3 Smart Solutions for Your Biggest Money Management Challenges Don't let these financial factors slip through the cracks when running your small business.

As a small business owner, you're all too familiar with the constant juggling of tasks and need to make decisions on-the-fly. Often when it comes down to it, money management gets left by the wayside in favor of other more manageable concerns.

But having a strong foothold on your financial situation is necessary if you want to run a successful business.

We spoke with Christopher "Kip" Sobel, executive vice president of Business Banking Deposits and Treasury Management at PNC Bank, about the most common money management challenges he's seen small businesses face. Here are three crucial areas often overlooked or mishandled by entrepreneurs and how to make sure you're not making the same mistakes.

1. Take control of your operating cycle.

It's important for entrepreneurs to step back and ask themselves: "How do I pay for the stuff I buy," Sobel recommends. Owners often operate under the assumption that they need to own everything in their business, including inventory, technology, and even the physical real estate. Instead, leveraging unique skills, taking care of customers and increasing the speed of operating cycle or the time between delivery of goods and services and the receipt of cash are the real keys.

Having cash available at all times is crucial to keeping your business running smoothly. That means strategically leveraging what is vital to the core of your business while pressing hard to turn offerings into cash. Leasing or renting technology, office space, or vehicles are some ways businesses can free up liquidity. "If you have a massive amount of equity in your company but it's all in capital (non-operating) assets, it absorbs an immense amount of cash, which then isn't available for improvements or for other short-term buying opportunities," Sobel says.

Timing your invoicing cycle right also plays a big role in cash flow. Take, for example, a laundry service whose biggest customers are a popular local restaurant and hotel. While these customers drop laundry off daily or weekly, the business may only be billing them monthly for the regular service. That's a huge chunk of cash the business could have access to sooner simply by changing its invoicing and payment structure or frequency.

2. Seek ways to minimize fraud and financial losses.

No matter how trusting you are of your employees and how secure the operation of your business may seem, you still run the risk of unknowingly encountering fraud. More than one in 10 business owners is a victim of fraud, according to the 2017 PNC Economic Outlook survey. The most common form of such fraud is embezzlement, which often results when people working within the company steal money. But what can an entrepreneur with limited resources do to manage against the dangers of bringing someone else in to help run their business?

Seeking out an established bank or financial advisor with a reputation of working well with small businesses is one way to help safeguard against fraud and theft. For example, working with a bank that specializes in small business money management, like PNC Business Banking, can provide tools that may help you detect early signs of fraud or embezzlement.

3. Think for the future.

Succession planning is often not part of the equation for many small business owners and that's a big mistake, Sobel warns. A plan should be in place for how the business will carry on without you.

Even some entrepreneurs who have considered their exit strategy have done so through rose-colored glasses, Sobel says. Take for example a local hardware store owner who helps customers choose the right supplies for their home repairs. That business attracts customers because they get an expert opinion on their home repair with each visit. Once the owner leaves the business, its most valuable asset is gone. "It has very little inherent value without that entrepreneur in it," Sobel explains.

That's why working with a financial advisor on how to create, update and execute a proper succession plan is essential so that you don't end up in a similar rut.

"Your succession plan when you're 35 is going to be different than your succession plan when you're 55, but you still ought to have one," Sobel says. "You have to be able to answer the question: What would happen to the business and my family if something happened to me tomorrow?"

For regular insights on the top challenges business owners are facing today, follow our PNC Business Banking Showcase Page on LinkedIn

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.

©2018 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC.