8 Tips for Managing SME Finance

8 Tips for Managing SME Finance

SME Finance (Small and Medium-Sized enterprises) Management Tips will help you learn how to properly manage your company’s finances. Recently, people choose to start a small business.Unfortunately, many businesses fail. what is the reason?  The success of a company depends largely on how you run it. With proper management, your business will run smoothly. On the other hand, poor management can confuse your business.  Before you start, it’s a good idea to get a better understanding of business management, especially related to financial management.


Here are some tips for managing the finances of small businesses that you need to understand before you start a small business.

1. Self-education

Self-education is the first thing to do in managing a company’s finances. The way to educate yourself is to learn how to read financial statements.
For those who don’t know, financial statements are basically made up of four parts.
Cash Flow Report
Revenue Report
Balance Sheet Report
Capital Report
Learning to read financial statements is at least a step to complete to be taken for the development of your business.

2. Execute the Planning

Planning General or general requirements must be done before starting a business. Prepare the big picture and first steps to take as a leader of a small business.
Once you have a big plan, divide it into several parts. For example, daily, weekly, and monthly plans. In this way, business development is more structured.
You also need to be detailed when planning. Needs and capital that need to be prepared based on what to do.

3. Create a budget on a regular basis

Not only financial records, but also budgeting and budgeting are important for a company. Budgeting aims to limit expenses so that they do not grow.
It’s a good idea to create a regular budget, for example monthly or weekly. Divide the cost for each group. Make sure that all the requirements of your company are met.
A regular budget can also increase the efficiency of your enterprise. This has a positive effect in the long run.
Cashbook notes should also be taken into account when calculating the budget. Therefore, you can see which budget to increase or decrease.
This budget is created because it cannot be separated from one period to the next or previous period. Everything must be sustainable for your business to run smoothly.

4. Turn Cash Flow Faster

Good corporate financial management to generate cash flow faster is also reflected in how to manage accounts payable properly.
Turn your cash flow, many business owners are having a hard time turning their cash flow, why is debt management related to cash flow income? If the
loan sells longer than the loan buys, the cash flow cycle will also be slower.
Therefore, it is very necessary to balance the two.

Read Also: 4 Types of Insurance Everyone Needs

5. Use your profits to grow your business

If you make a big profit, your business is considered successful. Instead of using it for your personal needs, set aside profits to grow your business.
At least 10% of the profits earned in a month will be added to working capital. That way, the business you start can continue to grow.
For example, there is a grocery store. Save monthly profits to buy more different items.

6. Separating Personal Money and Business Money

No matter how small your business is, you should separate the money used for business purposes from your personal money. The purpose of this separation is to prevent working capital from being used for personal purposes.
The worst part of combining business money and personal money is that capital is overlooked. This situation will bring your company out of business.
Use another space between personal money and business cash. You can split it into two different wallets. We also recommend creating a separate company-specific account.
You must also promise not to use business cash to meet your personal needs.

7. Preparing Emergency Funds

We never know what will happen to our business in the future. The worst can happen. For example, with the advent of competitors, natural disasters and sales continue to decline.
Such can put your company in a dangerous position. Reserves or emergency funds need to be prepared to anticipate difficult times.
This emergency fund must be prepared from the beginning before starting a business. These resources should also be used with caution.
Do not use in situations where it is still managed. You can use these funds if you suffer a loss.
Under normal and stable circumstances, this emergency fund can be considered an asset that can be closed.

8. Assets, Owners, and Capital Monitoring

All assets, owners, and capital must be recorded in a structured manner. All of this can affect the sustainability of your company.
Accounts receivable are an asset of the company and should be properly recorded. Otherwise, you may unknowingly lose your company’s assets.
Creditors have their own records, but they also need to record their debt to shareholders. This will prevent double payments and unilateral claims from creditors.
All products owned by the company must also be entered in the inventory book. Check regularly to make sure you haven’t lost any items.


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