8 tips for keeping your business financially sound

Tips for a financially healthy business

1. Ensure financial transparency

Good administration and bookkeeping are the foundation of your business. Keep your records up to date and use an accounting system. Check your income, expenditure, and bank balance daily or weekly. Make decisions using the figures, not just your gut feeling.

2. Manage your debtors 

In tough economic times, customers are more likely to pay late or, in some cases, not at all. Debtors who are slow to pay or do not pay cost you time and money. You want to avoid that. Agree on a payment term, or have your customer pay either half or everything in advance. Send timely reminders. If your customer still does not pay, send a demand for payment. 

3. Improve your cash flow 

Take a close look at your cash flow. Where do your various expenses and revenues come from? And when are payments debited from your account? Maybe the rent for the office is debited at the end of the month, whereas you get most of your income at the beginning of the month. And that can mean you find yourself just a little short of money every month. Look into whether you can adjust your payments schedule for a better cash flow. 

4. Work with a budget and planning

Draft a liquidity budget to keep a clear picture of your business situation, and to keep track of what funds you have. You budget based on what you have in your account, how much you are earning, and what your costs are. That way, you will know if things are going to be tight in certain months, and when it will be possible to invest. Use the Future Check, which will give you more insights into your liquidity and tell you what the forecast is for the next 12 months.

5. Make sure you have a financial buffer 

It can always happen that your financial situation is not what you were hoping for. That is why you want to have a safety net. If things are not going so well, you will not find yourself in trouble straight away. Set aside money on a regular basis and find out how to get funds if necessary. For example, a loan from family or friends or another form of financing. 

6. Maintain a good relationship with your bank 

A good relationship with your bank is very valuable. You build trust by being open and honest about your financial situation. That way, the bank will not be taken by surprise if your business runs into problems and you need financing, for example.

7. Take a close look at your business model 

Has your revenue model has been the same since the start of the business? Billing by the hour or the sale of merchandise, for example. And are you no longer earning enough? Look closely at your current business model and find out where the problems are. Perhaps it is time to switch to a new business model. 

8. Make time for networking and finding new clients 

Always make time for networking and finding new clients. If you do this consistently and are visible, it will also bring in new clients. Make sure clients know how to find you, and actively seek them out too. Online marketing will help with this.