The success of your small business depends on how well you manage your corporate expenses.
It’s not just the expenses, but your spending habits.
If you’re facing a lot of overhead expenses, then there might be a lot of reasons for that.Possibly, you might be spending money unnecessarily on things. I’ll take a small example to explain you this. Suppose, you’re dealing everything through checks then you’re just wasting your money.
Following conventional practices, while you can switch to the online system is something you should look into.The business prepaid cards came into inception very long back.
Organizations using the business prepaid cards for managing their operations are able to save better than their counterparts who are still with cash and credit cards.
For the reason, every business organization, big or small should consider switching to business prepaid cards. The small and medium enterprises should especially be more inclined towards using business prepaid cards.
Importance of Money Management for Small Businesses
Money management is one of the hardest tasks for a small business owner. It’s easier to do a financial plan, but sticking to the plan is not.
In the US, small business constitutes a major contribution for the GDP. But statistics show a different picture. As per the recent reports from the Bureau of Labor Statistics’ Business Employment Dynamics, small businesses that started out in March 2016, only 79.8% made it to March 2017.
There are many reasons for a business to fail and one of the most common reasons is cash flow/cash management issue.
The CBInsights analysisof101 startup polls showed that 29% of them fail due to insufficient cash. The number clearly says that you need to have good money management skills to keep your business afloat in the competitive landscape.
- Efficiently Support your Growing Business
The above report said that 29% of businesses failed because they have cash issues. But why do cash issues come up?
Maybe you made a bad investment or didn’t do good sales that year or your customers didn’t pay you on time. But whatever the reason, if you don’t have cash in your growing years, you’d lose all the opportunities to be in the dynamic market and be out of the race in a very less time.
When you have sufficient cash, you can meet all the financial obligations that are required to give your business a good growth.
- Stay up-to-date with your Account Payables
Accounts payable includes monthly utility billsand payments for your vendors and suppliers. On a greater scale, it also includes yearly taxes.
When you don’t pay your bills regularly, the first thing you’ll lose is your credit value. Your vendors may stop supplying materials and the business operations may stop. Your employees may stop working till you pay their salary. On top of this, if you fail to pay your taxes on time, you may be penalized.
A good money management strategy helps you avoid all this.
- Make Timely Investments
Now, a business is not all about business reinvestment and money making. Because the cycle may break at any point if the market is fluctuating, you should also make some good investments and create additional financial cushion – to survive during inflation.
You can easily do this if you have a good cash reserve.
Normally, most of the small business owners are bad at managing their money. It’s possible because their money managing ways are not effective enough.
Suppose, if they are still making use of credit cards, then it will be more challenging for them to have control over their spending habits. But using business prepaid cards; they can stay on top of this game.
Benefits of Using a Business Prepaid Card for Managing Your Money
- You’ll Stay within the Budget
What is the probability that a small business owner will stay within the budget if he’s using a credit card?
Even while you have a budget at a place, the power to spend more with a credit card may make you indecisive and drive you to put in more money. It may not happen all the times, but the extra dollar you have spent may impact you in the later stages.
In that case, a prepaid card gives you less freedom on your cash spending habits. You can spend only that amount that is loaded on your card.In that way, in any circumstances, you’ll find it easier to stay within the budget.
- Cheaper than Handling Cash & Checks
Money management also focuses on how well you’ll avoid unnecessary expenses. If you handling cash transactions through checks, then you’ll be paying a lot of fees. More the number of clients more will be the check transaction and greater will be the outgoing fees.
For using a prepaid card, you don’t have to pay any form of transaction fees. In addition to that, the B2B payment option will make cash transactions much easier and quicker.
- Manage Employee Expenses
The travel and expense programs demands major chunk from your budget. A series of expensive T&E programs can easily disrupt your business cash flow. This normally happens if your business organization doesn’t have aproper expense policy or if your employees are given your credit card.
On the other hand, a prepaid card works in your favor. If you have kept a budget of $1000 per employee for a T&E program including his hotel bookings, travel,and food expenses, then he cannot spend more than that.