees. Many companies who offer split payments (insurance, utilities, telecoms etc.) charge an interest rate on each month's payments. By paying in full upfront, you can cut these interest charges out, and save yourself a small fortune in the process.

3. Use planning software

Your business could be ticking along nicely, your bank balance building up as invoices are paid, but then there's that subscription you forgot about and it's suddenly due. If you're not planning for this, it could cost you. Unexpected bills (including tax bills like VAT or corporation tax) can throw your business from one end of the comfort scale to the other, overnight.

Plan and prepare for unexpected bills. There are many software packages available that can help with cashflow forecasts, and even accounting software such as QuickFile (our sister company) offers a tax summary to help predict your VAT and corporation tax bills.

Don't let it creep up on you - prepare for these with planning, and even set up a savings account with your bank to have the funds to cover these.

4. Don't forget one-off costs

It goes hand in hand with planning - consider all

Pound Coin

5. Agree favourable terms with suppliers

If you're using the same suppliers over and over again, you are likely to build up a strong relationship over time. If you've always paid your bills on time but would like a bit more room to breathe, you may be able to negotiate favourable payment terms to work more to your advantage.

You may have a supplier for example who asks for payment upfront, which can be common for new or small businesses. But if you've done business together for several months, or even years, then they may agree a bit of leeway with you. Those extra days of you holding that money could make the difference with your cashflow, especially if the client you've purchased for isn't a swift payer.

6. Put contingency plans in place

Hopefully you see the point in planning ahead from the points above; contingency plans aid this. You can plan and plan and plan, but there's always that one thing that can go wrong - that print order you signed off last week has the wrong phone number, the wrong equipment has been purchased and will cost a small fortune to send back, that international phone call took a bit longer than planned - you get the idea.

So, how can you cure' these? These things, although avoidable, can, and do happen in business, and they are unexpected. While they can't be undone and you have the bear the cost, you can put a contingency plan in place. These can help with what to do if something adverse was to happen.

Of course, these plans aren't just good for financial issues, but also other disasters - flood, fire, and others.

Plan, plan, and plan

Basically, a lot of the management in finance comes down to planning - making sure you're aware of what's going to happen, knowing what money you have available and what you don't, and just generally being prepared.

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