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7 Tips for Managing Your Small Business Payments

— February 2, 2022

Cooperate with your accountant or financial adviser and look for ways you can organize your business activities in a way to increase deductions from taxes.

As a small business owner, you often manage your finances all by yourself, without the help of a financial adviser or a financial executive. Without outsourcing the tasks related to payments, you can easily get flooded with the activities taking your attention away from the core business objectives. You have a lot on your plate, but who said you can’t do it? In this article, we are sharing some tricks on dealing with payments more effectively and scaling your business.

1. Use the right transfer service

If you are working with clients from all over the world who pay you in different currencies, you are probably going to lose a lot of fees related to money transfer services. The same applies to subcontractors and employees who receive payments for services in their local currencies.

If you have an account in a local bank, it is worth checking how much it costs to manage it and also looking for any hidden fees that your bank imposes on international transfers. It can turn out you have a lot of payment-related expenses that you can cut.

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

You can find various comparison tables of online transfer services showing the differences in fees.

2. Monitor your cash flow

As your business grows, understanding where your company stands in terms of finances gets more difficult. The situation can get out of control fast when you spend more than you receive from clients. 

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

Remember that cash flow monitoring doesn’t end on tracking current income and expenses. The projected cash flow is another aspect of your business finances that needs 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 insights on a silver platter – you will have to derive it by yourself. If you are new to the topic, start with the basics. Learn about the steps to improve cash flow and research some cash flow tools that crunch numbers, offer some in-depth insights, and visualize your financial situation.

Here is an example of cash flow visualization and prediction of future money-in and money-out transactions.

3. Build trust at checkout

If your clients pay you online and you are using 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 on increasing client trust in your business, you can earn more without introducing changes to the product offering or increasing expenses on marketing.

For example, eCommerce websites such as Kaoori are using the money-back guarantee badge in their checkout process.

4. Create a dashboard with client invoices

When clients pay invoices on time, you can plan expenses accordingly. To make it easy for clients to track their invoice status and quickly check payment deadlines, you can create client panels. There, you get all client invoices listed and can restrict access to it to specific email addresses.

Some invoicing solutions offer this feature where client panels are created automatically and are updated once new invoices appear or their status changes. When choosing one to use, make sure you go with a reliable provider that uses a good SSL certificate and covers the aspects such as your clients’ identity security.

5. Send reminders on overdue payments

To get invoices paid on time, you should introduce regular follow-ups. If your client is a small business owner or a private individual, it’s most likely they don’t have any standardized procedures for tracking and paying invoices. That’s why they can easily pass the payment date leaving you with more unpaid invoices. 

To avoid such situations, introduce regular invoice reminders. Get your invoicing system do it for you, instead of writing such reminders on your own or calling clients as this process is too time-consuming and engaging. 

Nowadays, you can send invoice reminders by various means of communication. Apart from a traditional one – email – you can also use an SMS gateway to set up SMS reminders. This approach will be more effective in case your clients don’t check their email inbox frequently or your emails often land in a spam folder. Apart from this, SMS serves as another channel to remind a client to pay for invoices. So instead of sending too many emails, you can substitute some with a brief SMS message.

6. Invest in growth

You can increase your revenue by either decreasing your expenses or increasing your earnings. While there are certain limits to cutting expenses, there are no limitations to growing your revenue.

Man reviewing project status on a tablet; image by Adeolu Eletu, via
Man reviewing project status on a tablet; image by Adeolu Eletu, via

There are at least a few ways you can increase revenue. You could start with upselling or cross-selling to your existing clients. This way, you would increase customer lifetime value. Your clients would end up paying you more during the cycle of relationships with your business.

Getting more clients is another way to grow revenue. While this might appear to be an obvious business expansion strategy, business owners usually fail at consistently growing their client base. They also tend to face the most challenges with customer acquisition when scaling a business.

Internet marketing is one of the channels you can utilize to get more clients. This channel includes SEO, retargeting, inbound marketing, and more.

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

7. Establish good financial habits

Keeping your business finances healthy is not only about ad hoc practices. Controlling your business performance also depends on good financial habits or an established routine. Those are the financial rules you stick to with no compromises.

Here are some of the good financial habits that will help introduce a healthy routine for keeping your finances under control. 

  • Keep debt minimal

While you might be advised to not fear debt if you want to scale your business fast, the habit of taking loans can quickly turn into a hazard. While there are situations when getting a small loan is justified, in most situations, having debts means you inhibit your chances of creating a cash surplus. In extreme situations, it increases the risk for business insolvency. That’s why consider focussing on growing your business organically instead of getting indebted with no guarantee for success.

  • Maximize deductions

Cooperate with your accountant or financial adviser and look for ways you can organize your business activities in a way to increase deductions from taxes. Learn what business expenses are deducted from your revenue and which ones would result in paying fewer taxes. 

  • Analyze financial statement

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

  • Save for taxes

If you expect to pay taxes every quarter or on an annual basis, it’s easy to forget about tax time and skip payments. You may end up not having any money on your account as you would make payouts to your employees or yourself. To avoid the situations when you have to get a loan to pay for the taxes, remember to freeze some money on your account, so you can be ready for a tax payout on time. 

Wrap up

There are a lot of technology tools that help you automate payments and spend much less time on dealing with them. Instead of using traditional and often expensive solutions for payments, you can choose innovative services that don’t break a bank and will help you save more money. 

When you have already improved the payment management process, remember to scale payments using payment processors, make sure your sales funnel is full of opportunities that you can convert into clients, and aim to scale your business at some point. Once you can’t manage to handle 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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