How SMBs Can Efficiently Structure Their Finances

How SMBs Can Efficiently Structure Their Finances
  • Opening Intro -

    Here's a staggering fact. Nearly 100% of the U.S. economy is powered by small to medium-sized businesses, also known as SMBs.

    There are over 30 million of these enterprises in the U.S.

    Together, they employ nearly half of the working population.


Despite their stature, many SMBs have stringent budget requirements. Not only does this help them maintain their current infrastructure. It also prepares them for future growth. Without planning and even-handed spending, an SMB quickly falters.

To prevent bankruptcy or complete closure, stable finances are necessary. Here are a few examples of how SMBs can efficiently structure their finances.

Utilize Automatic Payments

What happens when you don’t receive payments from your subscribers? First, you can’t pay your vendors. Next, they start inquiring about payments. Due to the lack of payment, the vendors withhold the delivery of supplies and inventory required to make sales. Thus, you don’t have money to pay your vendors.

Needless to say, the lack of customer remittance creates a vicious circle. To minimize this, institute automatic payments. Incorporate a program called an ACH API. Offered by companies like Modern Treasury, this is an application program interface that calls on an automated clearinghouse to transfer payments from one account to another.

Through this method, customers approve the distribution of funds to your SMB. Additionally, these payments are encrypted to ensure a secure transfer. In turn, you can adjust payments to correspond with remittance cycles.

Educate Your Employees

Training your SMB workers on the basics of corporate monetary policies doesn’t seem like a way to structure finances. Yet, their knowledge helps your company avoid the potential of fraud or cybercrime.

After all, everyone in your company must contribute to its financial stability.

Examples of this training include the use of automated payment programs, how to detect fraud, and what’s involved in anti-money laundering (AML).

Education in cybercrimes like hacks and ransomware is also important. The more known about these issues the greater the chance of detection or deflection.

Pay Yourself

No rule says you have to be a pauper to run an SMB. On the contrary, if you don’t pay yourself, then you won’t have the energy to generate new products or services. The reason for this? You spend more time worrying about how to survive instead of thriving.

Never overlook your own role within the SMB. You are the person who decided on the initial concept and got it started. Take credit for this through a salary. However, don’t pay yourself so much you take away from your employees or the company’s infrastructure.

Maintain Good Credit

Credit is both good and bad. On the one hand, if you make your payments on time and don’t overextend, then credit helps your SMB move forward. On the other hand, if you constantly reach limits and avoid regular payments, then credit is an albatross around your neck.

It transforms into bad credit reports and lower scores. As a result, it’s harder to obtain the necessary funds to grow. Plus, it takes a long time to repair the damage. As a result, the plans you have to stretch your SMB are delayed.

What does this all mean? Overall, maintain good credit. If possible, try to limit the number of accounts. Should you have no other choice but to obtain your operating funds through these methods, pay them off as quickly as possible.Consider the Best Return on Investments

other valuable tips from our business blog (new win):

As an SMB owner, you want the best for your organization. The top production methods and applications certainly help you climb above your competitors. However, do they have the best return on investment (ROI)?

To put it another way, you have to consider how the machines and software help increases your company’s revenue. If you take a loan out to revamp your production floor is the ROI strong enough to surpass the monetary investment? The same is considered in terms of longevity. For example, a customized enterprise resource planning (ERP) application must have an ROI of several operating years.

These examples are a small group of how SMBs can efficiently structure their finances. Yet, they’re a good start. Though a methodical implementation, these above steps should stabilize your finances and prepare you for future growth.

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