From chaos to clarity: Expert advice for managing your business finances

Managing finances is a critical aspect of running a successful business.

However, it can be a daunting task for many entrepreneurs, especially those who lack financial expertise.

This article will discuss some top tips for keeping your business finances in order. From tracking your income and expenses to setting financial goals and creating a budget, our experts provide valuable insights and practical advice for managing your business finances effectively.

Whether you’re just starting out or looking to improve your financial management skills, this article is a must-read for any business owner who wants to achieve financial stability and success.

In this week’s episode of Let’s Talk, our panel of experts explore ways to get business finances in order:

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Scott Wiltshire, GM, Head of ANZ, Oracle NetSuite

“Smart financial planning gives business leaders the starting point for growth and stability. When you have visibility into the money flowing in and out of a business, you can better forecast and more easily review variances between projected and actual figures. These insights underpin sound decision-making and are invaluable when leading through uncertainty.

“Businesses should stay on top of their inflows and outflows by creating a cash flow statement which is updated regularly. While this statement can be maintained manually using the information in your balance sheet and income statement, the right software can make it easier and reduce the time, from days to minutes, spent getting this insight into the health of the business. This automation gives the finance team time to focus on extracting business insights rather than spending time on administration.

“Software-as-a-service (SaaS) gives businesses of all sizes access to technology that helps pay-as-you-go. For example, automating bill payments can provide better accuracy with less processing time. Automation provides more accurate data capture, invoice matching, fast approvals, and reduced risk of fraud. Having an integrated financial management system provides increased efficiency and accuracy, while keeping all records in one place for tax purposes or auditing requirements.”

Amelia Hamer, Director, Strategy, Airwallex

“Strong financial management is critical to any business, irrespective of its size, sector or nature. If your finances aren’t in order, then your business can’t make informed decisions that will support your growth agenda.

“Put your accounting in the Cloud – Cloud has revolutionised accounting, facilitating convenient, real-time access to financial data. Cloud accounting has the added benefit of minimising risk so you’re not relying on one device to store your entire accounting system, plus encryption means the data is secure.

“Forecast your inventory to protect your cash flow – Making purchasing decisions on what you think, rather than what you know, is bad business. Effective inventory stocking means less overstocking, less understocking, and time saved. Combine financial forecasting with stock forecasting to make informed decisions based on data.

“Simplify your payments by automating them – The manual burden of paying suppliers, reimbursing business expenses and paying eCommerce platform fees is a thing of the past. Turn to a fintech platform like us at Airwallex to store your money digitally, move it with ease and automate your payments – freeing up time wasted on admin for activity that will propel your business forward, instead of settling the balance of what’s already happened.”

Nathan Reichstein, Chairman, National Business Advisory Committee, Moore Australia

“Businesses often spend a lot of time on budgets, but forget the importance of having dynamic cash flow forecasts to help understand the working capital requirements of their business. There are a lot of cloud-based accounting platforms which can assist businesses in preparing their forecasts and manage their cash flows.

“Managing your employee obligations is critical. Employers who are struggling with cash flows should continue to prioritise payments towards their employees’ superannuation funds and PAYG withholding to the ATO. Failure to make these payments on time may result in interest charges, further penalties and sanctions such as director penalty notices. Although businesses can pay PAYG withholding and superannuation guarantee on a quarterly basis, it always prudent to set aside these amounts in a separate bank account when your pay run is processed to ensure you do not use these funds for other working capital requirements.

“Tax planning will be crucial this year and it is important to get an understanding from professionals on what changes are expected from the 2023-24 year onwards. For example, temporary full expensing of depreciating assets is ending on 30 June 2023. If you have plans to spend amounts on plant and equipment it will be important to get the timing right to ensure you can maximise your tax deductions.”

Ben Pfisterer, Co-Founder and CEO, Zeller

“The focus of any business owner should always be on their customers, yet many forget to keep up with business banking innovations to ensure their finances are in order.

“Firstly, rethink what a business bank can offer you. Outdated business transaction accounts provide little to no additional functionality, so you should seek out a better option that enables you to understand every payment, attach receipts and notes to transactions, instantly create new accounts and issue debit cards with a click of a button, categorise transactions, and automate reconciliation with your accounting software. Selecting a business transaction account that is constantly innovating will enable you to run your business more efficiently, and simplify your operational overheads.

“Secondly, look at how you enable customers to pay, and ensure that you’re getting your money fast to avoid cash flow issues. Switching from outdated EFTPOS terminals to reliable, affordable, and fast next-generation solutions like Zeller Terminal will save you both money and time, and safeguard your business from crippling EFTPOS outages. Ensuring you also have the best possible electronic invoicing solution embedded within your transaction account will also simplify how you track late payments, automate reminders, chase overdue invoices, and reconcile your finances. The best Invoice systems come with no monthly fees, low transaction rates, and are integrated within your business transaction account.”

James Deason, Associate Director of Accounting, BlueRock

“In the current economic environment, business owners are wondering how to get their business finances in order to ensure their taxes, wages, and cash flow are not negatively impacted. One of the key ways you can ensure your business finances are in check is by seeking advice from a professional advisor who can help you keep track of your finances and give insight into what flows in and out of your business.

• Keep Accurate Accounting Records: It is essential to maintain accurate financial records to track business performance and manage cash flow. Use an accounting product like Xero to ensure the accuracy and time taken to process your accounts.
• Manage Cash Flow: Cash flow is crucial for any business, so it is important to monitor expenses, manage debtors, and stay on top of creditors.
• Understand Wage Obligations: Employers have obligations to their employees, including paying the correct wage and providing a safe working environment. Make sure you understand these obligations and comply with the Fair Work Act.
• Create a Budget: A budget is an effective tool to track business performance, make informed financial decisions, and keep the business on course for growth. A robust budget can help you make more informed decisions about where to invest capital.
• Pricing: In a highly inflationary environment, it is important to ensure you are pricing your product or services correctly as under charging can have huge impacts on your cash flow.”

David Britten, Managing Director APAC, Corpay Cross-Border Solutions

“With ongoing global volatility combined with Australia’s growing inflation and supply chain disruptions, it is crucial for small-to medium-sized enterprises (SMEs) to have their finances in order. This rings true especially for businesses that either operate internationally, or who want to open operations in overseas markets, as the effect of fluctuating international currencies continue to impact the cost of foreign exchange (FX) processes.

“Organisations that conduct global fund transfers via traditional or manual means could be out of pocket on account of exorbitant fees or hidden costs. It is crucial for businesses with international interests to invest in and implement robust fintech solutions to help navigate these complexities efficiently and manage costs effectively. Given the unpredictability of today’s FX market, organisations can also benefit from the support of a dedicated specialist to alleviate some of the complications and nuances involved in cross-border transactions, all while avoiding excessive processing fees in international payments.

“With the expertise of a cross-border payment specialist, SMEs may simplify how they connect with the global marketplace and move money anywhere in the world, without losing valuable capital on hidden costs.”

Angela Vithoulkas, Business Truth Teller, Business Strategist & Customer Success Specialist, Government Relations, Founder & Host of SME TV

“We are all in business to make money, so understanding your cash and how it flows is number one for me.

“You can easily get overwhelmed and feel like you’re out of control if you’re faced with bills you can’t pay from not managing the income. I’m also a big fan of quarantining funds – allocate and separate your money for upcoming costs that you know are coming. Think of your business as strata property owners do – they use sinking funds to save and earmark for payments they can plan around. Of course all of this cant happen without doing my least favourite thing – paperwork, and that has to be thorough and compliant. Don’t cut corners with your records, and don’t rely on your memory to recall things. You need a good system of record keeping that a third party like your accountant or bookkeeper can understand and follow without having to do a forensic investigation. I always presume that I won’t remember and make notes that are easy and relevant, almost like a map.”

Guy Callaghan, CEO, Banjo Loans

“Cash flow issues and poorly managed finances have major impacts on business success. Proper planning, keeping track of costs, and getting paid on time, will help you stay on top of finances, and make life easier come tax time. When it comes to managing business finances, there’s no overnight solution – it’s an important skill and mindset that small-business owners must master.

1. Go digital – The sooner you send an invoice, the sooner you’ll get paid. e-invoicing will help make the process as efficient as possible. It helps you issue and monitor the status of your invoices and payments – critical for managing your cash flow.
2. Accurately plan and forecast your finances to make smart decisions – Rigorous accounting and bookkeeping, allowing accurate forecasting, is key. Work with a qualified business accountant to help put a plan together. And ensure you are using the accounting and planning software that best suits your needs.
3. Pay attention to payroll – Payroll always comes first when money goes out. If times are tough, consider what other expenses you can cut before considering employee changes. Also, check out any government support available.
4. Seek out finance when you’re looking to grow – Although it might sound scary, debt is common for most businesses. Taking a loan is often a useful way to acquire funding for important growth opportunities i.e. new equipment, funding an expansion project, or an acquisition. Be mindful that your return is greater than the investment – think about the opportunity cost if you don’t do it. Speak to your trusted adviser about the best options for you.”

Matt Richardson, Senior Corporate Client Manager, OFX

“The current volatile global economic environment is forcing businesses that are dependent upon cross-border cashflow to plan their cash movements in advance to minimise currency risk exposure.

“For businesses operating in international markets, it will be critical to take all the necessary precautions to insulate their business from external disruptions.

“Two options to consider when moving money globally are using Forward Contracts to help protect against currency fluctuations, or operating a multi-currency account.

“The first option allows your business to safeguard against price fluctuations by locking in a rate at the current price, for an agreed amount of time up to 12 months, helping to keep costs within budget.

“The second option involves setting up a multi-currency account which can provide businesses with a natural hedge. Rather than receiving in USD and converting to AUD, for example, if you had USD expenses you can simply use your USD currency account balance. In short, allowing you to avoid currency exchange altogether when the market is unfavourable.”

Lisl Pietersz, Transition and communication coach, University of Sydney

“The key to growing any business venture sustainably is to build a strong financial foundation and the starting point is to get your business finances in order. As a sole trader operating a coaching and communications micro business, here are my top three tips on how to manage your business finances which I learned through trial and error:

• Effectively manage cashflow and payments. It sounds basic but pay your bills plus any tax and superannuation obligations on time. Depending on your business structure, you should pay yourself a wage or draw the equivalent, as well as any other costs. Investing in a cloud accounting package can help you to better track your expenditure and give you real time insights on your business so you can make better decisions on the go. Cloud accounting technology could also help you to get paid faster as most packages enable you to invoice on the spot which is a great option for tradies.
• Understand your business numbers: Be clear on your income, expenses, and profit. In particular, understand the distinction between money in the bank and profit.
• Turn to the experts: An accountant can give you further advice about maximising tax deductions, while a bookkeeper, for example, can advise you on business performance and your KPIs. What’s more, an accountant or bookkeeper can provide critical insights on how to grow your business, as well as providing ongoing support.

“No matter if your venture is a startup, scaleup, non-profit, or SME, make it a priority to get your business finances in order. In this way, you can set yourself up for financial success.”

Callan Mantell, Vice President JAPAC, Oracle Construction and Engineering

“Our philosophy has always been that transparency and data neutrality are the keys to successful collaboration for all stakeholders. This also applies to payment and contract management, where we’d encourage businesses to seek solutions that enhance visibility and build trust across their supply chain.

“When it comes to payments management solutions in the construction industry, contractors, sub-contractors and suppliers take on much of the risk. By procuring materials and completing work ‘on credit,’ they are much more vulnerable to a cash- flow crisis if payments are late. But, it’s not just a case of loss of income. If smaller organisations are reliant on businesses upstream to monitor and keep contract information like the status of payments and variations up-to-date, they’re also vulnerable to losing access to critical data.

“Digitisation has been great for the construction industry but has also resulted in a potpourri of point solutions, often controlled by outside organisations creating unintended blind spots and siloed information. Cloud-based collaborative claim and payment management solutions provide all project participants visibility to contracts, payments, and variations, boosting efficiency and reduce risk across the entire process.”

Des Hang, Co-Founder and CEO, Carbar

“Your finance function is the foundation of your business. Getting wrong can lead to a number cataclysim problems for your company  such as underpaying staff, presenting the wrong figures to potential funders, or even triggering an ATO audit.

“My best advice for this is that unless its your core competency, don’t be afraid to outsource it. It’s significantly cheaper than making a mistake.

“If you are starting out, bring in an agent (or agency) to set up and initially control your finances. Down the line, as the business grows, look to inhouse the function with a key financial services hire — either a CFO or senior finance lead. Over time, they should build out their team as the company grows, to ensure that nothing falls through the cracks.”

Helen Baker, licensed financial advisor and author of ‘On Your Own Two Feet’

“With all finances I talk about stretching your money.  So if you are losing money because you aren’t implementing a strategy or paying taxes when there are ways to reduce those, you end up with more.  If you have more, you can then choose what to do with that – pay off debt, invest in the future, distribute to yourself or your team.

“Prevention is also better than cure at times.  As is, avoiding mistakes or opportunities you are not aware of.  So check:

1. Are you paying everything on time?
2. How does your personal and business insurances align to your management of risk?
3. Are you looking after your staff – if you can’t do payrises at the moment can you splurge on them with other low fee rewards i.e. in-house wealth education, or books
4. Are you maximising your superannuation opportunities?
5. Are you in the right structure?
6. When was the last time you sat down with your team of advisers – your accountant, lawyer, financial adviser?”

Vincent Nair, CEO, SMARTECH Business Systems

“Managing your business finances is fundamental to the success of your business. As a business leader, I know firsthand how challenging it can be to keep your finances organised. Here are my top tips for getting your finances in order:

1. Forecast and budget – a budget can help you plan for expenses, identify potential shortfalls, and ensure you are allocating your resources effectively.
2. Track, track, track – keeping track of all your business expenses is essential for understanding your financial situation and making informed financial decisions.
3. Plan for taxes – understand your tax obligations. This includes setting aside capital, understanding which deductions you are eligible for, and working with a tax professional to ensure you are compliant with all regulations.
4. Prioritise payroll – your employees are your most valuable asset. Paying them accurately and on time is crucial for maintaining morale and productivity.
5. Cash flow is key – make sure you invoice your clients promptly and follow up on any late payments. This will help you maintain a healthy cash flow and avoid unnecessary delays.

“Your financial situation can change quickly, it’s essential to revisit your financial plan regularly. This will help you adjust your budget and forecast as necessary.”

Michelle Kvello, Founder and CEO, Lantern Partners

“With rising inflation and interest rates sorting your business finances has never been more important

1. Get a handle on your cash
   You need to know;

• What’s in your bank account(s)
• How much you owe.  (Suppliers, employee obligations, loan repayments and tax)
• How much you are owed.  Primarily from customers, but this could also include grant funds, loans draw downs or investment funds.

The aim isn’t perfection, it’s visibility so you can make quick decisions.

2. Make sure your finance support team is coordinated
   Most small businesses use a mix of internal and external support.  Make sure they are communicating effectively to avoid doubling up, confusion or teams missing key information to do their job.

3. Keep on top of your statutory obligations

• Are you up to date with changing superannuation?
• Have you hit the GST threshold?
• Have you hired contractors or employees in the ATOs view?  It’s a hot topic for the ATO and many businesses find they have employee obligations when they didn’t intend to

4. Separate out the cash that isn’t yours
   Particularly when cashflow is tight lock away money that doesn’t belong to you so you don’t inadvertently spend it

• GST
• Tax deducted from payroll
• Superannuation
• Income tax”

Angus Sedgwick, CEO, OptiPay

“Cashflow forecasting is a key management tool. If you don’t have enough cash to pay your bills you can’t succeed. There are 3 steps to preparing your cashflow forecast:

1. Prepare your Inflows – this is the breakdown of all the income you expect to receive from selling goods or services for a certain period. Don’t forget non-sales income like tax refunds, grants, investments from shareholders and insurance claims.
2. List your Outflows – Check your expenses for a similar period and calculate your fixed and variable costs. Fixed costs include rent and salaries whilst variables include things like raw materials and buying new equipment.
3. Collate – bringing your cash inflows and outflows together creates a cash flow forecast and the final amount is the cash balance you’ll have left.

“A lower or negative cash balance means it might be time to look at alternative external funding options such as invoice financing. It’s an affordable way to cover your needs whilst waiting for your debtors’ payments. Invoice financing will pay you up to 90% of your verified outstanding invoice value upfront giving you cash to instantly pay your bills, secure new suppliers or invest in growth opportunities.”

Craig Dangar, Principal Consultant, Vault Group

“Getting your business healthy is a mix of getting the cash flow under control, understanding your business and controlling your costs.

“For businesses our top tips include:

• Make a budget and understand your cash flow. Cash flow is critical for your business success and understanding where you stand.
• Understand what is happening in and out of your business, what are the threats and opportunities that your business is facing. We always recommend walking outside and seeing what your competitors use.
• Cost control is critical, whether it is staffing, occupancy or input costs. Review everything and make sure that you are getting the best outcome.

“The critical tip is make sure that you have a plan for your business, a short, medium and long term plan will help you stay accountable and get the most out of your business.”

Anurag Vasisth, Group CEO, Loyalty Now

“Loyalty programs are a valuable tool for small and medium-sized enterprises (SMEs) as they not only help retain customers but also improve business finances by incentivising repeat patronage. Customers who are members of a loyalty program are more likely to make repeat purchases, spend more per transaction, and refer family and friends.

“SMEs can also benefit from valuable data insights that loyalty programs provide. By tracking customer behaviour and preferences, businesses can gain a better understanding of their target market and tailor their marketing and product offerings accordingly. This can lead to more efficient use of marketing budgets and improved product development, ultimately resulting in higher profits.

“Additionally, loyalty programs can encourage customers to purchase products or services during slower periods, smoothing out revenue fluctuations. Therefore, loyalty programs that keep customers engaged and committed to the brand are an effective way for SMEs to boost revenue and profitability.”

Linden Toll, Chief Executive Officer, Apricity Invoice Finance

“Positive cash flow is critical to business success – below are a few tips to help:

• Continually engage expert advice to improve your financial skills – Work closely with an accountant or experienced financial adviser, as understanding business financials isn’t easy.
• From a personal point of view, pursue opportunities to learn and expand your business finance skills – online workshops or webinars etc.
• Inventory Management – stock control is important. During high cash flow periods, modify the timing and quantity of purchases, only holding the stock necessary to ensure efficiency.
• Enforce payment times – issue invoices promptly with clearly defined payment terms and conditions. Make it as easy as possible for customers to pay you by offering them several payment options.
• Spread out expenses – do not pay all your bills on the same day. Utilise accounting software to set up automatic payments and where possible, spread the payments out. Discuss payment options such as monthly vs. lump sums, as well as work with a financial adviser to understand what lending options suit your business
• Leasing vs. Purchasing equipment – buying typically requires large lump sums that have an obvious cash flow impact on SMEs. Investigate leasing options that avoid this and are more cash flow friendly.”

Lachlan Grant, CEO, Vital Addition

“One of the most overlooked aspects of getting business finances in order is keeping your private and business banking separate, so deduction and expenses are easier at tax-time.

“Speaking of expenses, how familiar are you with your profit and loss (P&L) statement? Understanding your P&L helps to spot wastage, identify cost cuts, and improve cash flow. It prioritises the organisation of your records and financial transactions; including invoices, expenses and receipts.

“Realise your tax obligations; your GST, income and payroll tax, even if you have an accountant. Reviewing P&L, balance sheet and cash flow statements regularly is critical, and speaks to managing cash flow.

“With employees, you’ll need to be across calculating and withholding taxes, hours worked, leave entitlements and superannuation.  Your balance sheet will identify what taxes are owed at the end of each month. Ensure money is set aside in a different bank account. This avoids last minute rush to find the cash to cover your BAS or Super.

“Investing in financial management software is a no-brainer for real-time visibility, but taking time to understand it all can help you budget to manage your business and finances more effectively.

“Finally, a financial expert on your side helps with everything, providing valuable insights you may not be aware of.”

Chris Dahl, Co-CEO, Pin Payments

“The number one thing businesses need help with when it comes to getting their finances in order is outdated systems which involve manual processes, a lack of digitalisation and big margins for human error. If the pandemic taught us anything it’s that digitisation can seriously help to improve the output and operations of a business, and the same is true for finances. Cash and non-flexible payment methods are, for the most part, now redundant, so businesses should re-examine how they’re making and receiving payments to see if this aligns with customer needs and wants. Streamlining your business payments into one system using an online payments provider will help you organise your cash flow, incoming funds and general accounting more efficiently and easily.”

Lachlan Magee, Head of Commercial Solar Solutions, Choice Energy

“If you’re a business owner, you know that managing finances can be a difficult task. With the right help, you can move to sustainable power and take advantage of the solar instant asset tax write-off, solar rebates, and financing options to assist your business's cash flow and reduce your energy costs.

“By leveraging the Instant asset tax write-off, more businesses can move to sustainable energy solutions like solar power to keep operational costs down. This tax break offers a unique opportunity to invest in an asset that manages your energy costs through periods of uncertainty. And, if structured correctly, can be cash flow positive from day one. Additionally, solar rebates and financing options can further reduce the cost of an installation, making it even more affordable for your business.

“In addition to solar power, you can also utilise energy procurement strategies that can save you time, energy and ultimately money, improving your bottom line. Experienced energy brokers are able to help your business find the best deals from competing retailers, negotiate better contracts, optimise your usage and most importantly reduce your energy costs.

“In short, now is the time to take advantage of government incentives towards sustainable energy and expert energy brokering to reduce your costs, helping you successfully navigate a volatile energy market through 2023 and beyond.”

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