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3 Ways Entrepreneurs Can More Easily Manage Their Money Don't let more money leave your business versus what's coming in. There are plenty of resources available to business owners to help them manage cash flow like a pro.
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A lot goes into running and growing a successful business. You're likely busy finding customers, hiring a team, identifying new markets—you name it. But while your attention is being pulled in what seems like a million different directions, are you making sure to keep an eye on your cash flow, too? After all, managing the money that comes in and goes out of a small business is critical to its long-term success.
"If a business owner does not have the correct practices or tools in place to help them with money management, then they may run into cash flow issues that could be detrimental to their business in the long term," says Kaylyn Houston, Assistant Vice President and High Value Business Card Consultant at U.S. Bank. "Many business owners are not experts in money management; they are experts in the type of work they are doing in their business."
This leads to common and avoidable money mistakes. The biggest and most obvious mistake is not making sure your business has more money coming in than is going out. For many entrepreneurs, keeping track of how their money is flowing in and out of their business doesn't come naturally. The next big mistake is waiting too long to seek credit for the business, such as business loans, lines of credit, and credit cards. Business owners are often ambitious and highly capable, but that doesn't mean they never need a backup supply of funds.
Here, Houston shares three important tips so entrepreneurs can more easily manage their money and thrive for long-term success.
1. Establish a strong relationship with a bank that understands startups.
As you've probably noticed by now, many banks seem the same, offering the same types of products. Houston recommends finding a bank that has experts who can help you and explain things to you, not just sell you services.
"You must be able to trust and have confidence in the bank you are going to do banking with. You also need to be able to manage your accounts all in one place," Houston explains. "This saves time and gives you access to your business information so you can keep tabs on what's going in and out of your accounts."
To get started, reach out to your local bank branch, and ask to have a meeting with their business banker. They can walk you through the beginning steps of your relationship and assist you with the online tools so you can access your accounts and information online. For instance, entrepreneurs can leverage U.S. Bank's Business Essentials online portal of services, like business deposit accounts and online banking/treasury management tools, that are designed specifically to help them run their business effectively and efficiently.
"U.S. Bank is a relationship bank," Houston says. "It's important to us that a business owner trusts and is confident in U.S. Bank to provide solutions to their financials needs."
2. Receive payments and make payments in a timely manner.
It sounds obvious, but business owners absolutely need to get paid as soon as possible so they can effectively run their businesses. "If there is a delay in you getting paid for the product or service you are offering, then it could cost you and your business time and money," Houston says.
To get started, meet with a business banker and payment solutions representative who can help you figure out which merchant processing option is the right fit for you and your business.
A business credit card can be an important asset when making payments. "Meeting with a business banker and a credit card representative will assist you in learning more about how you can use business credit cards to your advantage," Houston explains. "They can show you how credit cards can deliver on your priorities such as creating more purchasing power, maximizing rewards, simplifying expense reporting, and figuring out which card is the best fit."
"Using a business credit card not only helps your business establish credit, but it also can extend your cash flow cycle," Houston says. "For example, if you pay a vendor with a credit card, they are getting paid right away so there may be a discount for paying the invoice in full right away. Not only that, but you will have at least 30 days to pay off that charge on the card. Finally, you can receive cash rewards on those purchase to gain cash back from purchases you already have to make to run your business and add to your bottom line."
3. Establish loans or lines of credit for big-picture growth.
Perhaps you have a plan for how to take your business to the next level but you don't have the liquidity to make it happen right away. Instead of waiting for your savings to build, consider obtaining a business loan or a line of credit to help grow the business.
"Loans can help you upgrade to bigger/better equipment so you can give your clients what they need," Houston explains. "A business line of credit can be useful in short-term expenses that shouldn't be placed on a credit card. Lines of credit can also be in place for cash-flow gaps that you may be experiencing."
Working with your business banker is the best way to figure out if a loan or a line of credit should be established for your business.
Click here to learn more about how U.S. Bank's team of experienced financial experts can help you manage your money and find success.
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