Tips for managing business finances
Profitable businesses fail every year for one reason: the money arrives later than it leaves. These are the habits that prevent that — and that quietly make you cheaper to lend to.
Forecast thirteen weeks, and update it on Fridays
A thirteen-week cash-flow forecast is the single most useful document a small business can keep. It is a simple grid: money expected in, money committed out, week by week, for a quarter ahead.
It takes twenty minutes a week once it exists, and it turns "I think we are alright" into "week nine is tight, so I will chase those two invoices now". Lenders take you far more seriously when you have one, because it shows you are running the business rather than reacting to it.
Treat credit control as a routine, not a confrontation
Most late payment is not malice; it is a purchase ledger working through a pile. The businesses that get paid first are the ones that invoice immediately, state terms clearly, and follow up on a predictable schedule.
Chasing feels awkward for about a fortnight and then becomes ordinary. Getting paid on time is cheaper than any funding facility you can buy to cover the gap.
A credit control routine that works
- Invoice the day the work is done, not at month end
- Put payment terms and bank details on every invoice
- A polite reminder three days before due date does most of the work
- Agree terms with big customers before you take the order, not after
- Consider What this meansReleasing cash tied up in unpaid invoices. A lender advances most of the invoice value now and settles up when your customer pays. only once the basics are in place — it is not a fix for poor credit control
Keep the money separate, and put tax aside as it arrives
Business and personal accounts should never mingle. It muddies your accounts, complicates your tax position and makes lending decisions harder, because nobody can see what the business actually does.
The same applies to tax. Move VAT and corporation tax into a separate account as the money comes in and a quarterly bill stops being an event. A surprising share of emergency borrowing in the UK exists purely because a VAT bill met an empty account.
Know four numbers by heart
You do not need to be an accountant, but you should be able to say, without looking: your monthly fixed costs, your gross margin, what you are owed, and what you owe.
Those four figures answer most questions a lender, an accountant or a worried Sunday night will ask. Knowing them also makes the difference between borrowing to grow and borrowing to survive — and lenders can tell which is which.
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