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Money is a necessity for business capital. If you run a business, you need to pay attention to effective money management. A good financial system supports business continuity so that it can develop and prosper.

Even if your business makes a big profit, you still need to manage your business money streams. Because business isn’t just about making money, it’s also about spending and controlling money. You need to be good with finance to fund your business.

Even if you only run a small business, you need to implement financial management as well. Financial regulation is an obligation of every economic actor, whether small, medium, or large. So that cash flow does not represent a deficit when the level of expenditure exceeds revenue.

What was your main goal when you started a small business? Making a profit or profit, of course. To achieve this goal, you must understand the basics of managing small business finances. When operational financial management is going well, you can manage your finances smarter and more regularly.

Well, especially for those of you who run a small business and manage your finances, here is a look at how to manage finances that are easy for you to apply for.

 

  1. Separate personal money and business money

The most basic thing about managing finances is to separate personal money from business money. You have to split your money, one for your budget and one for your business budget. If not, unbeknownst to you or not, you may intentionally or unintentionally use your business capital for personal gain. As a result, you may lack the capital to grow your business.

The way of separation can be to create two different bank accounts namely business and personal. This allows you to have tighter control over your expenses and not use business funds outside of your interests. The segregation of accounts is done so that the finances in these two different sectors are not mixed up. Problems may not be felt when starting a business. When a business has started and lots of transactions are going in and out, you will feel confused.

The greatest risk is that the money could be used for the business for personal needs. The opposite can also happen, personal money can run out because it is used for business capital without knowing it. You can use the profits from the business for personal purposes. However, it must be ensured that the money used is net profit. However, that doesn’t mean you can use one account for multiple purposes.

 

  1. Plan the use of money

Build a good financial system by planning the use of money. When your capital is plentiful, don’t squander it. In the meantime, if your capital is limited, you can handle it so that you don’t run into a deficit. To do this, you need to plan expenses by matching them to your business income. Initial preparations have been made by setting up a special business account. The next step is to create a budget plan. Simply put, you need to create a detailed spending plan and income goal.

To make things easier, you can start at the smallest scale first, which is to create a daily financial plan. Try to put the plan into action. If things go well, do a weekly, monthly, and so on. If your business has been doing well for a long time, you can create a financial plan on a larger scale, namely annually. Financial planning or budget can be used as a reference in developing a business. In addition, budget planning can also be used as evaluation material.

 

  1. Do the Accounting

Also related to the previous point, business owners need to record all cash flows to ensure the business is going ahead as planned. Record all income and expenses, even if the value is very small. It’s not good to manage money from memory. You must make complete books or records. They track the money going out and the money coming in every day. Also, write down your liabilities and any assets you have. This allows you to identify your company’s cash flow, or how funds are coming in and going out. You know whether your company is making losses or profits. You can also check if money is hidden.

 

  1. Set aside profits for capital

You can allocate some of the profits you make to your budget. While you can set aside some of it for additional business capital. You certainly need more capital to develop your business. For this, you should not haphazardly spend all corporate profits on personal budgets.

 

  1. Avoid claims

You should avoid claims or buyers who owe you. Maybe you can give your customers an account from time to time. However, you must limit these and not allow too many claims to accumulate. Because otherwise, your capital will not come back immediately, even though you need it.

 

  1. Pay bills on time

It is important to pay all bills on time. Be it credit card payments, debt or loans, or taxes. If you pay late then you are the one who loses because you will be penalized in the form of a fine that will eat up your money. Being late also makes your heart uneasy when running a business.

 

  1. Prepare an emergency fund

You cannot predict what will happen in the future. Maybe one day your sales will drop because of the competition or your business will be hit by a disaster and you will suffer big losses. To overcome this, you need to prepare an emergency fund from now on. The emergency fund prevents your business from collapsing immediately in the event of a fall or at least can help ease the strain if your business suffers a loss.

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