Managing small business cash flow and income in 2022

It’s been a lean time for small businesses, and especially the families supporting them.

Xero’s small business trends report shows that 60% of small business owners are worried about their household finances running low.

So while 2022 will hopefully be a year of rebounding sales and revenue, business owners really need that to carry through to the bottom line.

What the experts say

While there will be a temptation to withdraw any spare cash from the business as ‘owner’s drawings’, experts say it’s important to be mindful of upcoming and potentially unknown expenses.

Owners often overlook upcoming business expenses when taking drawings, which creates cash flow issues later. These cash flow issues create further disruption to the household budget because money has to be put back into the business.

Rather than clearing out the business bank account, owners are better off paying themselves a modest amount at regular intervals.

Takeaways for small businesses

Here are four steps small businesses can take to help support their recovery:

  1. Analyse your business margins and focus on products that generate the most profit
  2. Create a ‘rainy day fund’ within the business so you’re not constantly loaning it money from your personal savings
  3. Schedule regular, sustainable drawings to ease home budgeting
  4. Keep your regular drawings modest, as you can always give yourself a bonus payment at the end of a good year

For more tips, advice and accounting essentials for your business, visit Xero Cloud Accounting and get started today with Omnis Group, or call our Xero cloud accounting specialists on 08 9380 3555.

Source: Xero

Justin Flavel

Managing Director

Justin’s experience spans across 20 years in accounting, financial analysis and general business practice.

Although born and bred on the land, Justin’s interest was more in spreadsheets, ledgers, and finance which led him to attend university. In 1992, Justin graduated with a Bachelor of Business majoring in Accounting and Finance. As well as qualifying as a CPA member and becoming a Fellow of the Taxation Institute of Australia, he began gaining practical experience in small and mid-tier accounting practices.

During the late 90s, Justin decided to expand his horizons and travel through Europe. It was during this time that he seized the opportunity to expand his knowledge on the workings of large organisations by taking on roles in multinational corporations.

Today, Justin’s passion is in facilitating businesses to grow and evolve. His focus is on acting in the role of business mentor to help clients develop the full potential of their businesses. He joins clients on their unique journey, and provides the tools and knowledge they need along the way to make the right decisions.

Justin’s aim for his clients parallels his own philosophy and personal journey—focusing on his own career growth and business success while maintaining balance in his life with his wife and three daughters.

Omnis Group Managing Director - Justin Flavel