Money! That' s what business is supposed to be all about. Then how come so many people in business don' t pay much attention to it? Oh, we may spend a lot of time and effort thinking about ways to make money, but most of us give little thought to how we manage our money. Of course those of us who run our own companies know why money management is often given short shrift. I have to spend all my time dealing with customers and employees, making my products and delivering my services, and handling the e-mail, phone, and paperwork of day-to-day business life. As long as I can pay my bills and have money in the bank, then money seems to be one thing I don' t have to worry about.

Except that if I don' t take time to think about my money, there' s going to be less of it. Perhaps a lot less.

Managing your money doesn' t have to take a great deal of time, especially if you get in the habit of taking care of a few money matters on a regular basis, such as:

  • Send out your bills. I' m continually amazed by the number of businesspeople, especially professional service providers, who wait months before billing clients or customers. The best practice is to get in the habit of billing immediately when you' ve delivered a product or service, even if the bill isn' t due for 30 days. Make certain you do your billing at least once a month. Remember, the longer you take to send out your invoices, the greater the chance you won' t get paid at all.
  • Review your books regularly. When you' re running your business, you may not take the time to sit down and look at your financials. But you can' t manage your money without having the facts. Fortunately, bookkeeping/accounting software programs, such as QuickBooks, make getting reports fast and easy. At least once a month, but preferably once a week or quickly every day, look at your overall figures, such as accounts payable, accounts receivable, income statement, checkbook balance, cash flow, etc.
  • Look ahead. When looking at your books, don' t just look at the present, look at the past and then look towards the future, creating an income and cash flow projection. Be conservative!
  • Watch where you put your money. Big companies have employees who spend all their time moving money from one account to another to increase the amount they earn on interest or investments. Those of us in smaller companies usually just have one checking account, leaving all our money there, no matter the balance. Sit down with your banker or an investment company such as Charles Schwab, to see about other types of accounts that can generate income on money that doesn' t need to be immediately available. Some accounts, such as " sweep accounts," don' t require you to do anything, automatically switching excess cash into interest-earning accounts. A little bit of planning could help your money make money for you.
  • Get a back-up source of capital. Even the most successful business has times when money is tight. To prepare for those cash-flow crunches, line up credit when you don' t need it. A good source is a credit line from a bank. Another, more expensive alternative, are credit cards with high credit limits you can use for cash advances when you need but otherwise let sit, unused, in a drawer.
  • Manage your growth. Growth costs money. Typically, you have an increase in expenses long before you have an increase in income. Plan your growth carefully so you have the financial ability to fund it yourself or comfortably pay the debt you' ll incur.
  • Get a retirement account. One of the few tax shelters truly favoring self-employed, sole proprietors are self-employed retirement accounts. The amount of income you can invest in Keogh, Simple, and 401(K) plans has recently been increased, allowing you to defer taxes on more of your income. You' ll save money now and have a more secure financial future too.
  • Save. Every business has income fluctuations. The best way to have cash when you need it is to put some away when you've got it.

Copyright Rhonda Abrams, 2001

Rhonda Abrams writes the nation' s most widely-read small business column. Her new book, The Successful Business Organizer, has just been released. For free business tips from Rhonda, register at or write her at 555 Bryant St, number 180, Palo Alto, CA 94301.