5 tips for better financial
health of your small business
Published on Wednesday, September 24, 2008
Maintaining the financial health of a small business is a complex matter and can be especially challenging in today’s economic climate. Now, more than ever, business owners need to understand the importance of safeguarding and strengthening key areas that impact the financial health of their businesses.
Here are five things you can do to improve the financial health of your business:
1. Establish separate business and personal accounts
It’s important to establish business accounts that are independent from your personal accounts. Keeping finances separate not only improves record-keeping and tax preparation, but also more clearly demonstrates your business’s cash flow. By maintaining dedicated business accounts, you can present a more professional, established business image to your partners, vendors and potential lenders.
2. Build a strong credit profile
Building a business credit profile is vital even if you have no immediate plans to apply for a loan. When you do apply, a strong credit profile can help facilitate the application process and may also help you secure lower interest rates. One important step is to always pay your bills on time, which will help bolster your business’s credit history.
3. Manage cash flow
Maintaining a consistent flow of funds in a business checking account demonstrates good cash flow management and reflects the stability of your business. If you maintain accounts with more than one financial institution, consider consolidating these accounts. This can make it easier to demonstrate a capacity to repay debt over time.
4. Monitor accounts
Online banking can provide convenient access to your financial information as well as financial resources and services. Regular online review of your accounts can also help you prevent and detect fraud. Services such as e-mail alerts can keep you informed about account balances and help you identify any out-of-pattern activity. By using online tools to regularly monitor your accounts, you can simplify processing payables and receivables, pay employees and contractors easily and more effectively manage your finances, making it easier to run your business.
5. Know your banker
A strong relationship with a banker can help you build a solid financial foundation for your business. The more a prospective bank knows about you and your business, the better off you will be when it comes to seeking financial management advice. Invest the time to cultivate a relationship with your banker to help build understanding and confidence in the long-term viability of your business.
For more tips on increasing the financial health of a company, see Wells Fargo’s Strategies and Solutions for Your Business Advice Guide: Sound Credit Practices for Your Business at https://www.wellsfargo.com/biz/education/publications/strategies.
Contact Jill Malick, a business banking manager for Wells Fargo in Tucson, at jill.s.malick@wellsfargo.com or (520) 512-0301.
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