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3 Tips for Stress-Free Money Management
You started a business because you have a passion — a dream of serving customers and making an impact on the world. You want to devote every waking hour to growing and improving your business, but the reality is that a lot of your time and energy can get eaten up managing important and sometimes tedious things like cash flow and investments. Here are three ways to minimize the stress of managing your money so you can concentrate on what you love:
1. Know when to purchase.
Many new business owners feel they have to buy all the resources they need to get operations started. Purchasing excessive fixed assets to reduce tax liability can be a common mistake, says Nanette Reid, Senior Vice President, Senior Credit Officer and Emerging Business Group Division Head at U.S. Bank. "You have to make sure that those assets are doing what you want them to do as far as helping you grow your business."
Putting money back into the business is important for growth, but understand when you should buy and when you should lease, Reid says. The owner of a growing business may want to own the space they work out of, but leasing instead can often times provide more flexibility. Renting equipment may also be a better option than investing capital to buy the tools you need. Assess how long you'll need certain assets and how your rate of growth might change your needs in the near future before you decide to make major purchases.
2. Understand your cash flow.
Pay close attention to your inventory bubble. Inventory ties up capital, so it's important to know exactly how much you have in stock and when to order. In addition to cataloging your products, find a balance between when bills are due and when customers are delivering payment.
"Many banks have treasury management solutions which help you understand your collection times and help you with your record-keeping," Reid says. At U.S. Bank, you can work with a treasury management consultant to learn when money comes in, when money goes out and how to minimize the time in between to manage your working capital gap. You may discover ways to better plan your payment and collection schedules. If you find that outstanding accounts become a regular issue, you can even offer discounts to customers in return for accelerated payment.
3. Use your bank to help.
Sometimes business owners wait too long to involve their bank or CPA. These financial professionals aren't just there when you need to take out a loan or do your taxes. Work with these money experts early on and throughout the life of your business to manage your growth and goals.
U.S. Bank has dedicated business bankers with industry expertise to help business owners reach their objectives. These business bankers can help you determine if you need a line of credit for capital management or when you might need a loan for equipment or real estate purchases.
At a financial institution like U.S. Bank, you can also find fraud prevention solutions. "A big concern for small business owners is protecting their money. We have fraud protection for your ACH, for your checks—anything regarding money moving in or out of your account. We help you minimize the potential fraud," Reid says. Using the resources from your bank from the beginning can help you avoid pitfalls along the way as your business grows.
Credit products are offered by U.S. Bank National Association and subject to normal credit approvals and program guidelines. Some restrictions and fees may apply. See a banker for details. Equal housing lender.
Deposit products offered by U.S. Bank National Association. Member FDIC.
General Purpose Quick Loans up to $250,000 are secured with all business assets and have a maximum loan term of 84 months for loan amounts greater than $100,000, loan amounts $100,000 and less have a maximum term of 60 months. Maximum loan amounts for vehicle Quick Loan is $100,000, except if secured with Class 4 vehicles and above the maximum loan amount is $250,000. Credit products are offered by U.S. Bank National Association and subject to normal credit approvals and program guidelines. Some restrictions and fees may apply. See a banker for details. Equal housing lender.
