Sourcing For Financing For Your Business II

In the last edition of our newsletter, we offered some advice to our readers on raising funds for their business. Fundraising, however, is only the first step of the long journey towards business success. Your money is only as good as how you manage it, and the successful business owner must be particularly diligent about how their funds are used.

With this in mind, we have decided to dedicate this month’s edition of the SME Newsletter to the management of business finances. Some tips are provided below:

Separate your business and personal finances: Before you start the process of managing your business finances, you need to take the vital step of separating your business funds from your personal finances. This will help you keep a close eye on your business transactions and save you from a lot of stress and trouble later, when, for example, you are trying to apply for a loan or showcasing your books to potential investors. Here at Wema Bank, we have two accounts that can help in this regard, the My Business Account and My Business Account Plus, which can be run with zero account maintenance fees, in addition to other excellent benefits.

Draw up a financial plan: A financial plan entails budgeting, accounting, forecasting, tax planning, and risk management. When kicking off with your business operations, you can start by drawing up a budget. A budget is a detailed plan for your projected expenses, and while most individuals tend to focus exclusively on these expenses, you should also focus on your projected income. You can only plan your spending effectively when you have some idea when – and how much – income you would be receiving over a certain period. Once you have planned out your income and expenses (including things like taxes and staff salaries), you can then begin to figure out how much money you will have leftover for savings and possible re-investment, with the goal being increased profitability for your business.

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Manage your cash flow: Financial management should be at the heart of your business operations. You must thoroughly understand the numbers that drive your business if you intend to be a successful entrepreneur. Sound financial management requires managing your cash flows efficiently.

Monitor your business expenses regularly (daily or weekly), review your business and financial operations and assess your core business and financial operations as they relate to your sales and operating margins. The knowledge and insights gained here can help you decide on the financial services (loans, for instance) and tools you will need and even warn you of coming problems or issues like fraud.

Hire the right talent (professionals): When running your business, you will discover very quickly that you cannot do everything yourself. Once you attain a certain level of scale in your operations, you will need to assemble a team. Irrespective of the individual tasks assigned to these employees, they will all be working with one goal in mind: making the most money for your business, either by maximizing incomes or minimizing expenses, most often a combination of both. It goes without saying that your bookkeeper(s) or accountant(s) should be the best you can find (and afford!) as a good accountant can help you find deductions and tax savings and ensure that you remain penalty-free and get the most value for your money. Sometimes, the best “talent” may not necessarily be human. In spite of the presence of a human team working for your business, you will need to:

  1. Keep an eye on their operations, especially where it concerns your finances and,
  2. Support them with the best software available. With Wema Bank’s ALAT for Business (AFB), you can rest assured that your human team will be fully supported by a digital team member which will allow them (and you) to manage your account(s) and transactions, execute bulk transfers of up to  ₦2,000,000,000, pay your bills and so much more. Note that you can access all these features securely, either via your mobile phone or via web. In addition to ALAT for Business, you can use other accounting software to structure your books and monitor your expenses.

Decide what types of payments you will accept: Having a variety of payment options is a source of increased convenience for your customers. Any convenience for your customers is a source of increased revenue for you. While “cash is king”, you can never have too many options, whether they be Wema Bank’s Scan2Pay offering, our USSD channel (*945#), M-Cash, WemaPay, WemaOnline, and ALAT (bank transfers). When setting up payment options, make sure that you standardize payment terms (for easy entry into your books) and set up rules which will apply to all your customers (if you intend to permit payments in instalments, then all your customers should be able to do this, not just a select few). If you apply the same terms and rules across the board, you won’t have to worry about remembering the arrangements you made with each customer.

Have an emergency plan: No one goes into business with the expectation that things will go wrong, but if the past year taught us anything, it would be the importance of “hoping for the best and planning for the worst”. A good place to start here would be to maintain an emergency fund (it is generally advised that building an emergency fund should be prioritized over other forms of saving and investments in the first few months of running your business). In some cases, however, your emergency may be larger than your emergency fund, and in this case, you may need to pursue other means of tiding over your challenges. This is where loans come in. Most business-owners tend to shy away from taking loans, which is unfortunate, as loans can be a very effective tool for supporting your business when used correctly.

Note that applying for loans should not be the first port of call for a business that has just kick-started operations, in most cases, you will need to show a history of (successful) operations when applying for loans, and this requirement effectively rules applicants out if they are just starting out. For the established business owner however, the process of applying for a loan should be launched at the right time. It is advised that you do not wait for too long before applying for a loan (if you need one). Waiting for too long will be waiting until your business is already in financial trouble, which is when you are least likely to get a loan. You should apply when your financials are still in a good state so that the loans can then be used for expansion or as an emergency line of credit instead of rescue.

When considering a loan, you should start by engaging your financial advisor. As we highlighted in the last edition of this newsletter, Wema Bank maintains an SME Help Desk ( to help you with this.

Suppose your advisor points you in the direction of taking a loan. Wema Bank has a suite of offerings available to serve, whether you are a school owner, or you own a pharmacy, or run a hospital, or need general business support to finance your working capital needs (you can even borrow up to N5,000,000 without collateral!). Furthermore, we can facilitate your access to intervention funds made available by the Federal Government. We also offer corporate credit and debit cards which can help with easy and immediate access to cash.

In conclusion, cash is the lifeblood of your business. To succeed at business, you need to ensure that your funds are appropriately utilized (even as you work to grow them), which calls for a detailed and systematic application of yourself and your resources. Lastly, never hesitate to ask for help when you need it.

Posted in SME Newsletter.