How to put the spark back into your business’ finances
Keeping track of your business’ finances can often feel like fighting a constant battle to keep a bonfire well stoked with essential kindling.
Your business is similar to a firework display. Just as it’s important to make sure your firework display involves many different types of fireworks all working together to create a memorable spectacle, so too must different financial methods, strategies and tools all work together to create a sustainable financial strategy for your business.
If you’ve felt like your business’ finances are on the brink of fizzling out, here are our tips for how to reignite your finances for a firecracker financial year.
Create a long-lasting firework display that won’t fizzle out
Everyone knows the worst firework displays are the ones which start with a bang, only to trail off into a smoky cloud after a few short minutes. The same is true of any business, especially those that are just starting out.
To avoid this, keeping track of your company’s finances might sound like a no-brainer but with two thirds of SMEs saying they know of businesses that have been forced to close due to cash flow problems 1, it’s clear to see that cash flow is a major issue for many UK businesses.
It can often be tempting to turn to a quick fix to get your business’ finances back in the black, but just like a cheap sparkler, certain quick fixes often don’t last very long and although they seem impressive at first glance, are not a sustainable solution.
The best way to stay on top of your business’ finances is to perform regular checks on your business’ financial health so you don’t get any nasty surprises further on down the line.
Naturally, keeping a close eye on your business bank account and all outgoings is always a good place to start, but it can only tell you so much.
However, tools such as Experian’s My Business Profile, provide a clear view of your business’ financial health including your business’ credit score. It lets you see what lenders, customers and other businesses see when deciding whether to offer you credit and provides advice on the best course of action to help improve your score.
Light the fuse for growth with credit
Just like the trusty and dependable roman candle which is often a staple of any firework display, securing credit is a tried and tested way to help you avoid cash flow issues. This can be done by applying for finance directly from a creditor such as a bank, which will often come in the form of cash flow finance through a business loan. Securing credit through this route will involve having to prove strong sales and profitability, but if successful, this loan is often paid quickly and can be used to help boost cash resources.
If your business requires many vehicles or lots of equipment to carry out its day-to-day activities, then applying for asset finance might be a welcome solution. By allowing you to pay for assets in instalments, it can help to alleviate the strain of having to buy vast amounts of equipment in one go. The sensible and well-planned use of credit can improve the stability of a business, and keep cash flow moving, even during tighter times.
Don’t ignore the warning signs
It’s a well-known saying that ‘there’s no smoke without fire’, and that’s often true in business too. When it comes to deciding which businesses to work with, you might often rely on the word of mouth of others in the industry or a specific business’ payment history if you’ve worked with them in the past. But rather than relying on a hunch, why not put your faith in a proven method of checking how trustworthy a business is, using Experian’s Business Express.
Experian’s Business Express allows you to keep a close eye on the credit status of businesses that you work with, alerting you to any changes to their financial stability, so you can be safe in the knowledge that you won’t end up getting stung by a late or missed payment.
The UK is currently a melting pot of fantastic businesses but those that will stand the test of time will be the ones that take the time to get a handle on their business finances before it’s too late. These are just a few of the steps you can put in place to fan the flames of success for your business this year.
Find out more about how Experian could help set your business’ trail to success ablaze here.