Running a business is a juggling act. You’re managing clients, team members, deadlines, systems – and that’s before you even look at the numbers. It’s easy for finances to slide down the priority list, especially if numbers aren’t your thing.
But managing your money well doesn’t have to be overwhelming. With the right structure in place, you can reduce stress, make more confident decisions, and give your business the best shot at long-term success.
Here are a few practical financial habits we recommend to all small business owners.
1. Pay Yourself First
It’s natural to want to reinvest everything back into your business – but you need to look after yourself too. You still have personal expenses, superannuation obligations, and long-term financial goals. If you’re not paying yourself, the business isn’t sustainable.
Set a regular wage that covers your personal needs and reflects the value you bring. This also gives you a clearer picture of your business’s true financial position.
2. Separate Business and Personal Finances
Combining your personal and business finances is a recipe for confusion. You’ll struggle to see how the business is performing, and come tax time, everything takes longer to sort out.
Open a dedicated business bank account, and use it for all income and expenses related to your business. Pay yourself into your personal account from this. Keeping things clean not only makes bookkeeping easier – it gives you clarity and control.
3. Tighten Up Your Invoicing Process
If you’re doing the work, you deserve to be paid – on time. But too often, money gets tied up in unpaid invoices, creating unnecessary cash flow stress.
Here’s what we recommend:
- Invoice immediately – don’t delay sending it out.
- Follow up before the due date – not after.
- Offer incentives for early payment (e.g. 2% off if paid before the due date).
- Set clear payment terms, and consider deposits or upfront payments for larger jobs.
- Charge late fees or interest for persistently overdue clients.
If you work with large organisations, find out their payment cycles early so you can factor those into your cash flow planning.
4. Keep Digital Copies of All Receipts
Gone are the days of shoeboxes full of receipts (or at least, they should be). Digital record-keeping is easier, faster, and more secure.
Use software like Hubdoc or Dext to store your receipts and bills. Most will automatically extract the key data and attach it to your Xero transactions.
Just make sure you’re following ATO guidelines for how long you need to retain receipts, employee records, and other documentation. If you still receive paper receipts, combining the likes of Hubdoc, Dext and Xero ensures record keeping compliance.
5. Build and Use a Budget
A budget isn’t just a forecasting tool – it’s a decision-making tool. It helps you:
- Anticipate periods of high or low income
- Prepare for large expenses like tax, insurance, or equipment upgrades
- Make informed hiring or investment decisions
Even a basic 12-month cash-in/cash-out plan can give you powerful visibility over your numbers. And if you ever apply for finance, investors or banks will likely ask for one.
Final Thoughts
These are just the basics – but getting these right sets a strong foundation.
Other useful habits include automating bill payments, reviewing your cash flow regularly, and making sure your business structure is still the right fit for where you’re heading.
Need help building structure into your finances, or just want to feel more in control of your numbers?
We’d love to help.
Reach out to the team at Blackwood Bookkeeping and let’s talk about how we can help you reduce financial stress and get back to focusing on your business.
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