Managing small business finances is no cakewalk. As per the State of Small Business Cash Flow report, almost 61% of small business owners have reported that handling consistent and steady cash flow can be challenging.

No matter how good your product or service is, if you are lost when it comes to small business finance management, building a profitable business may remain a far-fetched dream. 

Here are nine tips to help you keep your small business finances running smoothly while also planning for your future.

1. Prioritise business financial planning

A comprehensive small business finance plan includes budgeting, accounting, future prediction, tax planning and risk management. 

You must analyse your businesses’ accounting reports and financial statements from time to time to gain insight into your business performance. This will allow you to set the right financial goals, whether to invest more money in your business (for expansion, buying new inventory or hiring staff) or save for retirement.

Also, the best way to avoid tax stress is to prepare ahead of time. Avoid common tax mistakes with organised records and bookkeeping. In addition to understanding tax deductions, learn how to lower your tax burden as a small business owner through tax audit.

2. Create a budget and stick to it

Putting together a budget can completely change how you manage your small business finances and help you achieve revenue goals sooner than you’d expect. A budget can help you accurately forecast the revenues your business will generate and even identify unnecessary expenses. 

Ideally, you should first create an operating budget that shows you the projected revenues for the financial year. Even though this is only a high-level summary, it includes all the essential details about your business’s fixed cost, variable costs and operating expenses. 

Think of the operating budget as a tool that tells you whether your expenses are as per plan. Next, focus on a cash flow budget to keep track of money going out and coming in. Doing so will ensure that you know your businesses’ liquidity position.

3. Get a corporate card for your business

Corporate credit cards aim to solve the hassles of digital spending for businesses. They increase the company’s purchase power while improving the cash conversion cycle with short-term credit at no cost (zero interest). 

With corporate credit cards, you also get a higher credit limit than personal cards to be able to make all business expenses without affecting personal liability. 

Apart from helping manage small business finances, corporate credit cards make compliance and reporting much easier for a growing business that needs to focus on core business goals. 


Suggested read: Corporate Credit Card: Why Every Business Should Get One

4. Obtain a line of credit 

Obtaining small-term financing or a line of credit is another tool to help you manage your small business finance and ultimately grow your business. 

When you own a business, a line of credit can help you tackle several short-term funding requirements, such as maintaining inventory, salary payments or addressing new orders. 

Also, having access to a line of credit can help you control your cash flow throughout the year.


Suggested read: 6 Reasons Why a Line of Credit Is Necessary for Every Business

5. Optimise your payroll process 

While ensuring steady cash flow is important, you also need to think about the best ways to streamline your payroll process. 

Choosing the right payroll software is an easy way to ensure that salaries are directly deposited into your employees’ bank accounts. 

A direct deposit helps to manage cash flows better; you eliminate the chances of different employees depositing their cheques at different times that can disrupt cash flows and prevent you from accessing funds in your account as they are allocated for the outstanding checks. 

6. Don’t be afraid of loans

Many business owners fear that they will enter a debt trap once they start borrowing money. But this couldn’t be further from the truth. 

Business loans help you tackle unforeseen expenses. No matter how skillfully you manage your small business finances, any disruptions and volatility in the market can make it incredibly difficult for your business to meet any working capital requirements. 

Some of the best features of small business loans include minimal documentation and easy eligibility. This makes the application process quick and hassle-free.

Small business loans are collateral-free and offered at competitive interest rates. You can use the loan for different needs of your business, such as buying inventory, paying salaries or even utility bills. 

7. Keep your business and personal finances separate 

Mixing business expenses with personal finances is the perfect recipe for creating disorganised records. 

Not only does it make it incredibly challenging to keep track of money received and money spent, but it can also result in overspending as you may end up using your personal funds for business expenses and vice versa. Moreover, a clear separation between personal and business finances is also necessary so that you can claim tax deductions for various business-related expenses. 

8. Improve inventory analysis 

Inventory management is the fundamental building block to your company’s longevity. When your inventory is organised, your entire supply chain will be on the right track. Not having your inventory in place can lead to issues like mis-shipments, out of stocks, overstocks, financial inefficiencies and more. 

For example, if a customer doesn’t know that an item they wanted in store can also be purchased online, a sale is lost, one that could’ve helped a business move inventory that might soon be out of season. 

9. Opt for a financial service/tool

You can leverage various financial services and tools to better manage your small business finances and cash flow. These tools help business owners and finance teams automate manual, repetitive financial tasks and provide insights into money flow.

Final words

These are some of the easy ways to manage small business finances and keep your business operations running smoothly. 

Remember that as a small business owner, you already have enough on your plate. Delayed access to funds or long-drawn approval processes can completely stall growth opportunities coming your way. 

Luckily, end-to-end solutions offered by Razorpay Line of Credit is designed to help small businesses get financed and grow. 

So what are you waiting for? Fast forward your business with Razorpay Line of Credit right away!


Ashmita Roy is an Assistant Marketing Manager at Razorpay. When she’s not working, you can find her strumming her guitar or writing poetry. Dislikes writing about herself in third person, but can be convinced to do so via pizza or cheesecakes.

Write A Comment