Five finance tips for future-proofing your SME business

In today’s uncertain economic landscape, it’s crucial for small and medium-sized enterprises (SMEs) to plan for the future and ensure their financial stability. Rising operating costs, increasing taxes, and inflationary pressures make it essential for business owners to take proactive measures. In this article, we share five finance tips to help SMEs effectively manage their money and future-proof their businesses.

1. Build up a cash reserve:

Having a cash reserve is vital for preparing for unexpected challenges. Economic uncertainties can arise, and having funds set aside provides peace of mind and flexibility. Just as you would set personal savings goals, consider doing the same for your business. Explore ways to allocate a portion of your income to build up a cash reserve, ensuring you’re prepared for any unforeseen circumstances.

2. Plan for your tax bill:

Avoid surprises by setting aside a percentage of your income regularly to cover your VAT and tax bills. With the increases in national insurance contributions and corporation taxes, planning ahead is even more critical. By allocating funds consistently, you can meet your tax obligations without compromising your cash flow.

3. Optimise your savings:

Avoid keeping idle money in your business current account. Explore business savings accounts that offer higher interest rates than current accounts. Different types of savings accounts suit various business needs. Consider easy access accounts for flexibility in adding or withdrawing funds, or opt for fixed-rate savings accounts for higher interest rates over a specific term. Choose the right account based on your business requirements.

4. Diversify your investments:

To benefit from higher interest rates while ensuring access to working capital, diversify your investments across different account types. By managing a savings portfolio across various products with varying fixed terms, you can balance the need for growth with the need for liquidity. Maintain an emergency fund in an easy access account to handle unforeseen expenses swiftly.

5. Verify FSCS protection:

Ensure your savings are protected by the Financial Services Compensation Scheme (FSCS) in case your bank or building society faces financial difficulties. The FSCS provides protection for up to £85,000 of savings per individual per financial institution. Familiarise yourself with the eligibility criteria and rules to understand the extent of protection available for your savings.

Speak to Beavis Morgan for expert advice:

At Beavis Morgan, we understand the unique financial challenges faced by SMEs. Our team of experts can provide tailored advice and guidance to help future-proof your SME business. Whether you need assistance with cash flow management, tax planning, or optimising your financial strategies, we’re here to support you.

Contact your usual Beavis Morgan Partner or email to discuss how we can help you navigate the financial landscape and ensure the long-term success of your SME business.