Knowing the state of your financial affairs back to front is one of the best ways to make sure the cash keeps flowing. Staying on top of your finances means you can avoid unforeseen business debt and have enough money to invest in and grow your business.

1. Keep A Separate Business Bank Account & Credit Card.

Avoid mixing your personal expenses and income in the same account. Open up a separate bank account whose only source of deposits is the business income you receive. Also open up a separate credit card where the only charges are those related to the business. Having a separate business bank account and credit card is ideal for record keeping purposes. This will give you have a clear dividing line between your personal and business expenses

2. Make Sure You Have Enough Capital.

Small businesses tend not to have enough capital to get themselves through the startup phase. To prevent this, have three months’ living expenses saved plus the amount you are expecting to need for the first three months’ business expenses. Plan as if you expect to receive no business revenue.

3. Properly Manage Your Accounting.

Buy a DIY accounting software like Quickbooks or Xero. If bookkeeping isn't a strength consider hiring a bookkeeper. It is vital to have precise tracking of your income and costs. When setting up your software don't be afraid to contact your CPA or EA about Chart of Accounts (expense categories). These are very generic categories that may not apply to your business. Setting them up properly will save you headache come tax time.

4. Review Your Costs.

Be mindful of your small business expenses. These can easily add up quickly when you are starting out. By reviewing them frequently, you will allow yourself as the owner to strategically decide where your money should go.

5. Don’t Spend Prematurely.

Don’t splurge on signage, marketing materials, or inventory before any actual revenue comes in. This can create a cash flow blockage.

6. Stay On Top Of Your Invoicing.

• Send out invoices as soon as possible after providing goods or services.

• Set payment terms of seven days to make sure that payments are not forgotten or lost in the process.

• Always follow up on sent invoices. You can make this easy by creating set templates for email or SMS follow-ups.

• Reference invoice numbers and cross-reference these with payments.

7. Make Sure To Pay Yourself First.

This doesn’t mean sucking up all the profit the moment you make it; start with 10% of the earnings. This is a good way to set aside money consistently and to test the profitability of your business. It also provides a safety net for unexpected expenses.

8. Keep Track Of Personal Loans To Your Business.

Keep accurate records of what you loan to your business. When your business starts making money, you can easily pay back the director’s loan first before paying tax on the remaining profit.

9. Apply For A Business Loan When You Are In Good Standing.

An easy mistake to make is waiting until your business is in financial trouble before applying for loans or other credit. This is exactly when you will be least likely to receive financing. Consider applying for a business loan when your financials are still in a good state. This way the loan can be used for expansion or as an emergency line of credit instead of rescue.