5 ways to optimize your small business finance processes

By David Webb

No matter how brilliant your business idea is, for it to become a success you need to run your business as efficiently as possible. It comes as no surprise that this starts with getting your small business finances in order. This can help you reduce your overhead, boost your credit rating and improve your standing with potential investors. Nevertheless, optimizing your small business finance processes is a broad term and here are five methods you might want to use as your starting point.

Bill payment

The first thing you need to keep in mind is the fact that regular and timely bill payment isn’t simply good manners, it also affects your credit rating. In the future, this can make a difference between getting a loan application approved or being rejected. Because of this, your first priority needs to be learning how to pay all your bills in time. This can come down to two major factors. First, you need to make sure all your bills are paid by the due date or as soon as possible. Second, you need to ensure that you spend as little time as possible paying bills, due to the fact that this business practice is simply more efficient.

Apart from this, you also need to learn how to cut the costs of your bill-payment process. On average, an SMB spends somewhere around $12 to pay a bill, when the same can be done with less than $2 (when done electronically). This discrepancy happens due to a poor bill-payment system. While at first, it may not seem like much, you need to keep in mind that this adds up fairly quickly. Just think about the number of bills you’re required to pay on a monthly basis, multiply this by 12 and you will see a serious expense that is easy to avoid. Needless to say, both of these issues can be solved by automating your bookkeeping and paying these bills electronically.

[amazon_link asins=’0998051802′ template=’ProductAd’ store=’succeedingin-20′ marketplace=’US’ link_id=’0e486856-47bc-11e8-8600-2bd2335496d8′]Collect your debts

Being considerate is not the same thing as being a pushover; after all, you’re running a business and not a charity foundation. Even if you do hate the idea of bothering your debtors for your hard-earned money, you still have an overhead and your business needs a constant influx of cash in order to run. After all, you have bills, salaries and lease to pay, not to mention that you can’t actually work if you don’t pay your suppliers in time.

The most efficient way to start tackling this issue is to automate this process by opting for direct debit services. In this way, you get a better management of recurring payments and debts, which will be much easier to distribute later on. As for those who aren’t as vigilant in their payments, you might want to consider outsourcing to a professional debt collection agency.

Consider factoring

The next issue you need to address is the one of providing your company with some working capital through factoring. The advantage of this method over any other is that you stand to lose only 1.5 to 5 percent of the total invoice value (depending on the factoring company and the overall value of the invoice in question). Moreover, you’re not selling equity in your company or overburdening yourself with hefty interest rates. You’re merely getting your money a bit ahead of the schedule.

Consolidate your debt

Facing several different debts at the same times can be incredibly confusing. Apart from having several different payment dates (which is a problem we discussed in the first section), you are also facing several different interest rates, some of which may be terrifyingly high. So, to get your finances in order, it might be a much better idea to simply consolidate your debt. On the one hand, this doesn’t reduce the total amount of money you owe but it does make your life considerably easier and therefore optimizes your business finance processes. Also, this might reduce the interest rate on your debt by quite the margin.

[amazon_link asins=’047012508X’ template=’ProductAd’ store=’succeedingin-20′ marketplace=’US’ link_id=’18470007-47bc-11e8-bb48-497be48f6351′]Outsourcing your accounting

Finally, you might want to do something that’s been a common business practice for decades and centuries and simply outsource your accounting. Some SMB owners, especially if their business is a sole proprietorship, believe that they can run their own books. However, there’s more to accounting than simply running books. Ensuring correct tax fillings and reducing the cost of financial obligations are just some of the numerous examples. If for nothing else, financial planning and estimation done by professional accountants is something that potential investors hold in incredibly high regard, which is something you always need to take into consideration.


While some of these techniques solve more than a single problem, others are quite specific and benefit your business only within that limited niche. On the other hand, there’s nothing preventing you from combining these methods however you see fit in order to create a closed financial system that is capable of satisfying all the needs of your business. In time, you will discover many other ways to optimize your company’s finance processes, yet, for the time being, tackling these five issues may be more than enough.


David Webb is a Sydney-based business consultant, online marketing analyst and a writer. With six years of experience and a degree in business management, he continuously informs the public about the latest trends in the industry. He is a senior editor at BizzmarkBlog. You can reach him on Twitter or Facebook.

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