RBizz Corporate Accountants - Resources #Personal FinanceRBizz Corporate Accountants - Resources #Personal Financehttps://www.rbizz.com.au/blogs/tag/personal-financeFri, 08 May 2026 07:33:24 +1000http://zoho.com/sites/<![CDATA[3 Ways to Make Your Business Attractive to Lenders]]>https://www.rbizz.com.au/blogs/post/3-ways-to-make-your-business-attractive-to-lendersMicro, small and medium businesses make up over 90% of all firms, globally, but still find it hard to access funding. We have 3 tips for improving your chances of getting a loan approved.]]>


3 Ways to Make Your Business Attractive to Lenders

MSME business funding strategy

Micro, small and medium-sized enterprises (MSMEs) make up over 90% of all firms and, on average, account for 70% of total employment and 50% of GDP worldwide.

But MSMES are finding it increasingly difficult to access funding. According to recent figures from the International Finance Corporation, (part of World Bank Group) the MSME finance gap in emerging markets and developing economies (EMDEs) now stands at $5.7 trillion.

The key routes to funding

For your micro, small or medium-sized business to thrive, it’s important to have easy access to funding. But what are the usual routes to take when looking for additional funding?

For many business owners, the starting point has traditionally been their bank. Overdrafts, business loans and access to credit cards open up a route to extra capital. But with the major banks currently reluctant to lend to MSMEs, the lending market has diversified.

Private finance specialists and fintech platforms offer ways to borrow. But despite the proliferation of alternative lenders, it’s still vital to be an attractive proposition for lenders.

How to make your business more attractive to lenders

Lenders don’t want to lend to a risky prospect. As a business, it’s critical that you have a positive credit profile, good sales revenues and the available cashflow to repay the loan.

To present your business as a more attractive prospect, try these three key approaches to good recordkeeping, cashflow administration and debt management.


Keep accurate, real-time financials: Using cloud accounting software, like Xero, QuickBooks or MYOB, helps you provide potential lenders with the financial data they need. Having up-to-date balance sheets and cashflow statements gives the lender a clear overview of your financial performance and reduces the perceived risk of lending.


Demonstrate consistent cashflow coverage: Focus on achieving a strong debt service coverage ratio (DSCR). If you can show consistent, recurring revenue that comfortably covers the company’s existing and proposed debt obligations, this reassures lenders of your ability to repay.


Strengthen your business credit scores: Regularly monitor and improve your business credit score by paying suppliers early and correcting reporting errors. A high score signals you’re a low risk to lenders and eases the path to lender approvals.


Opening up the best routes to small business lending

If you’re eager to scale but are facing resistance from traditional lenders, come and talk to us. Our team can help you build a workable funding strategy and recommended approach to best lenders.

Contact Us


]]>Fri, 10 Apr 2026 13:50:20 +1000<![CDATA[Business credit: using loans to grow your business]]>https://www.rbizz.com.au/blogs/post/business-credit-using-loans-to-grow-your-businessHaving a good business credit profile is vital for accessing routes to funding. We look at six different ways to fund the growth of your small business.]]>

Business credit: using loans to grow your business

Business credit: using loans to grow your business
Business credit: using loans to grow your business

Whatever stage you’re at in the business journey, having an injection of additional working capital is always welcome. Being able to borrow money and take
Whatever stage you’re at in the business journey, having an injection of additional working capital is always welcome. Being able to borrow money and take on managed debt in the business is what allows you to fund the next stage in your growth.

But how does your credit profile affect your ability to borrow as a business? And what types of debt financing will help you expand, grow and scale up the company?

Let’s explore the impact of your risk rating and the types of finance that may be availableYour credit profile: and how it impacts your ability to borrow

Your credit profile is a measurement of your risk as a borrower. It’s how banks and specialist business lenders assess whether you’re a good business to lend to.

Lenders want to know you have the revenue and cashflow needed to repay a loan. This will generally be assessed based on your business credit score and your overall financial health and forecasted business performance. 

With a good business credit score, your application for a loan is more likely to be accepted. With a poor credit profile, those doors to potential lending are more likely to be closed.


What is debt financing and how does it help you borrow money?

Debt financing is the process of borrowing money from a lender and paying it back over a pre-agreed timeline through regular repayments.

This is how it will typically work:

  • You apply for a loan, with supporting documents showing your financial health
  • The lender analyses your risk profile
  • If you’re successful, the lender lends you the money
  • You take on this debt in the business
  • You use the capital to invest in growth
  • You gradually reduce the debt by repaying the loan


Are there risks associated with taking on debt?


There are obviously risks associated with taking on any kind of business loan.


Too much debt can be a financial burden. But well-managed debt can be the key to financing the expansion of the business, whether it's hiring more staff, or investing in new equipment. What types of loans and financing are available?


There are a multitude of different loans, financing options, lines of credit and government grants available to you. Knowing what’s right for your business, and specific funding needs, is down to understanding how each type of financing works.


Here’s a breakdown of the common ways of borrowing:


Unsecured loans:

Unsecured loans allow you to borrow funds without offering any collateral – collateral being assets you offer to guarantee the loan. Because there’s no collateral guarantee, unsecured loans will generally be for smaller amounts, with higher interest rates.

Unsecured loans are typically used for flexible purposes like working capital or marketing campaigns, leveraging the business's creditworthiness and cashflow for growth.


Secured loans:

Secured loans require collateral, like business assets or property, as a guarantee. Due to the lower risk for the lender, you’ll generally be able to access larger sums of money and lower interest rates with a secured loan.

Secured finance is usually used to fund significant investments, such as buying expensive machinery or expanding your operations by creating new branches.


Asset finance:

Asset finance helps you acquire specific high-value assets, like vehicles, machinery, or technology, without a large upfront payment.

There are various different types, including:

  • Hire purchase, where you have use of the asset and gradually repay the cost to the lender over an agreed amount of time, with an option to own the asset at the end of the term.
  • Finance lease, where the lender buys the asset and leases it to you for a fixed term. You’re responsible for maintenance and insurance, but you can buy the asset at the end of the term.
  • Operating lease, where you rent the asset from the lender, but without the intentioning of owning it. The lender retains all the risks and rewards of ownership, including the residual value.

Using asset finance helps to preserve your cash flow while giving you the essential tools that you need to grow and expand the business.


Commercial property loans and bridging loans:

Commercial property loans are long-term mortgages that you can use to buy commercial premises. Bridging loans are short-term loans that are usually used to ‘bridge’ the gap when waiting for other finance to be secured.

Both types of loan are secured by property, allowing you to finance your expansion, purchase new land or manage cashflow between property transactions.


Lines of credit:

Lines of credit provide a flexible revolving fund up to a set limit, often used for daily cashflow needs. Credit will usually need to be repaid monthly, depending on the terms of the agreement.

Types of business credit include trade credit, where your suppliers extend an agreed amount of credit, and business credit cards, which are ideal for managing working capital and extending cashflow during the expansion of the business.


Government grants and tax incentives:

Not all means of financing involve debt financing. In some situations, there are government grants and tax incentives that can be used to fund your company’s growth.

Government grants allow you to make use of money from the government, without having to pay back the funds. Tax incentives are usually used for specific purposes like research and development (R&D), creating jobs or entering new markets. They’re a great way to cut your corporation bill and fund new growth without incurring debt.

Contact Us


]]>Mon, 18 Aug 2025 12:09:21 +1000<![CDATA[6 Powerful Reasons To Watch Your Financial Reports]]>https://www.rbizz.com.au/blogs/post/6-powerful-reasons-to-watch-your-financial-reportsAs a leader, if you are acting like a mushroom grower you’re unlikely to have a clear plan yourself, so you can’t share this with your team.]]>

6 Powerful Reasons To Watch Your Financial Reports

6 Powerful Reasons To Watch Your Financial Reports
6 Powerful Reasons To Watch Your Financial Reports

Making time to look over your financial reports each month is an important task for any business owner. If you are not taking time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend you should start to.

But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following:

  • The Statement of Financial Performance – also known as the Profit and Loss report (P&amp;L) or the Income Statement – tells you, as the name suggests, how your business is performing over a period of time, such as a month or a financial year. In broad terms it shows the revenue that your business has generated, less the expenses for that same period. In other words, it shows how profitable your business is.
  • The Statement of Financial Position – also known as the Balance Sheet shows the value of the business’s Assets, Liabilities and Equity. 
    1. Assets include things like money in bank accounts, Plant and Equipment, Accounts Receivable balances
    2. Liabilities include things like Bank loans and credit cards, Accounts Payable, and Hire Purchase balances
    3. Equity is the difference between your Assets and your Liabilities and includes Retained Earnings and Owner Funds Introduced

  • Accounts Receivable Ageing report (Aged Receivables) – this shows how much money is still owed to the business as at a certain date in time, and is usually segmented as to how overdue they are, or sometimes by how far past the invoice date they are. Generally, you will have Current, 30, 60 and 90 days columns.
  • Accounts Payable Ageing Report (Aged Payables) – this report shows who the business owes money to as at a certain date in time and, like the Accounts Receivable Ageing report, is usually segmented by overdue period.

So why bother?

  • Understand your business better - by looking at your Profit and Loss report monthly you will get a good picture of how your business is performing month by month and it gives you a better understanding of what makes up your profit. It can be helpful to compare periods, or to look at a month by month P&amp;L, so you can clearly see on one page the revenue and expenses month by month. This also helps identify trends in your data and many also help to highlight anomalies in coding/categorising or unusual expenses or earnings. 
  • Accurate information for lending purposes – If you are applying for a loan or an overdraft, the bank or financial institution will look closely at both your Profit and Loss report and the Balance Sheet as a lot can be learned about a business by looking at these reports together. If you are unsure what some of your balances are in your accounts, get in touch and we can explain them further.
  • Get paid quicker and reduce bad debts – by looking at your Accounts Receivable Aged Summary each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher the risk of it not being paid at all, so it is important to keep on top of this. 
  • Better relationships with your suppliers – Assuming you are entering your supplier bills into your accounting software (recommended for most businesses to get an accurate profitability figure) your Aged Payables report will alert you to any unpaid or overdue amounts. Supplier relationships are an important aspect of your business and paying on time is crucial to maintaining those relationships. 
  • Better cashflow – having an accurate understanding of how much money the business is owed, and how much money the business owes, can help with cashflow planning to ensure that there is enough money when needed. Additionally, understanding the trends of your business, its profitability drivers, its expenses, etc., can help to plan sales and marketing campaigns so that the revenue keeps coming in.
  • Better business decision making – Your financial reports tell the story of your business and it’s important that you understand the story that they are telling you. The better you understand what’s going on in your business the stronger position you will be in to make better business decisions that affect the profitability of your business and its financial viability.

If you would like to know which reports are relevant to your business, and you want to better understand what’s going on in your business, then get in touch so we can make a time to go through them with you.

Your business success is important to us and we are here to help you.

Contact Us


]]>Sun, 10 Aug 2025 19:40:54 +1000<![CDATA[Making your business work for you: the big goal]]>https://www.rbizz.com.au/blogs/post/making-your-business-work-for-you-the-big-goalIs your business helping you deliver on your personal goals? Our new series looks at ways to make your business work for you, with handy hints on setting and tracking your goals.]]>

Making your business work for you: the big goal

You spend a lot of time making sure your business runs like clockwork. But is your business delivering for you personally, as the owner and/or founder?


In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals. 


A business that supports your personal vision and life goals


When you started your business, you’ll have had a clear idea of how this new venture would provide for you and your family. But, over time, your attention can become focused on the day-to-day operations, with less awareness of how the company is delivering on your own personal and entrepreneurial goals.


In this series, we want to reverse that flow. We want you to think clearly about what you want from life, your business and your wider position as an entrepreneur.


We’ll look at:

Maintaining a healthy work/life balance

Think about how you structure your business to allow for flexibility and time for your own personal pursuits. This could involve working remotely to spend more time with your family, flexible working hours or having the right team to delegate work to.


Securing your lifestyle

Make sure your business generates enough income to support the lifestyle you’re aiming for. This may mean reviewing your budget and expected income, setting financial goals and developing a business model that delivers the revenue you need.



Making enough to retire

If the end game is to retire, you need a nest egg to do this. Funding a comfortable retirement might mean reinvesting dividend income into a pension, exploring tax-efficient strategies and developing a long-term financial plan.




Investing in your passions

What gives you joy outside work? You can use your business as a platform to pursue your passions, whether it's supporting local charities, promoting sustainability or creating products that reflect your personal and ethical values.




Passing the business to the next generation

Before you retire, it’s important to plan for a smooth transition to the next generation, whether those successors are family members or other members of your existing team. This will mean putting serious thought into succession planning and training.




....

Helping you set and track your personal goals


Over the course of this series, we’ll explore each of these five goals in more detail. In the meantime, we’re here if you want to track how you’re performing against your personal goals.


Come and have a chat about what you want from your business.

Contact Us


]]>Fri, 27 Jun 2025 19:37:36 +1000<![CDATA[PSI under increased scrutiny with new guidance released]]>https://www.rbizz.com.au/blogs/post/psi-under-increased-scrutiny-with-new-guidance-releasedPersonal services businesses must remain aware of other tax obligations, such as steering clear of tax avoidance schemes. Find out what this means for you.]]>

PSI under increased scrutiny with new guidance released

A recent draft compliance guidance has been released by the Australian Taxation Office (ATO) that deals with income that your business earns.


Specifically, this draft guidance relates to income that comes from personal exertion and services. As you self-assess your income as a personal services business (PSB), this may require further analysis going forward to ensure your arrangements are not subject to high-risk audits.

Personal services income rules

The PSI rules are in place to deny you an opportunity to divert income to an associate of yours that pays a lower average rate of tax. If the PSI rules apply to you, there are also limitations on the types of tax deductions you can claim.


However, in your circumstances, you have been declaring yourself as a PSB. This allows you to operate as a standard business, generally earning income through your trust/company.

Tax avoidance schemes

The draft guideline highlights situations where individual's in your industry use a PSB to gain a tax benefit by distributing income that an individual earns through personal services to another person or company that does not undertake those services.


Overall, the ATO argues that the sole reason for doing this is to obtain a tax benefit, such as the individual's income getting the tax-free threshold twice. An example of this would be a non-working spouse getting a dividend where tax is paid at the lowest marginal rate of 16%.

Next steps

In order to make sure you are fully compliant with your tax obligations, we would like to have a deeper look at the type of work you complete, as well as go through the contracts you sign.


This will help us advise you on the best way you can distribute income made by your PSB in a manner which is commensurate with the services provided by the principals in your business.


Please give us a call to arrange a follow up meeting, where we can discuss further.

Contact Us
]]>Thu, 26 Jun 2025 12:37:53 +1000<![CDATA[Keeping your cashflow strong in tough times]]>https://www.rbizz.com.au/blogs/post/keeping-your-cashflow-strong-in-tough-timesWeathering the storm? Small businesses are particularly vulnerable in tough economic times. We can help with strategies for healthy cash flow, so you can continue to thrive.]]>

Keeping your cashflow strong in tough times

Small businesses are particularly vulnerable in tough economic times. 


When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive. 


Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for. 


If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.

MINIMISE THE STRESS OF CASH-FLOW

INVOICE EARL

Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.




CHASE PAYMENT

Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.




TALK TO SUPPLIERS

A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship. 




REVIEW INVENTORY

Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?




REVIEW YOUR COSTS

It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to. 




TALK TO THE BANK OR TAX DEPARTMENT

Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?




We can help you implement strategies to protect your business for the long term and help you alleviate cashflow worries.

Contact Us


]]>Fri, 20 Jun 2025 15:50:04 +1000<![CDATA[What makes a business expense tax deductible?]]>https://www.rbizz.com.au/blogs/post/what-makes-a-business-expense-tax-deductibleThe ATO recently published some ‘wild claims’ that business owners had tried to make for business expenses. But what CAN you claim and what CAN’T you claim? We have the answers.]]>

What makes a business expense tax deductible?

You’re a business owner, so you’ll incur a fair number of business expenses over the course of your average week. Costs for client entertaining, petrol to put in your car and toner for the office printer to name just a few.

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But are any of these expenses deductible against your tax bill?

The Australian Taxation Office (ATO) recently published some wild claims that business owners had attempted to make when claiming for business-related expenses:


A mechanic tried to claim an air fryer, microwave, 2 vacuum cleaners, a TV, gaming console and gaming accessories as work-related. 


A truck driver tried to claim swimwear because it was hot where they stopped in transit and they wanted to go for a swim. The claim was denied as these expenses are personal in nature.


A manager in the fashion industry tried to claim well over $10,000 in luxury-branded clothing and accessories to be well presented at work, and to attend events, dinners and functions. The clothing was all conventional in nature and was not allowed.

Needless to say, none of these expense claims cut the mustard for the ATO. So What Expenses Can You Claim?

BUSINESS EXPENSES THE ATO ALLOWS YOU TO CLAIM

Most expenses you incur in the everyday running of your business can be claimed, but to qualify, the expense must be directly related to earning your assessable income.

This can include day-to-day operating expenses, purchases of products or services for your business and even certain capital expenses, such as the cost of depreciating assets.

The ATO has three golden rules that an expense must pass to be tax deductible:


1. The expense must have been for your business, available as an allowable deduction and not for private use.


2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.


3. You must have records to prove it.


As a rule of thumb, if your expense is in any way related to personal usage, then it’s not tax deductible as a business expense.

For example, NONE of the following expenses can be claimed with the ATO:

  1. Entertainment expenses, other than those you provide as a fringe benefit.
  2. Traffic fines, even if it was during business travel.
  3. Private or domestic expenses, such as childcare fees or clothes for your family.
  4. Expenses relating to earning income that is not assessable.
  5. Payments for which you have not met your PAYG withholding or reporting obligations – non-compliant payments.
  6. The GST component of a purchase if you can claim it as a GST credit on your business activity statement.Still unsure?


If you’re unsure whether a cost qualifies as a business expense, or whether you can make a claim to the ATO, do come and talk to the team.

We’ll help you review your operational expenses, so you can maximize the tax deductions and lighten the load on your cashflow.


Contact Us


]]>Thu, 19 Jun 2025 10:54:05 +1000<![CDATA[Rise in the minimum wage: the impact for your business]]>https://www.rbizz.com.au/blogs/post/rise-in-the-minimum-wage-the-impact-for-your-businessFrom 1 July 2025, the minimum wage for Australian workers increases by 3.5%. We explain the numbers behind the increase and the potential impact for your small business.]]>

Rise in the minimum wage: the impact for your business

     
On 3 June 2025, the Fair Work Commission’s Expert Panel announced the National Minimum Wage and award wages will increase by 3.5% from 1 July 2025. This wage increase follows on from the 2024-25 Annual Wage Review and its recommendations.

This increase in basic pay is great news for Australian workers, especially with the country facing an ongoing cost-of-living crisis. 

But how will an increased wages burden affect your small business?

 What’s the new minimum wage?
 The 3.5% increase will mean that the National Minimum Wage will increase by:
      • $0.85 to $24.95 per hour
      • $32.10 to $948.00 per 38-hour week
      • $1,669.20 to $49,296.00per year.

How will the wage increase impact your payroll cost

If your workforce includes a large percentage of employees that are currently on the minimum wage of $24.10, that jump of 85 cents per  hour will put extra pressure on your cashflow.

For example, if you’re currently employing 20 people on the minimum wage, and pay them every two weeks, the salary component of your  payroll will jump from $36,636 to $37,920. That’s an extra $1,284 on your payroll bill every fortnight – and that’s before you factor in super  contributions and other benefits.


Talk to us about preparing for the wage increase
 If you’re concerned about the cashflow impact of an increase to the minimum wage, please do come and talk to the team.

 We can review the overall effect of the 3.5% rise and suggest ways to mitigate the impact on your payroll costs, cashflow and overall financial position.


Contact Us
]]>Tue, 17 Jun 2025 15:43:13 +1000<![CDATA[Business credit score: how to build a good credit profile]]>https://www.rbizz.com.au/blogs/post/business-credit-score-how-to-build-a-good-credit-profileA good credit profile acts as the foundations for your start-up’s finance strategy. But what can you do to build and nurture a good credit profile and business credit score?]]>

Business credit score: how to build a good credit profile


    When you first start out in business, having access to finance will be fundamental to your success. And being able to borrow funds, or attract investment, will be dependent on you having a good business credit score and a healthy credit profile as a business.

     But having a good credit history can be tricky when you’ve only just begun trading.

    Let’s explore how you can build up your credit profile as a start-up.

Why is your credit profile important?
Funding is key to getting your startup off the ground. Banks will lend to you and private equity investors will put money into the business – but only if they see the business as viable.

In short, lenders and investors want to be confident that you’re a low-risk prospect, with viable income streams, good cashflow and the capability to repay the loan, or deliver a return. 

Your credit profile lists your credit history, payment history and your public financial records, to give an overview of the general creditworthiness and risk level of your business.Key factors that affect your credit profile

Your credit profile evolves over time, along with the business. And your overall business credit score is not static. By being responsible with your use of credit facilities and your overall financial governance, you can improve your credit score and open up more routes to funding.

Here are some ways you can grow your credit profile as a new start-up

Pay your suppliers and debts on time

Always pay your bills, invoices and loans before their due dates. This demonstrates that you’re reliable and financially responsible, factors that are heavily weighted by credit reporting agencies (CRAs) and lenders when assessing your business's creditworthiness.

Keep your credit utilisation ratio low

Don’t use the full amount of credit that’s available to you. A high credit utilisation ratio can signal financial distress, so aim to use well under 30% of your available credit limit. Keeping this ratio low, shows you’re responsible and can have a positive effect on your credit score.

Don’t apply for multiple lines of credit

Applying for multiple lines of credit or loans in a short period can be a major red flag to lenders and CRAs. Each application can result in a hard inquiry on your credit report, which can temporarily lower your score. Only apply for credit when it’s genuinely needed.


Get a business card and use it properly

Using a business credit card for regular, manageable expenses, then paying off the balance in full each month, builds a positive credit history. This credit history is separate from your personal credit score and demonstrates that the company can manage its finances and credit well.

Keep your debt-to-equity balance healthy

Make sure the business isn't overly reliant on debt compared to its own equity. A balanced capital structure is a good sign of financial stability to lenders, showing that you have a strong financial foundation to support your obligations and future growth.

Keep your financial records and fillings up-to-date 

Make sure you’re updating your financial records, statutory accounts and company filings (like those with Companies House in the UK, ASIC in Australia or NZCO in New Zealand). This makes it easier for the CRAs, lenders and investors to access your public records, check for good governance and form an opinion on your creditworthiness. Talk to us about building a positive credit profile. A good credit profile acts as the foundations for your finance strategy, putting you on solid ground to reinvest in the business and begin the next stage in your start-up growth.

We can help

Come and talk to us about other ways to improve your business credit score, sure up your finances and get the funding you need to bring your strategy to life.


Contact Us
]]>Tue, 01 Apr 2025 16:02:00 +1100<![CDATA[Business tips: Budgeting and managing cashflow]]>https://www.rbizz.com.au/blogs/post/business-tips-budgeting-and-managing-cashflow1Do you know the best way to manage a project budget? We’ll help you build solid, workable budgets that can be easily tracked through your accounting system.]]>

Business tips: Budgeting and managing cashflow

If you want to stabilise your finances and grow the business, working to strict budgets becomes a necessity. Managing the cashflow twists and turns of a project can be hard work. But it’s easier to do when you have an agreed budget and can track your spending and performance.

So, what’s the best way to stay in control of the budgets you’ve set? And how can you manage your cashflow position to make sure there’s always enough cash to fund the project?

UNDERSTAND THE COSTS OF EACH PROJECT

Starting a project without fully understanding how much it will cost is a no-no. To keep on top of costs, overheads, staff expenses and general spending, you need at least a ballpark figure for this expenditure. In an ideal world, you’ll want to be as precise as possible with these costs.

Run through the project from start to finish and highlight every point where there will be costs to incur. It might be the cost of your raw materials. It may be the cost of buying new equipment. It could be the payroll costs for the people actively working on the project. Break everything down and come up with a total expense for the project. This is your starting point.

SET YOUR BUDGET AND TRACK IT OVER TIME

Once you know your baseline cost for the project, you and your team should decide on the amount of funds to allocate to the budget. Your baseline cost is a starting point, but don’t forget to include extra for specific contingencies. What if the project overruns? What if your raw material costs go sky high? What if you need more people to get the job over the line?

Agree on a clear budget and set up your finance system to track spending against this budget. With a cloud accounting system at the heart of the business, it’s very easy to create a budget and then record and track your spending over time.

KEEP A CLOSE EYE ON BUDGETS AND PROJECT CASHFLOW

One of the big things to remember is that a budget is not a static thing. You’ll obviously aim to stick to your initial costs, but prices and availability will affect the total spend over time. Because of this, it’s vital to not just write the budget and then forget about it.

Keep a close eye on your budget performance and the cashflow for each project. Being able to review this performance, in real time, should help you avoid overspending, or running out of cash for the project. And when the cash in the kitty is getting low, you can get proactive and look at ways to top up the budget, or rein in spending in other areas of the project.

TAKE ACTION TO MAINTAIN YOUR POSITIVE CASHFLOW POSITION

Balancing the cashflow scales on a project isn’t easy. But when you spot that there’s a potential hole in the budget, the important thing is to do something about it, pronto!

Running any project with your fingers crossed that ‘it will all work out in the end’ is a recipe for disaster. And with such detailed budget reports and cashflow forecasts available with today’s finance apps, there’s really no need to be disorganised about your spending.

Think about:

  • Setting up key metrics for each project, to measure spending, cashflow and progress

  • Run worst-case and best-case cashflow scenarios, so you’re prepared for anything

  • Regularly reviewing your spending and looking for areas to make savings

  • Taking on finance facilities to plug any cashflow holes as they appear.


If you’re thinking about scaling up your established startup, please do get in touch. We’ll help you build solid, workable budgets that can be easily tracked through your accounting system.

Contact Us


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