A business comes across a flurry of challenges in its course, but managing finances is, perhaps, one of the most critical for its survival and growth. It is especially evident during today’s difficult times; a recent survey including approximately 28,000 responders, of which nearly 8,400 are start-ups, showed that nearly 38% of the responding businesses have ran out of funds, and approximately 30% are left with only 1 – 3 months of reserves due to the recent economic crisis.
Every business, be it small or large, requires appropriate business finance management to further its objectives. Hence, it is imperative to be financially savvy when running a business. It’s even more apparent today because of an increasingly competitive market that requires organisations to optimise their financial standing continually.
- In India, the number of registered MSMEs grew by 18.49% from FY19 to FY20, according to the latest government reports.
- According to the annual report submitted by MSME Ministry, there were 6.33 crore MSMEs across the nation in FY2019.
- 99.4% of MSMEs are micro-enterprises.
Managing finances efficiently is an indispensable skill for entrepreneurs. Here are a few tips that you can apply to improve your understanding and management of business finance –
- Pay attention to transactions
Like any other skill, it’s essential to be attentive towards the financial status in your business; it’s the first step toward handling finances more efficiently. Track all expenses and note where the cash outflow is primarily channelled towards.

Staying on top of your business’s expenses will allow you to regulate it more effectively. In case you have a financial objective in place, monitor whether the current state of transactions is in line with it. If not, observe corrective measures to organise your business finances and ensure the realisation of those objectives.
- Negotiate for better deals with suppliers
An effective way to handle business finances better is by optimising short-term cash flow. In that regard, a bargain with vendors or suppliers for better terms can prove useful in the long-run.
For instance, agreeing on an extended period for payment of dues can strengthen your business’s liquidity. This way, you can utilise the payments from debtors toward enhancing operational efficiency or other activities elevating the value of your business.
Moderation of costs is critical to the success of any organisation and a key business finance strategy. It’s of heightened significance to cut expenses wherever possible. Monitor the financial statements of your business on a weekly basis and note down expenditures that seem unnecessary or excess. Execute prompt measures to rectify the situation.
Also, consider alternatives for every outlay before undertaking them, especially for the larger ones. For instance, when considering procurement of any equipment, analyse the cost-profit dynamics of leasing it. This way, you can bring down the overall cost of processes and commit those excess funds to other necessary undertakings.
Several organisations opt for a loan to finance business to address sizable financial obligations in their organisations. Economists consider utilising a mix of internal and external capital (to mitigate monetary obligations of an organisation) as a significantly more preferred option than utilising own capital solely.
- According to a financial report, aggregate borrowing by businesses in India was tallied at Rs.64.45 lakh crore, as of January 2020.
You can utilise a business loan to invest in growth operations, expansion of business, purchasing equipment, restocking supplies, etc. Since a business loan does not entail any end-use restriction, you can commit the fund to a number of areas in your enterprise.
NBFCs like Bajaj Finserv also extend pre-approved offers to borrowers in order to ease and speed up the loan application procedure. Such offers apply to business loans, personal loans, credit cards, etc. You can check your pre-approved offer by sharing only your name and phone number.
Another efficient way to handle business finances better is by encouraging debtors or clients to pay their undue bills on time, or before the due date. It could involve regular reminders before the due date, providing discounts to early payers, etc.
By a mix of incentivising and penalising appropriately, you could optimise the cash flow in your business. It’d also allow proper working capital management since you can ensure a timely operating cycle. It’s one of the ways to ensure your business is never short of working capital.
It’s essential to develop a system of timely payments on your end as well. Late payments can impact your credibility, and corresponding fees can strain your finances. For instance, delinquency in regards to EMIs on your business finance loan can be dearly expensive, especially if it’s a micro or small enterprise.
- Total lending to MSMEs stood at Rs.17.75 lakh crore, as of January 2020.
Also, keep up with tax payments to avoid any legal issues that might incur at a later point of time.
You might also consider a flexi business loan from Bajaj Finserv to manage business finances easily. It allows you to withdraw from the sanctioned limit whenever required, necessary to overcome any financial emergencies.