Losing track of finances can be easy once you immerse into business operations. It is also something that can be detrimental when opting for credit. Any lending institution will want to invest in a company that promises adequate profits, thus ensuring timely repayment.
Chalking out effective strategies to manage cash flow is vital to keep yourself updated on your organisation’s progress. Reflecting the same on your CIBIL score will aid in acquiring business finance seamlessly.
Track your income and expenditure
Enterprises can experience a cash influx from various sub-divisions. Sorting and tracking all business income is necessary to monitor your institution’s progress towards a set profit goal. At the same time, it is also essential to plan your expenses to prevent constraining funds unnecessarily. Entrepreneurs must monitor and prioritise crucial and lump-sum payments. Accordingly, they can plan secondary costs and cut down on the ones eating into significant profits. This way, you can always stay updated on sales and other whereabouts and plan business operations ahead.
Prepare and schedule tax payments
This comes as part of tracking your expenses. Income tax is an indispensable liability. Skipping a payment deadline can lead to hefty penalties, which can make your creditworthiness take a back seat. To prevent tax dues from hampering your credit score as well as your chances of qualifying for business finance, always plan such expenses in advance. Also, consider tax-saving tips for small business owners while channelling income towards such payments.
Separate your personal and business finances
It is a commonly observed practise among new business owners to use their personal bank account for business turnover as well. This can be a malpractice and is definitely not approved by finance experts. A primary reason for this is, once your enterprise starts pulling in more revenue, all records can get haphazard.
Such unorganised funds can lead to significant inconvenience, especially when paying taxes or availing of a business loan. Therefore, it is always a good idea to open a separate account for business operations. Individuals can also designate a different credit card for business transactions to ensure optimum legal protection and easy loan approval.
Set up an efficient filing system
For an efficient record to back up your business finance claim or even for hassle-free management, every organisation must have an organised filing system. Whether digital or hard copies, sorting paperwork will help you gain easy access to information and fasten operations. Following are some of the important sections you would want to make when organising data.
- Bank account statements.
- Employee records.
- Client records.
- Contracts, like service agreements.
- Bookkeeping and accounting data.
- Licenses and permits.
You can sort the above items by month and invoice dates. This can aid in efficient tax payment as well.
Prepare effective ways to manage cash flow
To ensure seamless cash flow in your organisation, you must frame a budget and stick to that. Unnecessary expenses will strain your financial reservoir, and if not taken care of, it will affect other payments and credit score negatively.
Another way to ensure uninterrupted cash flow is by setting up your desired mode of receiving payment. For example, a service-oriented business might want to send out invoices, while companies dealing in products might need to set up online cart and payment systems.
Opt for a business loan
There are considerable costs involved in effectively running a business, such as purchasing machinery, paying workers, replenishing inventory, and keeping up with other day-to-day expenses. Such huge expenses can be burdensome, especially for start-ups. Learn how business loans can keep your business financially healthy amidst lack of funds.
Leading NBFCs like Bajaj Finserv offers such financial products against zero collateral to applicants satisfying business loan eligibility parameters. Borrowers can also seek pre-approved from this lender to quicken and ease loan processing.
These offers are available on a range of financial products, including business loans, personal loans and others. To avail this facility, check your pre-approved offer before applying.
It is usual for a company’s income and expenses to waver, but not keeping track is what leads to undue complications. Most financial institutions will demand financial statements like profit and loss statements and balance sheets when sanctioning business finance. Therefore, it is essential that you conduct periodic financial checks and frame reports to develop relevant insights.
