3 Tips To Manage Your Money During The Tight Months

by | May 13, 2015

Whether you’re starting out, or have suddenly hit a rough patch after years of being open for business, learning how to manage your money is a difficult and often frustrating task. Unfortunately, some of us never truly master this skill, but if you wish to keep the doors of your business open, it’s important to develop your money management skills.

Getting to the Heart of Money Management

Two important factors that influence your ability to get a handle on your money are profit and cash flow. Controlling your direct and indirect costs can maximise your overall profit. Creating positive cash flows by timing your payments to occur when they are the most advantageous to you is also important.

Doing so makes it easier to build cash reserve so that you can protect yourself against the very real possibility that you will run out of money at some point in the future. It will also ensure that you have adequate working capital to open and run your business.

What is a Cash Reserve and Why Do You Need One

A cash reserve is simply a portion of your earnings that you save rather than spend. Having a cash reserve, or cushion, makes it easier to weather difficulties that might occur later, such as a sudden slowdown in sales or an unexpected expense. A cash reserve also comes in handy if you want to expand your current business or start a new one in a completely different line.

Ideally, you will take steps to maximise your working capital and build a cash reserve, or cushion, while you are experiencing high sales and low costs. Similar to your personal finances, the business choices that you will need to make when you are cutting back to save are easier when you aren’t facing a shortfall.

3 Strategies to Better Manage Your Money During Tough Times

Sometimes circumstances make it nearly impossible to save, even when your sales are booming.  If you’ve hit a bump in the road, or just want to boost your ability to build a financial cushion, the following three ways can help you manage your money more effectively and put you back on the road to financial stability and prosperity.

Pay bills on time, but not before they are due. The payment terms offered by vendors vary, but many offer terms such as 15/30/45/60 days to pay. You might want to pay closer to the last day of the term if your sales are slow, or if you’ve got a sudden expense to cover. One thing to keep in mind, however, is that many of these same vendors offer a discount of 5 to 15% of the total bill if you pay early, so don’t neglect an opportunity to save money and build your relationship with your vendor.

Operate on a cash basis. As a business there are two ways that you can accept payment for your products and services, on a cash basis or a credit basis. With a cash basis, you receive payment up front at the time of delivery. If you operate on a credit basis, you wait for your customer to pay you later, typically, 15 to 90 days after delivery.

If you are running short of funds, or just need extra time to pay your bills to ensure you have sufficient working capital, you will want to encourage your clients to pay you up front with a cash payment, even if you need to offer a small discount for them to do so.

Keep in mind that when you operate on a cash basis, this doesn’t necessarily mean that you will receive payment on the spot in the form of physical dollars. If your customer pays with a credit card, or check, you will need to wait for the processor to deposit the funds from the credit card transactions, minus any merchant fees, into your account.

You should also wait an appropriate amount of time for checks to clear after they have been deposited before you draw on the funds. You should take these factors into consideration when you prepare your budget based on your projected cash flow as well as when you make decisions about when during the term to pay your vendors and creditors.

Get Your “Ducks in a Row” ahead of time.  While many small businesses try to avoid debt at all costs, taking some steps to have a line of credit waiting in the wings in case you need it can be a good idea to help ensure that you will have the capital that you need to take advantage of sudden expenses or even unexpected opportunities to expand the reach or lower the long term costs associated with running your business.

Lenders are more likely to grant requests for credit if they see that an applicant has both a good repayment history as well as a dependable means for repayment, which is why it’s a good idea to go ahead and apply for a line of credit before you need one.

Learning to manage your money doesn’t come second nature to most of us. We’re here to help you if you need assistance getting a better handle on your money. In addition to bookkeeping services, we can help you have a better understanding of where your money is both coming from as well as where it’s going. We can also assist you in creating a plan to help your business both survive and thrive. Why not get in touch today and find out more about the steps you can take to create a firm financial foundation for your business?

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I was recommended to The Accounts Studio at a networking event and have been working with them for the last 2 years. The team have all been very approachable and available – two things essential when it comes to understanding your accounts! I now no longer have the stress every three months of getting my BAS correct and even better I have a clear understanding of where my company is financially! Thanks Sophie and TAS team!

Eleni Mitakos
Galmatic Pty Ltd

2017-10-13T04:16:02+00:00

Eleni Mitakos
Galmatic Pty Ltd

I was recommended to The Accounts Studio at a networking event and have been working with them for the last 2 years. The team have all been very approachable and available – two things essential when it comes to understanding your accounts! I now no longer have the stress every three months of getting my BAS correct and even better I have a clear understanding of where my company is financially! Thanks Sophie and TAS team!
I have really enjoyed working with you guys and look forward to a successful 2013. From the moment we started with TAS I have seen value. The figures are accurate, you are accessible (and approachable!) and most of all – you are cool people!

Chris Du Plessis
Managing Director, Origin Meat Pty Ltd

2017-10-13T04:20:03+00:00

Chris Du Plessis
Managing Director, Origin Meat Pty Ltd

I have really enjoyed working with you guys and look forward to a successful 2013. From the moment we started with TAS I have seen value. The figures are accurate, you are accessible (and approachable!) and most of all – you are cool people!
"Sophie is so professional – careful, attentive and punctual – she has made managing my accounts not just easier, but a whole lot less stressful"

Fast Ed
TV Chef from Better Homes & Gardens

2017-10-13T04:23:15+00:00

Fast Ed
TV Chef from Better Homes & Gardens

"Sophie is so professional – careful, attentive and punctual – she has made managing my accounts not just easier, but a whole lot less stressful"
Sophie has been a tremendous support and guiding light for my business. I have continually succeeded when acting on her advice and by using her services. Her products are fantastic and her ideas and accuracy is out of this world. I would never hesitate to recommend Sophie’s services and I would invite anyone to contact me for a referral.

Belinda Grundy
GM, Property Styling Online and BG Property Styling

2017-10-13T09:21:50+00:00

Belinda Grundy
GM, Property Styling Online and BG Property Styling

Sophie has been a tremendous support and guiding light for my business. I have continually succeeded when acting on her advice and by using her services. Her products are fantastic and her ideas and accuracy is out of this world. I would never hesitate to recommend Sophie’s services and I would invite anyone to contact me for a referral.
Sophie has the spirit of the Entrepreneurial Business Owner! Whether she is running a successful single family website, creating a product for small business owners or running her own bookkeeping agency she is always right on track as to what small business needs. If you want to speak to someone who not only knows what business owners are going through-she also does something about it- then don’t miss out, connect with Sophie! She is someone who can not only think outside the square- she has true strategic thinking; which is often spoken about but is rarely truly placed into action.

Sue Heins
Councillor at Warringah Council

2017-10-13T09:25:16+00:00

Sue Heins
Councillor at Warringah Council

Sophie has the spirit of the Entrepreneurial Business Owner! Whether she is running a successful single family website, creating a product for small business owners or running her own bookkeeping agency she is always right on track as to what small business needs. If you want to speak to someone who not only knows what business owners are going through-she also does something about it- then don’t miss out, connect with Sophie! She is someone who can not only think outside the square- she has true strategic thinking; which is often spoken about but is rarely truly placed into action.
Sophie is an amazing business woman. She is able to take the complexities of business and break them into manageable pieces for small and home based business owners to work with. She’s clever, creative, supportive and very generous. She’s the reason that so many small businesses are doing so well. If yours is a small or home based business then Sophie is someone you need to know.

Anne Maybus
Writer and Content Creator, Clever Streak

2017-10-13T09:26:35+00:00

Anne Maybus
Writer and Content Creator, Clever Streak

Sophie is an amazing business woman. She is able to take the complexities of business and break them into manageable pieces for small and home based business owners to work with. She’s clever, creative, supportive and very generous. She’s the reason that so many small businesses are doing so well. If yours is a small or home based business then Sophie is someone you need to know.
Sophie is efficient, direct and gets the job done. She responds quickly, keeps me updated and has a way of simplifying things and making my life easier. She is all about efficiency and that’s what makes it great to work with her, I highly recommend her to anyone who wants someone to efficiently look after their books and she is great value for money too.

Adam Dobson
Strategic Resourcing Manager

2017-10-13T09:28:24+00:00

Adam Dobson
Strategic Resourcing Manager

Sophie is efficient, direct and gets the job done. She responds quickly, keeps me updated and has a way of simplifying things and making my life easier. She is all about efficiency and that’s what makes it great to work with her, I highly recommend her to anyone who wants someone to efficiently look after their books and she is great value for money too.
I’d been stalking Sophie for a while since I saw some of the great work she did at Ideas Book. What she’s up to at the SOHO Agency is equally impressive and I’m delighted to have someone working in this space who I feel so confident referring onto others. Keep being brilliant Sophie!

Robert Gerrish
Founder and Director, Flying Solo

2017-10-13T09:30:45+00:00

Robert Gerrish
Founder and Director, Flying Solo

I’d been stalking Sophie for a while since I saw some of the great work she did at Ideas Book. What she’s up to at the SOHO Agency is equally impressive and I’m delighted to have someone working in this space who I feel so confident referring onto others. Keep being brilliant Sophie!
Sophie is an incredibly savvy business owner, for whom I have great respect. She has always been very clear and detailed in her instructions, is always very focused on her business objectives, and displays a business model that you can aspire to as a small business owner. I have no hesitation is recommending her work at The Accounts Studio.

Kristy Smith
Director, Virtual Elves Outsourcing Solutions

2017-10-13T09:30:59+00:00

Kristy Smith
Director, Virtual Elves Outsourcing Solutions

Sophie is an incredibly savvy business owner, for whom I have great respect. She has always been very clear and detailed in her instructions, is always very focused on her business objectives, and displays a business model that you can aspire to as a small business owner. I have no hesitation is recommending her work at The Accounts Studio.
I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.

Gai Hook
Virtual Sales Strategy

2017-10-13T09:32:05+00:00

Gai Hook
Virtual Sales Strategy

I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.