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5 new year business resolutions for 2020

Be financially ready for the new year

new year

The new year is all about future planning. As we step into the new decade, we’ve put together some top tips to set your business up for a more prosperous 2020.  

The beginning of a new year is a good opportunity to take stock of what’s happened over the past 12 months and decide the priorities for the year ahead. Whether it’s planning to improve your cash position, take on new staff, or to improve relationships with suppliers, a fresh look at your finances can help you reach the next stage in your business journey. Even if the start of the year is not the beginning of your financial year, it is sensible to set aside time to regularly review your finances.

Business finance tips for 2020

1. Seek professional advice

Business finances are never static and complacency can potentially lead to the failure of any business. Just like an athlete who is regularly training, business owners should constantly review their finances and identify any weak spots. Over time, small changes can lead to drastic improvements in business efficiency and commercial viability.

If understanding your business finances and general cash flow management are giving you nightmares, don’t lose sleep over something an experienced financial expert can help you with. You can tailor and streamline your finance process by seeking external advice. If you have investors, they should be your first port of call as they can offer an incredible source of financial expertise and support. If not, your bank manager, accountant and any other financial advisor can also offer help, as can regional growth hubs across the UK

2. Review financial targets, budgets and processes

You might benefit from reviewing your financial goals, sales targets and your short and long-term business vision.

There may be an opportunity to simplify bill payments, invoice payments and consolidate debts to improve cash flow management and efficiency. The nature and scope of your business may have changed considerably over the past 12 months, so it’s important to review your proposition, product and public liability insurance policies. This ensures they are still relevant for the changing nature of your current business practices.

Make time to speak with an accountant, financial planner, or even your regional growth hub. Taking a step back to re-examine your business from an outside perspective can help you identify the key priorities and any inefficiencies to be tackled in the new year.

3. Invoice quickly, and get paid faster

Having reliable cash flow is essential for any successful small business. Issue invoices for goods or services as soon as possible to make sure that you’re paid promptly. If chasing up late invoices was your downfall in 2019, make revising your invoice payment terms and conditions a priority for the new year. Reformat and edit your invoice template to ensure it has clear due dates and easy-to-follow payment instructions.

If your business relies on contractors, or you have significant costs incurred in advance of sales, it may be worth exploring an asset-based finance option such as invoice finance or factoring to improve your cash position.

Read our article ‘Supply chain finance – your seasonal saviour?’ to find out more about this asset-based finance option.

4. Review business finance options

accountantWhatever your plans for 2020, there’s an increasing number of financial options available to help strengthen your current position, as well as fund growth. Whether you’re looking for debt or equity options, or are unsure of what type of finance might be right for your business, the Business Finance Guide Journey Tool can offer suggestions as well as link you with relevant providers.

If you already have business finance in place, make sure to review all your debts, and consider consolidating these to get a better deal, from the range of current lenders. Look after your investors, and you will find that in many cases they can offer more than just money.

5. Plan to succeed, but be prepared for any eventuality

Every business needs a backup plan. In the new year, take time to consider whether you have enough savings to cover any potential business losses or to protect you when things don’t go quite as planned.

As well as your normal business overheads – rent, salaries, etc., your PAYE, corporation tax and VAT payments come around regularly, so make sure to keep a buffer in reserve, and know exactly what your liabilities are. Ask yourself what uncertainties affect your business and how you could be prepared for any eventuality and ensure your cash flow isn’t affected.

Whether you’ve been in business for one year or ten, chances are you’re aware of when big expenses are due. Planning in advance for the larger expenses can help reduce the financial blow and ensure your cash flow stays strong even in the tightest months.

If you have less than 3 months’ cash flow available to cover future overheads, salaries and tax liabilities, then it may be worth considering a financial buffer such as a loan or overdraft, to ensure your business is in a strong position for the year ahead.

Be clear about what you need as opposed to what you want. The new year will bring with it a wealth of opportunities for some – and challenges for all. Start the year, and decade, as you mean to go on, with a strong financial understanding and the right tools in your financial toolkit to support your business finance journey.

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