How To Better Manage Your Finances During COVID-19

Even though the worst is behind us, companies today still need to exercise caution when it comes to finances. One thing that this pandemic has highlighted is the fact that companies with good financial management skills will be more successful than those with poor management skills. We’ve seen this in action with businesses folding within the first few months of lockdown orders being issued.

While the reasons for businesses folding can vary widely, it’s important for companies now and in the future to adopt some better financial skills. To help with that, here are some ways for small and medium sized businesses to improve their management skills.

Pay Attention To Your Deadlines

Just as we are aware of when payments are due for loans and credit cards, you still want to be diligent about paying your bills on time for businesses. From tax payments to utility bills, set re-minders as often as you can.

Every business across the spectrum is struggling in some way financially right now. While your decision to pay a bill on time may or may not affect a companies well being, we both know that every payment these days counts. Furthermore, you have extra incentive to pay bills on time as companies can and will still charge late penalties in the event you miss payments.

Divide Business And Personal Finances

When it comes to small businesses, many are guilty for mixing in personal finances with their business expenses. While you could have the best of intentions for your personal money to fund your business, this can complicate things in the future.

Even if segregation between personal and business finances isn’t needed from you, it helps to have separate bank accounts and books to help you monitor your cash flow. This allows you to set more accurate financial goals and budgets and follow them accordingly.

Be Smarter About Budget Choices

The smarter your budgeting system and choices are, the more you’ll be able to manage your finances better. When making a budget, you are inadvertently helping yourself in being a better negotiator and over time a better budgeter as well.

You can also enhance your skills by doing the following four things:

• Simply making a budget and sticking to it. Going into more detail, a budget will help you to identify where all of your money is going and will help you to assess whether you’re spending too much or not enough on key parts of your business.
• Timing expenses. It’s normal for you to get leased equipment or to get training for employees. The key is to not do all of this at once. Even when times are getting better for you, be smart about your purchases so they don’t put you in a financial bind.
• Be more frugal. While some think this is an extreme measure, it doesn’t have to be. The whole idea is to see if you opportunities to cut things without hampering the quality. This is where negotiating skills can shine where you can negotiate with other companies to get better deals before finalizing contracts. Another aspect is looking at expenses that are providing no or little results reflective on the amount of money you’re spending.
• Set up a cash reserve. A cash reserve is a way for companies to fall back on in the event there are unexpected expenses that emerge. This will allow you to smooth things over without the need of relying on lines of credit or going into debt.

Compensate Yourself Accordingly

It’s common for small and medium business owners to pour all of their money into their business and neglect paying themselves. However, that’s not a wise thing to do. As the owner, it’s important that you do pay yourself along with your employees. That being said, you can be more flexible with your own pay during these times of hardship.

Invest In Ways To Grow Further

Even during these difficult times, there are many opportunities for companies to grow in various ways. It’s smart to set aside a budget specifically for these opportunities. It can be things from getting new software to a new sales technique, investing in resources now can help future growth in the future.

Make Future Plans

It’s easy for us to get lost in the daily operations, but it’s important that we also remember why we started a company in the first place. We all have plans for the future and not to just pay more bills. If it’s been a while or you haven’t done this, do it: sit down and list off your goals and plans for expansion. Break that down into a small list of short-term and long-term financial goals to help you stay on track.

Be Smarter With Your Money

While these little habits may not amount to much right now, the world of finance reminds us that it’s these small actions early on that play a significant role in our future. So practice all of these small things and you’ll find things will start to change more as time goes on.