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How can small businesses stay financially fit? Serg Premier, NAB’s General Manager of Deposits & Transactions, explains the importance of controlling business expenses.
Knowing at a glance how money flows in and out of your business is crucial for business survival, says NAB’s General Manager of Deposits & Transactions, Serg Premier. Here, he outlines tips for small business expense management.
Tip 1: Set budgets and stick to them.
Establishing budgets is a great discipline to get into in order to create a better understanding and knowledge of exactly where your cash is going. Depending on the needs and size of your business you may do this on a weekly or monthly basis.
Tip 2: Involve your staff in budgeting and identifying areas for cost cutting.
Don’t underestimate the value of involving staff in creating a cohesive, responsible expense management culture. After all, it’s staff who are often the most capable of identifying ways to reduce costs and help recognise any hidden inventory (a major pool of trapped cash). Set new expense targets and gain ownership and buy-in from staff. The objective is to have staff critique all spending as if the ‘money was their own’. Ensure your employees know their budget and restrict how much they can spend.
Tip 3: Keep accurate and detailed records to ensure that you know where your money is going.
Exclusive use of cash and cheques can lead to expenses and payments quickly spiralling out of control. Use of some form of business card can help with expense tracking, providing monthly statements recording total expenses and listing who in your business is making purchases.
Tip 4: Choose a cost-effective method of making payments.
For many small businesses, every dollar counts. That’s why it’s important to ensure you have a cost effective method of making payments and incurring expenses. If use of cash and cheques requires you to do all of your banking in branches, you may incur an additional cost of banking this way. Making payments to your suppliers by electronic transfer or making petty cash expenses via a business card can reduce the amount of time and cost associated with banking cash and cheques.
Tip 5: If you don’t trust yourself with credit facilities, find an alternative.
Some businesses prefer the control and discipline of using their own money to make purchases. This can be a preference based on previous over-spending or letting expenses get out of control, or just based on the additional cost that may be incurred with credit facilities. If this is you, ensure you only use your own money when making purchases and don’t rely on credit facilities.
NAB has a range of cards available to help you manage your business expenses, from Credit cards, Charge cards, Corporate cards and the recently launched NAB Business Payments card. The NAB Business Payments card uses your own funds to make purchases and has no annual or monthly card fees. The card provides a separate detailed monthly statement, and removes the hassle of managing cash and cheques, receipt reconciliation and staff reimbursements. Preparing tax statements can also be made easier because all transactions are recorded on one statement. Find out more about NAB card solutions.
Download these free tools to help you manage the cash coming in and out of your business:
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