5 Top Tips for Managing Your Business Finances Better


Let’s face it. The vast majority of business owners and directors are not accountants. In most cases your real expertise lies at the heart of your business – making stuff, designing things, training people, selling goods, providing services.. After all, isn’t that what you are really good at and why you started your business in the first place? Here are my 5 top tips for managing your business finances better:

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You run your business for profit as well, don’t you? So you probably want:

  • more (or different) sales
  • new customers
  • better profit margins
  • lower costs
  • regular cash flow
  • competitive products and services

This blog looks at what you as an owner or director can do to improve your business finances and provides you with my 5 top tips to help you change your business finances now.

What is the big problem with Business Finances?

In my blog Small Business and Finance – an uneasy relationship? I looked at why many small business owners struggle with their finances. 

Even those who are paying an accountant or bookkeeper still don’t know exactly what they need to do to improve their finances. The one consistent message that I have been receiving from new business clients recently is that most do not know where to start. 

So, they put it off. 

Some even bury their heads and hope it all goes away or gets better by itself.

As you are still reading this, then you are not avoiding the finance issue in your business and you want to see how my Top 5 Tips can help you to improve your business finances.

So, let’s get started.

Recommended reading: 5 Simple Financial Tips for Startups and First-Time Entrepreneurs

1. Make sure your bookkeeping system is fit for purpose

The most common issue I have found with new business clients is that their bookkeeping system is not fit for purpose:

  • Many still operate paper systems or some type of spreadsheet that they designed themselves
  • Those that do have a formal bookkeeping system aren’t using it properly – they are often only recording sales and some purchases and the rest is partly paper and partly spreadsheets
  • The records usually get bundled up and handed to their accountant at the end of the year to complete their tax returns

With free versions of cloud based systems out there, quality branded systems starting from as little as £6 per month and desktop systems from £20 one-off, then cost is not a prohibitive factor.

Tip 1: Take a good look at your bookkeeping system and improve it or upgrade it to one that meets your business finance needs for record keeping, meaningful business decisions and for tax purposes. 

P.S. Run your preferred choice past your accountant before making the move.

2. Review the way you work with your accountant

As a Chartered Management Accountant myself, I am often surprised by the number of business owners/directors I meet who employ an external accountant (or bookkeeper) and yet they have a range of bookkeeping problems that the accountant is either unaware of or is ignoring.  

In some recent engagements, I have discovered that the client operates their own (weak) bookkeeping system and the accountant transfers all their data to another system entirely, to produce accounts at the year end. The first time the owner knows how well his/her business has performed is when they go through the accounts with their accountant 6 months after the year has finished.  

Too late to do anything about it then.

Tip 2: Review the way you work with your accountant and make sure that that you are getting value for money from them in terms of quality financial support and expertise when you need it.

3. Review Your Profit and Cash Flow

“Turnover is vanity, profit is sanity and cash is reality”

Nobody knows the definitive origin of the above quote but it is as true today as it was when it was first used.  As we all know, profits cannot pay the bills or the wages until it is actually turned into cash or reaches your bank account.   

Cash and profit are affected by many aspects of your business, so when was the last time you had a really close look at your business model and asked yourself:

  • Do I charge enough for my products/services?

  • Are my profit margins and pricing policies as good as they should be?

  • Are my business sales and products/services mix what I want them to be?

  • Do my customers pay me on time?

  • Am I on top of my stock, production processes or projects?

  • Is my cash flow regular enough and do I have strong enough reserves?

  • Do I make the profits that justify the time I spend in my business?

  • Are my banking arrangements satisfactory?

  • Do I get regular challenge from a coach/mentor/non-exec director that keeps me on my toes?

Not all of these questions will be relevant for your business and indeed there may be others that occur to you in your own particular circumstances, however the point is you need to be asking yourself the right questions about your business.

Tip 3: Step back, identify the top sales/profit/cash issues in your business and take some practical actions to critically address them – ideally engage an independent professional who won’t be afraid to challenge your assumptions, make suggestions and keep you and your business moving forward.

4. Review your banking arrangements

As an ex-banker, issues in this area of business finance still surprise me when I meet with owners/directors.

For those businesses that borrow money, many have no clear idea what their borrowing terms are, rates of interest, fees charged or security held.

Two recent retail business owners that I met were not aware of the significantly higher costs for handling cash from customers and how some simple front line changes could direct more payments to be made by debit cards or online would reduce bank transaction fees by up to 50%.

Banking is a critical element of a small business financial model and so it should not be ignored.

Tip 4: Review your last bank ‘lending facility’ letter (if relevant) and check your arrangements are what you agreed for the borrowing and/or complete an analysis of your last 24 months banking transaction fees to make sure you are not paying avoidable bank charges.

Find time to review your business strategy/future plans

Like most other business owners/directors you probably spend so much time ‘in’ your business, you struggle to spend any quality time ‘on’ your business.

This is a difficult one. 

Firefighting, getting paid, making sales, dealing with issues are all urgent.

Reviewing your business performance, checking trends, making plans and thinking about future strategy are all important. So, the trade-off is between sorting out urgent (and sometimes important) business items and important (yet rarely urgent) business items.

To be honest, few business owners that I meet are able to genuinely show they are practising this and it is often intertwined with other issues detailed earlier in this article:

  • The absence of a quality bookkeeping system means owners/directors may not have access to the management information they need to manage their business now and in the future

  • An ineffective accountant may not bring enough challenge to the owners/directors in terms of the timeliness or quality of financial oversight

  • A lack of structure around pricing and collecting payments may mean too much effort on time consuming operational tasks

Tip 5: Set aside at least one hour every month to review how your business has performed in the last month/quarter and year to date and compare it to the same period last year so you can identify trends that need to be investigated, encouraged or stopped – then use it to make future plans. 

P.S. Ideally complete this review with someone independent and professional who will provide you with the challenge you need to help you make the right decisions.


Running a business is not easy. If it was, then everyone would be doing it!

Understanding the critical role that business finance plays in the success or otherwise of your business and making a start with even some of these Top 5 Tips will help you to manage your business finances now. 

Why not make just small steps and try to take forward one of the tips every month? It’s better than postponing it until you have the time, which you know might never come.

Over to you now. Did you find these tips useful? Tell us your thoughts in the comments below. 


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Comments 1

James OSullivan on Thursday, 20 September 2018 06:44

Great tips for anybody looking for managing their business finance.

Great tips for anybody looking for managing their business finance.
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