Getting your commercial finances in order

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on June 7th, 2022       

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There’s an old saying, and it’s true. The saying is all about business success. “You need to make more than you spend.” That’s fine, but how can you get all your finances in order so you are maximising your potential for profits?

Learn how to read your financial statements, first.

If you don’t do your own bookkeeping or simply rush it because it’s an afterthought, you need to figure out how to listen to what your numbers tell you. You should know what your balance sheets, cash flow statements and profit and loss statements show you – they should all show that you’re making more than you’re spending. If you are in debt, you likely have two kinds of debts to deal with.

You need to reduce debt, the smart way.

What are these types of debts? They’re short-term debts and long-term debts. Short-term debt might be what you owe on 30-day accounts, to-be-fulfilled orders or commercial credit card debt. Long-term debt might be useful debt, such as car loans, equipment loans, real estate loans and other types of mortgages such as a chattel mortgage. These could also be leases and hire purchases. You should always use short-term income gained from sales of inventory or cash to pay short-term debts first. Long-term loans (such as $100,000 business loans) and share capital (funds from yourself or partners) can be used buy inventory that you can then sell for cash – or just to have cash in hand. You should never use short-term loans and liabilities to finance long-term assets, because lenders will ask for money sooner, rather than later. If you have several different loans owing, it makes sense to talk to a financial professional and consolidate your debts.

This is part of reducing your expenses.

Many businesses spend too much on utilities, communications and even travel. Using your statement, you can identify what items or services you’re spending too much on and look around for cheaper alternatives. You could save money on travel by conducting business over GoToMeeting or Skype, for example.

Get your books in order and get them online.

Now, there’s no excuse for having your books out of order. One of the more popular web accounting apps Xero is handy for not only for budgeting and for looking at your profits and debts, but for invoicing and keeping track of cheques and spending. You can also find other programs such as QuickBooks or MYOB that are useful for getting your commercial finances in order. Then you’re well on your way to earning more and spending less!

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