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How to manage your small business finances

Use our 17 tips to get your small business finances under control.

Knowing the state of your financial affairs inside and out is one of the best ways to make sure the cash keeps flowing. Staying on top of your small business finances means you can avoid unforeseen business debt and have enough money to invest in and grow your business.

Stay on top of the day-to-day money management

  1. Properly manage your accounting. You can hire a good bookkeeper or purchase DIY accounting software. It’s crucial that you keep accurate track of your income and costs.
  2. Review your costs. Keep track of all of your small business expenses. These can add up quickly, but reviewing them allows you to fine-tune where your money goes.
  3. Make financial projections. Having clear financial projections is important. Your main business plan will help you to anticipate and address possible future obstacles.
  4. Don’t get lazy when it comes to invoicing.
      • Send out invoices as soon as possible after providing goods or services.
      • Set payment terms of seven days to make sure that payments are not forgotten or lost in the process.
      • Always follow up on sent invoices. You can make this easy by creating set templates for email or SMS follow-ups.
      • Reference invoice numbers and cross-reference these with payments.

Need a cash advance on outstanding invoices? See what options are available

Need a business loan? Compare these lenders

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $250,000
6 - 120 months
$10,000 /month
100 days
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
Swoop Funding Business Loan
4.00% - 25.00%
$1,000 - $5,000,000
3 - 60 months
$10,000 /month
24 months
Term, MCA, LOC & more
To be eligible, you must have been in business for at least 24 months and have a minimum of $100,000 in annual revenue.

Swoop partners with banks and alternative lenders to match your business with the right funding options. Register for free and browse your offers without affecting your credit score.
Lending Loop Business Loan
Starting at 4.96%
$10,000 - $500,000
3 - 60 months
$8,500 /month
12 months
P2P
To be eligible, you must have been in business for at least 12 months and have a minimum of $100,000 in annual revenue.

Lending Loop is Canada’s first regulated peer-to-peer lending platform. Complete an application in 5 minutes. Once you accept your loan offer, investors will begin to fund your loan on the marketplace. Your loan will be transferred to your bank account when it is fully funded.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.
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Separate your small business finances from your private accounts

  1. Keep a separate business bank account. Mixing your small business finances with your personal finances is a recipe for unexplained losses and tax headaches. Keeping your business’s money separate in a business bank account will make gauging profitability easier and help you to keep proper track of your expenses.
  2. Keep track of personal loans to your business. Keep accurate records of what you personally loan to your business. When your business starts making money, you can easily pay yourself back first before paying tax on the remaining profit.
  3. Make sure to pay yourself first. This doesn’t mean sucking up all the profit the moment you make it; start with 10% of the earnings. This is a good way to set aside money consistently and test the profitability of your business. It also provides a safety net for unexpected expenses.
  4. Remain frugal. Even though you pay yourself, don’t get sucked up in the benefits of business ownership – even if you can afford it. Set your salary as low as possible and reap the rewards from any government benefits offered to small business owners or those who are self-employed. What you save now will give you more flexibility in future lean months.
  5. Keep travelling costs minimal. Most hotel and travel costs should be spent on a place to simply lay your head at night and a way to get from meeting to meeting. Don’t overspend on luxurious travel and accommodation. This sets a bad precedent to employees and can be an unnecessarily large cost with little return. Plan your business trips as if you were paying for them yourself.

man using a calculator near a laptop

Take care of the bigger business issues

  1. Don’t let legal fees get out of hand. A reasonable amount to pay per hour for legal services is around $300. How can you manage this cost?
      • Make your expectations clear to your lawyer when procuring their services.
      • Choose the billing option that is the most cost-effective for your business, for example, hourly or per project.
      • Ask whether it’s possible to defer payment until the project is funded.
  1. For the more simple necessities, consider DIY legal documents. There are various kinds available online if you do a little research.
  2. Take care when expanding. Make sure expansion is done steadily and wisely. Pushing large amounts of money into expansions that are too quick and too drastic can be disastrous.
  3. Take control of your own marketing and public relations. Follow a PR and marketing strategy to make sure efforts are intentional and focused. Use social media whenever appropriate to help grow your business.
  4. Consider renting instead of buying. Leasing equipment instead of buying helps you avoid maintenance costs and can also prevent you from overpaying on equipment only needed for a specific period of time. You could also consider renting your office space, as it makes relocation and expansion easier.
  5. Don’t wait too long before seeking a loan. An easy mistake to make is waiting until your business is in financial trouble before applying for a small business loan or other credit. This is exactly when you will be least likely to receive financing. Consider applying for a business line of credit when your small business finances are still in a good state. You can use the funds for expansion or as an emergency should you need access to funds. Unlike a loan, you won’t pay any interest with a line of credit until you actually withdraw funds.
  6. Make sure you have enough capital. Small businesses tend not to have enough capital to get themselves through the startup phase. To prevent this, have three months’ living expenses saved plus the amount you are expecting to need for the first three months’ business expenses. Plan as if you expect to receive no business revenue.
  7. Don’t spend prematurely. Don’t go big on business cards, signs, marketing materials, cars, inventory or a trendy office space before any actual revenue comes in. This can create a cash flow blockage.

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