5 Tips To Improve The Financial Health Of Your Small Business By Equals Money

Businesses that have weathered the pandemic so far have demonstrated incredible resilience. Unfortunately, there are more challenges ahead. This year promises financial and logistical challenges such as ongoing supply chain issues, soaring prices and inflation, so businesses will need to stay sharp to remain “in the black”. 

Here are 5 actionable tips that will help SMEs improve their financial health this year by Simon England, Managing Director, Equals Money.

Conduct a spend analysis

A spend analysis involves putting the company’s financial data under the microscope to find out where the money is really going. By looking for repeating costs that add up or expenditures that are larger than they should be, businesses can make a change and save money. In addition to eliminating waste, a comprehensive spend analysis can help a business forecast more accurately.   

The complexity involved in carrying out a spend analysis depends in large part on the way that a company stores its financial data. Pulling it all from disorganised spreadsheets massively increases the time and energy required. 

Conversely, businesses that leverage well connected financial tools, such as a spend management platform that talks to their banking and accounting software, can have all the data together in minutes. If your business can’t easily complete a spend analysis, consider that a potential sign that your financial system could use streamlining. 

Make smart currency decisions

Businesses of all shapes and sizes often have to exchange currency, whether it’s to pay employees abroad, import or export, or – surprisingly frequently – to pay a software subscription. Our research shows that more than half of SMEs pay for a software subscription in another currency, often Euros or US Dollars. 

Whatever your business is spending on, an accumulation of fees and poor rates can have a major financial impact. Banks simply don’t offer the flexibility or affordable rates that businesses need, so if your business is spending money abroad on a regular basis, it may be worth partnering up with a currency specialist. These experts can provide insights on currency fluctuations, assist you with sending at the right moment to secure a good rate, and leverage local clearing accounts to lower processing costs. 

Review supplier relationships

As the ripples of the pandemic continue to disrupt the supply chain, it’s likely that getting the things your business needs will remain a challenge in the year ahead. That’s why it’s doubly important for your business to consider whether its supplier relationships are fit for purpose. 

Examining your relationships with suppliers comes down to more than just money: businesses also need to consider flexibility and reliability. In light of the economy-wide uncertainty, businesses may even want to consider spending a little bit more for a shorter-term contract. 

For SMEs that are importing and exporting products, especially if they’ve been doing so since the pre-Brexit era, now is a great time to review whether you’re getting the best value for money. When factoring in the cost and logistical challenge of shipping, it might make financial sense to pay slightly more per unit from a supplier closer to home. 

Improve expense management

The traditional expense management process, with the associated stress and tower of paper receipts, is bad for employees and bad for business. Fortunately, technology offers a solution in the form of expense management platforms. These systems provide employees with payment cards that the company can pre-load and control according to individual budgets. 

As employees spend money on behalf of the business, decision-makers can monitor company funds in real-time to keep better track of the business’s money.  Simultaneously, employees benefit from simpler receipt submission and don’t have to worry about not getting reimbursed if something goes wrong, making this a win-win. 

Stop relying on the banks

Despite ads proclaiming their love of small businesses, high street banks aren’t especially concerned with SMEs. They’re never going to be the cheapest or most flexible option, especially on things like loans, foreign exchange, and overseas payments. 

Fortunately, there are specialists available in each of these areas which cater exclusively to the unique needs of small businesses. It’s worth taking a little bit of time to explore the rapidly growing marketplace of alternative financial service providers, as finding the right one can mean serious long-term savings.