7 tips for managing payments for your small business

Work with your accountant or financial advisor and look for ways to organize your business activities to increase tax deductions.


As a small business owner, you often manage your finances on your own, without the help of a financial advisor or financial manager. Without outsourcing payment-related tasks, you can easily become overwhelmed with activities that take your focus away from core business goals. You have a lot to do, but who said you can’t do it? In this article, we share some tips for managing payments more efficiently and scaling your business.

1. Use the right transfer service

If you work with customers around the world who pay you in different currencies, you are likely to lose a lot of money transfer service fees. The same goes for contractors and employees who receive payment for services in their local currency.

If you have an account at a local bank, it’s worth checking out how much it costs to manage it and also researching any hidden fees your bank imposes on international transfers. It may turn out that you have a lot of expenses related to the payment that you can reduce.

International transfer services are often much more transparent than banks in terms of fees and it is often free to set up a business account there and order a business card. They serve as an alternative to traditional banking services and help you save a lot of money.

You can find different transfer service comparison charts online showing the differences in fees.

2. Watch your cash flow

As your business grows, it becomes more difficult to understand where your business is in terms of finances. Things can quickly spiral out of control when you spend more than you receive from customers.

Forgetting to keep track of your cash flow is one of the biggest mistakes business owners make. This mistake can lead you into debt.

Remember that monitoring cash flow is more than just tracking current income and expenses. Projected cash flow is another aspect of your business finances that requires your attention. So how can you monitor your cash flow?

The majority of business owners would probably end up with one universal answer: open an Excel sheet. While it’s easy to start with an Excel document, it won’t offer information on a silver platter – you’ll have to derive it on your own. If you’re new to the subject, start with the basics. Find out about the measures to improve cash flow and look for cash flow tools that crunch the numbers, offer in-depth insights, and visualize your financial situation.

Here is an example of visualizing cash flow and forecasting future transactions of incoming and outgoing money.

3. Build trust at checkout

If your customers pay you online and you use payment processors to enable such transactions (if you have a checkout page), focus on adding more trust signals to the cart and checkout pages.

By working to increase customer confidence in your business, you can earn more without introducing changes to product offerings or increasing marketing spend.

For example, e-commerce websites such as Kaori use the money back guarantee badge in their checkout process.

4. Create a dashboard with customer invoices

When customers pay their bills on time, you can plan expenses accordingly. To make it easy for customers to track the status of their invoices and quickly check payment terms, you can create customer panels. There you get all customer invoices listed and can restrict access to specific email addresses.

Some invoicing solutions offer this functionality where customer panels are created automatically and are updated as new invoices appear or their status changes. When choosing one to use, make sure you choose a reliable provider that uses a good SSL certificate and covers things like your customers. identity security.

5. Send late payment reminders

To ensure that bills are paid on time, you need to introduce regular follow-ups. If your client is a small business owner or an individual, chances are they don’t have standard procedures for tracking and paying invoices. That’s why they can easily miss the payment date, leaving you with more unpaid bills.

To avoid such situations, introduce regular bill reminders. Let your billing system do it for you, instead of writing such reminders yourself or calling clients, because this process is too time-consuming and time-consuming.

Nowadays, you can send invoice reminders by different means of communication. In addition to a traditional – e-mail – you can also use a SMS gateway to set up SMS reminders. This approach will be more effective if your customers don’t check their inboxes frequently or if your emails often end up in a spam folder. Apart from that, SMS serves as another channel to remind a customer to pay their bills. So, instead of sending too many emails, you can replace some of them with a short SMS message.

6. Invest in growth

You can increase your income by decreasing your expenses or increasing your income. While there are some limits to reducing expenses, there are no limits to your income growth.

Man reviewing project status on tablet; image by Adeolu Eletu, via Unsplash.com.

There are at least a few ways to increase your income. You can start by up-selling or cross-selling to your existing customers. This way, you will increase the customer lifetime value. Your customers would end up paying you more during the relationship cycle with your business.

Getting more customers is another way to increase revenue. While this may seem like an obvious business expansion strategy, business owners typically fail to consistently grow their customer base. They also tend to face most customer acquisition challenges when scaling a business.

Internet marketing is one of the channels you can use to get more customers. This channel includes SEO, retargeting, inbound marketingand more.

Start by choosing the appropriate channels that can bring the most utility to your brand and create a strategy to appear there with your brand.

7. Establish good financial habits

Keeping your business finances healthy isn’t just a matter of one-time practices. Monitoring your business performance also depends on good financial habits or an established routine. These are the financial rules that you respect without compromise.

Here are some of the good financial habits that will help you adopt a healthy routine to stay in control of your finances.

Although you may be advised not to fear debt if you want to grow your business quickly, the habit of taking out loans can quickly become a hazard. While there are situations where getting a small loan is warranted, in most situations having debt means you reduce your chances of creating excess cash. In extreme situations, this increases the risk of business insolvency. That’s why consider focusing on growing your business organically instead of going into debt with no guarantee of success.

Work with your accountant or financial advisor and look for ways to organize your business activities to increase tax deductions. Find out which business expenses are deducted from your income and which would pay less tax.

  • Analyze the financial statement

Compare how your business performed in the past versus now. For example, you can compare the situation of January 2021 with that of January 2020 or analyze the performance from one year to another – the year 2021 to 2020.

If you expect to pay taxes quarterly or annually, it’s easy to forget about tax time and skip payments. You may run out of money in your account because you would be making payments to your employees or to yourself. To avoid situations where you need to get a loan to pay taxes, remember to freeze money in your account, so you can be ready for a tax payment on time.

Conclude

There are many technology tools that help you automate payments and spend a lot less time processing them. Instead of using traditional and often expensive payment solutions, you can choose innovative services that won’t break a bank and will help you save more money.

When you have already improved the payment management process, remember to stagger payments using payment processors, make sure your sales funnel is full of opportunities that you can convert into customers and aim to scale your business at some point. Once you can’t manage everything with all sorts of automation, it’s time to hire a specialist or use the external help of financial advisors.

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